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Communized Medicine

China has two big problems: first, to revive its own economy, it can no longer rely on rising American consumer spending; it has to find ways to boost its own domestic consumption; second, to still growing unrest among its populace, it is going to have to find some way to spread the wealth that has so far been concentrated among the country’s urban business and political classes.  One answer to both these problems is a national health care system.

Under Mao’s Communism, China used to have a national healthcare system.  It was derided in the West for its “barefoot doctors” who would sometimes lack the kind of medical education that a dental assistant would obtain in the United States, but as the Financial Times points out in a terrific analysis of China’s health care system, the mere dispensation of antibiotics had its effect. Life expectancy in China rose from 35 in 1952 to 68 in 1982.  

Deng Xiaoping brought capitalism and rapid economic growth to China, but he didn’t improve the health care system.  On the contrary, it went to hell under Deng’s version of Communist capitalism.  Villagers and workers were left to pay their own bill.  Deregulated hospitals pegged their income and the income of doctors to profits from drug sales, which encouraged charging people for expensive procedures and regimens that they could not afford.  As Geoff Dyer points out in his article, much of China’s extraordinary savings rates are due to people putting away money in fear of healthcare expenditures.  Families with incomes of less than $200 a year save 18 percent of their income.

If China were to establish a national health care system, it could increase domestic consumption, provide investment demand for China’s own version of a medical-industrial complex, and also respond to growing protests from China’s farmers and workers.  It would, in other words, address China’s economic and political problems at the same time.  And that’s a good reason why China’s government has put a national health care program at the top of its domestic agenda.  

The government is now planning to cover 90 percent of its citizens by 2011 and everyone by 2020.  As a beginning, it is promising a clinic in every village.  But will it happen, and on what terms?  Dyer reports some skepticism about whether the government is willing to spend enough money.  According to one estimate, rural residents will initially get coverage for Rmb120 a year – that’s $16.80 a year – about enough for two bottles of aspirin.  That could relieve a few headaches, but do little to alter China’s domestic consumption patterns or please its populace. Still, China’s government is clearly starting to think along the lines of a solution to both its economic and political problems.

--John B. Judis