x Abu Dhabi, UAESunday 21 January 2018

High price of illness, paid by China's poor

Treatment can be expensive even for those covered by various insurance schemes and patients are often required to pay up front.

Major illness can "push people into poverty" in poorer areas, as insurance schemes often only pay a percentage of treatment costs. Above, workers from a company queue to receive food in Shenzhen, Guangdong Province, last year.
Major illness can "push people into poverty" in poorer areas, as insurance schemes often only pay a percentage of treatment costs. Above, workers from a company queue to receive food in Shenzhen, Guangdong Province, last year.

BEIJING // When the Chinese premier, Wen Jiabao, said last week that migrant workers should be looked after as people "treat their own children", he was perhaps looking to pacify a group that has become increasingly radicalised.

In recent weeks, there have been multiple strikes over pay by largely migrant factory workers, and many of those who downed tools have been rewarded with hefty wage rises. Some have hailed the increases as a step towards reducing the income disparities that have developed as a result of China's rapid economic growth, but for many of China's poorest, another major problem remains: affordable healthcare.

Migrant workers in particular can be vulnerable if they fall sick or suffer an accident, as their status as migrants shuts them out of many state-managed healthcare insurance schemes. Werner Christie, a former minister of health in Norway who is chairman of the Asia branch of the Public Advice International Foundation, an organisation of former ministers that provides assistance to governments and other institutions, said extending healthcare insurance was the critical reform needed in China's welfare system.

"[China's former leader] Deng Xiaoping said that first someone has to become rich. You have to accept there will be differences [in income]," he said. "But now the time has come for the poor people also to have improvements, which means health reform. "The poverty is thinly distributed. Poor people have housing and access to water. It's not like the poverty in India or Africa, where they're desperately poor. But when you get sick, you have problems because you have to pay cash."

Healthcare, pensions and housing used to be the responsibility of the work unit that employed a person, and some hospitals were even dedicated to workers from particular industries. However, over the past 20 years, as state-run industries have been dismantled or privatised, such free provision has ended. The vast majority of hospitals remain publicly run, but health coverage, even for those covered by the various insurance schemes set up by the authorities, can nonetheless be expensive, and payment for treatment is often required up front.

In its Economic Survey of China, published in February, the Organisation for Economic Co-operation and Development (OECD) said "households out of pocket medical expenses have soared". The organisation said while the launch since 2003 of urban and rural insurance schemes had alleviated these problems and improved coverage - government figures from 2008 indicated 91.5 per cent of rural residents came under the umbrella of the rural co-operative medical care system, for example - major illness could still "push people into poverty" in poorer areas, as insurance schemes often only paid a percentage of treatment costs.

Many of China's estimated 230 million migrant workers, as nonpermanent residents, are not covered at all by such schemes where they live. Figures from the OECD indicated that in 2008 about 15 per cent of Chinese people - or about 200 million individuals - still lacked health insurance. Last year the authorities pledged to spend an extra 850 billion yuan (Dh457bn) on healthcare by 2011, about 40 per cent of it to come from central government. The OECD described this additional expenditure as "just a down payment" on what was needed to deal with issues such as ensuring insurance was available to more people, doctors were better trained and greater efforts made to prevent illness. A government study organisation, the China Development Research Foundation, has suggested 5.74 trillion yuan must be spent over the next decade to build a comprehensive welfare system, including healthcare, pensions and education for all, including migrants.

"It's time for China to consider improving its welfare provision," said Dong Lisheng, a professor at the Chinese Academy of Social Sciences in Beijing. Mr Ding said welfare services must be provided under "a system that's transferable" so that people such as migrant workers were covered. He also said the quality of services should be more consistent across the country, adding that currently provision varied considerably based upon the financial situation of different provinces.

One welfare model being advanced in China is that of the Nordic countries, where taxes are high, healthcare is free or cheap at the point of delivery and levels of income inequality are relatively low compared to some other developed nations such as the United States. Stein Kuhnle, a professor at the Hertie School of Governance in Berlin and the University of Bergen in Norway, has co-edited a book titled The Nordic Welfare State that was recently published in Chinese translation.

With China keen to sustain its rapid rebound from the global economic slump, Mr Kuhnle insisted the generous welfare provision need not come at the expense of growth. "Having a large welfare state is basically good for economic growth," he said, citing World Economic Forum figures that put Sweden, Denmark and Finland as the fourth, fifth and sixth most globally competitive countries. "You can see huge inequality [in China]," Mr Kuhnle said. "Something must be done about it. In the long run, it's not good for the economy."