Chinese health care in rural areas

In the linked study (doi:10.1136/bmj.c5617), Babiarz and colleagues assess the impact of China’s New Rural Cooperative Medical Scheme (NCMS) on village clinic operations and patterns of clinic use. The scheme aims to provide health insurance to 800 million rural citizens and to correct distortions in rural Chinese health care.1

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Dermot Tatlow/Panos

One defining feature of contemporary China is the pervasive divide according to urban or rural residence. This divide has permeated all aspects of Chinese society, and health care is no exception. However, in the collective era (mid-1950s to early 1980s, when rural agricultural production was organised by production teams and collective farming), glaring health disparities were kept in check by the presence of almost universal health insurance coverage. In the countryside, a cooperative medical scheme was established in the 1960s. It was a collective, community based insurance programme organised, planned, and financed by the government. Its guiding principle emphasised basic primary health care for all, preventive medicine, and health promotion. The system worked. In the heyday of the scheme’s operation (mid-1970s), it effectively reached 90% of all rural Chinese people,2 with decades of accumulated benefits substantially improving the overall health profile of China’s population.

The market based economic reforms since 1978 set in motion a roller coaster of changes in every part of Chinese society. Like the economy, the healthcare sector was decentralised and left in the invisible hand of market forces. The government retrenched healthcare financing, and at the same time medical pricing and patients’ out of pocket healthcare costs soared. The medical establishments and healthcare providers became increasingly driven by economic incentives and profit seeking.

Although these changes were global, the consequences were particularly detrimental to rural health care.3 The previous system collapsed. What emerged in its place were predominantly private practices that operated on fee for service, out of pocket financing, or simply, the ability to pay. This resulted in a massive loss of access to care among rural residents, especially the poor. The numbers say it all—in 2003, more than 90% of the rural population, about 700 million rural Chinese, had no health insurance coverage and had to pay out of pocket for almost all health services.4 Medical impoverishment, among many other predicaments of rural families, has become a pressing policy concern. The urban-rural gap in access to health care has widened.3 4 It is only fair to conclude that China’s market based health reforms failed on virtually all measures.

With this painful realisation, in 1994 the Chinese government initiated a pilot project in 14 counties of seven provinces in an attempt to resurrect the rural cooperative medical scheme.5 Building on that experience, the government launched the NCMS nationwide in 2003.6 This new scheme is a government run, heavily subsidised voluntary insurance programme with its main policy focus on reducing the risk of catastrophic health spending for rural residents.7 The prevailing model combines medical savings accounts or medical financial assistance (or both) with high deductible catastrophic hospital insurance (which covers rural residents in for a major medical event requiring costly hospital treatment).8 This new round of health reform in China has run its course for nearly seven years and is now rapidly expanding, so has it achieved its intended policy goal?

Babiarz and colleagues’ study is one of the most recent efforts to evaluate the impact of the NCMS and its implications for primary health care in rural China.1 The study sample is fairly comprehensive and up to date, covering 160 village clinics and 8339 people from 100 villages across five Chinese provinces at two points in time, 2004 and 2007. One of the major findings—that out of pocket medical spending in the sample fell by 19% and catastrophic spending declined by 36% after enrolment in the new scheme— is particularly encouraging. On the basis of this finding, the authors concluded that the new scheme has provided some financial risk protection and reduced out of pocket health spending for enrolees. This conclusion should be interpreted with caution, however, in view of the relatively thin evidence base and mixed results across published studies in this area. For instance, several recent evaluations noted that the scheme had a relatively limited effect on reducing out of pocket spending or preventing rural households from financial catastrophe.8 9 10 These inconsistent findings may result from the heterogeneity of study samples as well as substantial regional variations in the design of the programme and local resources. In addition, many more unanswered but important questions remain. For instance, has the new scheme attenuated (as it should) or accentuated (as it shouldn’t) disparities in access and care between the haves and have-nots? In short, the available evidence seems too limited to draw any definitive conclusions about the effects of the ongoing NCMS programmes.

Looking ahead, Chinese policy makers and health practitioners face multifaceted challenges to furthering and sustaining the healthy development of the scheme. Given limited financial and health resources, multiple priorities must be balanced with respect to access, quality, and cost of health care. To redress the neglect of rural health care in the post-reform era, the most urgent policy goal is the expansion of access to basic health insurance and health care for rural residents. This goal is now being vigorously promoted by the government and should be achievable with relative ease if the determination is there.

The quality of medical services and patient outcomes under the new scheme is unclear, but unfortunately this is not yet perceived as urgent enough to move up the priority list on China’s health policy agenda. It will have to be tackled sooner or later. Let us also not forget the obvious—that every progress comes with a cost. Costs driven by perverse incentives in the healthcare financing system are particularly difficult to tackle. Under the NCMS, there have already been symptoms of overuse of medical services, from overprescription of drugs11 to unnecessary use of caesarean deliveries.12 Because the government is heavily invested in the new scheme, Chinese policy makers will soon be consumed in waging battles against soaring healthcare costs. All of these challenges are compounded by the rapidly growing number of elderly people, especially in rural areas, who are bound to overwhelm the already overburdened healthcare system in the future.

Looking abroad, China’s experience over the past 30 years may offer valuable lessons for other developing countries contemplating health reforms—namely, that a market driven laissez faire approach to healthcare reform is not a panacea, and that policy makers need to be prepared for dealing with unintended consequences of any reform.