Winston Mok

The View | Done right, China’s healthcare reforms could boost the economy and more

Beyond a corruption crackdown, a structural reconfiguration of the healthcare system would unleash the consumption long suppressed by the need to save for costly medical bills

It would also build confidence, improve social stability, boost the government’s standing and, perhaps, even encourage births

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People walk on an overpass near a hospital in Beijing on February 16. China’s healthcare system is in the midst of an anti-corruption crackdown. Photo: Reuters

Winston Mok

Published: 4:34pm, 12 Sep 2023

If there is an area in which the US and China can compete for the productive benefit of their citizens, it is healthcare. The rival powers have healthcare sectors with much that needs fixing. While their problems are shaped by different causes, they have this in common: the highly unequal delivery of healthcare.

Although the US spends more than 18 per cent of its gross domestic product on healthcare, far above many other countries, it was ranked last out of 11 of the world’s richest countries in a 2021 Commonwealth Fund survey of healthcare systems. Among the rich countries the fund studied, the US was the only one without universal healthcare.

In contrast, more than 95 per cent of China’s population has basic medical insurance while health spending makes up just 7 per cent of its gross domestic product. The government was responsible for an estimated 27 per cent of national healthcare expenditure in 2021 – about 1.9 per cent of GDP.

To make sense of this level of government health spending, we can look at Australia, whose healthcare system ranked third in more than one survey. Australia’s health spending was 10.7 per cent of its GDP in 2020-21 – about 50 per cent higher than China’s. But over 70 per cent of this health expenditure came out of government funds, comprising about 7.5 per cent of GDP. Compared to China, as a proportion of the economy, the government in Australia spent almost four times as much on the health of its people.

There are plenty of healthcare role models in Asia, such as South Korea, Japan, Singapore and Taiwan – which was recently ranked as having the best healthcare in the world in a magazine survey of 110 countries and territories. Taiwan delivers its universal single-payer healthcare services primarily through the private sector.

Mainland China’s nominally public hospitals receive limited government funding and doctors are woefully underpaid. Over time, corruption became endemic. As exposed in the recent medical sector anti-corruption crackdown, the most egregious abuses were often the taking of kickbacks, such as for ordering big-ticket medical equipment.