Transition and Reform: Chinese Business Environment

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Transition and Reform Treatment for China’s Healthcare System

Introduction

Chinese Healthcare policies are still in a transitional phase despite the many reforms that have been implemented during the Deng Xiaoping and Jiang Zemin era over the past twenty-five years. Healthcare reform in China continues to evolve in a haphazard format seemingly reliant on experimental policies trying to institute market-oriented, rather than collective-oriented, health centers. Understanding the history of Chinese Healthcare policies and infrastructure of the Healthcare system since 14, the beginning of the Communist Era in China, is essential, and therefore will be presented for background informational purposes. During the post-Mao period of the 180’s and the 10’s healthcare reforms in the rural and urban areas of China have been dynamic and present a political and economic conundrum for present-day China.

Healthcare Under Mao




The healthcare system under Mao TseDung during his chairmanship in the years of 14 and 176 resided under the Ministry of Public Health. Mao and the Chinese Communist Party’s relationship with the Ministry of Public Health were far from cordial during these years. Mao’s purpose was to create one class of persons in the People’s Republic of China and the Ministry of Public Health did not seem conducive to this thought process. The Ministry’s focus in the furtherance of urban healthcare led Mao to action. In Mao’s “June 6th directive”, Mao laid blame on the Ministry for giving preference to “urban lords” and demanded putting the emphasis on the countryside. For this reason, medical education through universities dropped and urban doctor’s were sent to the rural areas and the countryside. With this directive, the distribution of healthcare was decentralized and spread into the rural areas of China . This is just one example of the healthcare reforms Mao brought into place.

The medical reforms Mao brought into place during his leadership were ones of simplicity and insight. Mao’s most important reforms in healthcare included the Cooperative Health Care Scheme (CHCS), a three-tier health care network, and the infamous “barefoot doctor” program . In the 150’s, Mao focused on public health and preventative treatment through “patriotic health campaigns”. The hope of these campaigns was to improve hygiene and sanitation among the populous. One example of these “patriotic health campaigns” is the war against the “four pests” that is, rats, sparrows, flies, and mosquitoes . Through these “patriotic health campaigns”, the health of the average Chinese person has been improved. Before the Chinese Communist Party took power in 14, the average life expectancy was 5 years of age . According to certain statistics, “Life expectancy rose - to 68 for men and 7 for women today. Infant mortality rates dropped, from 00 per 1,000 births to per 1,000.” In the 160’s, Mao instituted a position referred to as “barefoot doctors”. These “barefoot doctors” were a group of around one million farmers who were trained to provide basic medical treatment and healthcare in the rural areas .

Three-tier Healthcare Network

China’s healthcare system, under Mao, developed into a three-tiered system which consisted of village stations, township health centers, and county hospitals in rural healthcare. In the urban areas, the system was divided into street health stations, community health centers, and district hospitals . The services and levels of training and care for both urban and rural stations were about the same at each respective level of the three-tier system. Chinese citizens visited each level of healthcare according to the degree, or severity, of the injury or sickness. In the rural areas, the village medical stations are run by village doctors, previously known as “barefoot doctors”, who, on average, receive three to six months of medical training as well as two to three weeks of CE, or continuing education, each year . These village medical stations provided preventive healthcare, such as vaccines, as well as primary-care services in the villages. Village medical stations usually had about two doctors per 1,000 people. At the next level, the Township Health Centers, physicians with and average of three years of medical school education are on staff. Usually these centers have between ten and twenty beds for patients . Township Health Centers usually focused on outpatient care because of the lack of beds in the centers. These centers usually served about 10,000 to 0,000 people. Finally, at the third level are County Hospitals. These medical treatment centers are usually supervised by physicians with and average of four to five years of medical school education. There are usually about 50 to 00 beds in a county hospital as well as a staff of nurses and technicians . The County Hospitals are the last level of the three-tier system and usually serve 00,000 to 600,000 people. Each level in the three-tier system provides a higher level and standard of medical care than the previous level.

Financing Healthcare in the Mao Era

The financing of healthcare in China, like the three-tiered system of healthcare provision, was also formed in a threefold system. These systems, gongfei yiliao or Government Employee Health Insurance, the laobao yiliao or Labor Health Insurance, and Rural Cooperative Medical System (RCMS), formed the primary systems of financing of healthcare in China. The gongfei yiliao covers insurance costs for government workers at all “political divisional levels (central, provincial, county, township, and village), including officials of labor unions, youth’s and women’s leagues, the staff of cultural, educational, health and research institutes and students at approved colleges and universities.” This form of insurance is completely funded by the government. The laobao yiliao, or Labor Health Insurance, is the insurance program used by State-Owned Enterprises (SOEs). Under the laobao yiliao, “employees in state and collective enterprises and their immediate family members are entitled to full (for the employees themselves) or partial (for immediate family members) benefits.” The laobao yiliao is financed by the SOEs and other enterprises employing over 100 employees. Finally, the oldest form of financing healthcare is the Rural Cooperative Medical System (RCMS). Implemented in the 150’s, this system of medical care was instituted by the communes and brigades in the rural areas of China. The Rural Cooperative Medical System is financed by “yearly contributions paid by participants and subsidies from collective welfare funds.” This final branch of financing medical coverage in the rural areas as the RCMS is hailed as an impressive step in providing healthcare coverage in the countryside of China. According to some, “The accomplishments of this system were internationally regarded as an unprecedented feat in the creation of a nationwide medical system which effectively met the basic health care needs of the general population, including the widespread use of what is now called preventative medicine, while simultaneously taking major steps toward the eradication of major infectious diseases.” Statistics show that by the mid 170’s, The Rural Cooperative Medical System coved 0% of China’s rural population and “5% of the rural population had a collective medical system administered by their brigade with their own village health clinic.”

Modern Transition

China has been undergoing change and transition in recent years, and as a result, everything has not always occurred smoothly and efficiently. China’s healthcare system is an example of such a change. Indeed steps were made during the Mao era to give China an improved health system, but they were far from being complete. The system needed to be improved to keep up with China’s growing population, and increased demand for medical attention with longer life spans of the average citizen. Since the founding of the Peoples Republic, the goal of health programs has been to provide care to every member of the population and to make maximum use of limited health-care personnel, equipment, and financial resources. Over the last twenty years, reform has been the driving force behind the Chinese economy. Part of this reform has been a shift in emphasis from a central state controlled economy to a more planned market economy. The government has improved many of the inefficient outdated health care systems that were set in place during the Mao era, and one of the major goals has been to bring health care up to date. To say the least, this has not been an easy task for China’s leaders. China’s transition to modern health care has produced a certain amount of success as well

as many failures that continue to plague the system with setbacks.

Private Health Care

In the early 180’s China allowed private enterprises to enter the healthcare industry, in an attempt to strengthen healthcare availability. This type of private practice had been disallowed during the Mao years of the Cultural Revolution (166-176). As a result, “the disparity between rural and urban health has been exacerbated due to increased privatization. During this time, the rural peoples communes were dismantled, as was the cooperative medical system, which was organized and highly subsidized by the production brigades under the communes.” Overall, hospitals have had to find ways to generate more profits, by over prescribing drugs, overusing MRI’s and CAT scans, and by charging higher prices so that they could make money. This has resulted in poor health care. For hospitals, the drug income accounts for more than one half of their total income and in some medium-sized and small hospitals it is as high as 70 to 80 percent,

Failures In Transition



More than twenty years have elapsed since China changed its agricultural economic system. China is still struggling to find an equitable, efficient and sustainable way of financing and organizing its rural health services. One of the main problems with Chinese health care is that there is just not enough medical care available for China’s large population. Quality hospitals are just not available for the majority of the poorer rural areas, and even the ones in the urban areas are often inefficient and do not provide good healthcare. There are several reasons for this inefficiency 1) Staff directors have not always taken good records of finances in their hospitals. Health care directors have had no incentives to maintain good records, because any needed money to balance the budget was provided by the state. ) Administrators in the past have not had the power to fire or promote employees, which has led to virtually no incentives for employees to improve working skills or even provide quality health care for patients. Employees realized that they received payment and compensation regardless of the quality of their work. ) The Chinese government has reduced funding and support in many hospitals and healthcare programs in an attempt to make them more independent. This has put a strain on hospitals and rural health centers to generate enough profits to stay in business whereas previously the government has provided enough money to keep them running. In fact, the number of village health officials has been decreased by 18-% while the number of hospitals and health care centers have also decreased significantly at the township and village level.

Migrant Workers and Moral Economy

With China’s transition to a more planned market economy, there is a rise in the private sector of business and many jobs are created that are not required to provide employees with health care. On top of that, there is really no purchasable private or public health insurance available to individuals. With the increasing amount of jobs in the urban areas, there is an influx of workers going to the cities for work. Unfortunately, with China’s residency requirements migrant workers cannot qualify for state run jobs that provide health care. This is only a small part of the problem for the government who has only been able to provide some sort of medical care for one-half of the Chinese population. Rural and urban fieldwork conducted in the reform era indicates that most respondents believed in the governments responsibility to provide social welfare programs. This idea of a moral economy in which the government is responsible to provide society with such benefits is an issue seen in China. This is typical for a society where socialist ideals were implemented before the reform began. Elisabeth Croll explains this idea of governmental responsibility, rooted in a rhetorical and practical legacy of state socialism and such expectations of welfare support by the state have been fostered by an increasing sense of insecurity as a result of the rapid pace of market of welfare services and a new sense of inequality.

Unfortunately, quality health care is becoming a fee for service provided….leaving ninety-five percent of rural people without health insurance. People who have more money or better health benefits receive more and better health care. This is unfortunate for the majority of the Chinese people who are located in poor rural areas. For example, the cost of one average hospitalization would exceed the average annual income of 50 percent of the rural population. Meanwhile, medical costs nationwide have risen by 8 times in the past 0 years, making it too expensive for many Chinese to seek medical help, while leaving hospital beds in many regions empty. Where health care is very lacking, if any even exists. Governmental reforms have raised standards of medical care in urban areas, but have also widened the gap between urban and rural areas. Over eighty-percent of medical resources are now concentrated in urban areas, while poor rural residents suffer from shortages of medicine and doctors. Indeed the government has improved rural healthcare in recent years, but more still needs to be done.

Success In Transition

In spite of the many failures and shortcomings in Chinese health care, the overall system has been successfully reformed in perspective of a big picture where change is gradual and not instantaneous. The majority of the success has been seen in the urban areas where there is a greater amount of revenue available for the people to use. As a whole the Chinese transition from complete governmental control to a more independent market economy has been a slow process. In contrast to the determined efforts of the 180s, the health care reform movement had lost momentum in the 10s. It seems that the government has been much more lenient with the urban cities who have large populations of people. So it is apparent why there has been more emphasis on health care reform in the cities, and not in the poor rural areas. The hopeful goal would be for the success of the urban areas to spread out to the surrounding urban areas. This effect has begun to spread out and many rural towns are improving health care. The officials, however, insisted reform was drastically needed as Chinas decrepit health care system was falling apart after 50 years of doling out increasingly inefficient and backward medical services in the cradle-to-grave social welfare system.

Conclusion

The interesting thing about Chinese health care is that it is constantly changing to fit the demands of a seemingly market economy as well as governmental control. In order to analyze the current system, an understanding of Chinese history starting with the Mao era is necessary to look at the entire picture. The improvements under Mao’s implementation of the Cooperative Healthcare scheme, as well as reforms under Deng Xiaoping have ultimately led to the successes and failures of China’s health care system. Indeed there are still many uncertainties about the future of Chinese health care, and there probably will continue to be for a long time. It is important to look at the modern transition of Chinese health care as the society moves towards a more market steered economy. The government has succeeded in replacing some of the inefficient and outdated systems with better working programs, but there is still much that needs to be done for the majority of the rural population who are in dire need of affordable quality health care.

http//hcs.harvard.edu/~epihc/currentissue/huang-.php In his infamous June 6 Directive, Mao vehemently criticized the Ministry for paying attention only to urban lords and called for putting the emphasis on the countryside.

http//www.mtholyoke.edu/courses/sgabriel/health.htm Health care provision was greatly decentralized and diffused throughout the countryside and city neighborhoods during the Maoist era.

http//www.amityfoundation.org/Amity/anl/Issue_56_1/gap.htm In the past, Chinas rural health care system, established in 14, incorporated a Cooperative Health Care Scheme (CHCS), a three-tier health care network and the barefoot doctors system.

http//memory.loc.gov/cgi-bin/query/r?frd/cstdy@field(DOCID+cn006) An emphasis on public health and preventive treatment characterized health policy from the beginning of the 150s. At that time the party began to mobilize the population to engage in mass patriotic health campaigns aimed at improving the low level of environmental sanitation and hygiene and attacking certain diseases. One of the best examples of this approach was the mass assaults on the four pests--rats, sparrows, flies, and mosquitoes--and on schistosoma-carrying snails.

http//www.amarillonet.com/stories/17/hea_china.shtml The average life expectancy was 5.

http//www.amarillonet.com/stories/17/hea_china.shtml Life expectancy rose - to 68 for men and 7 for women today. Infant mortality rates dropped, from 00 per 1,000 births to per 1,000.

http//news.beststar.com/ll/english/10606.shtml …barefoot doctor, one of a million farmers trained to provide basic health care to rural Chinese during the more revolutionary 160s.

http//www.chinamed.org.cn/healthcare.htm The tiers consist of village stations, township health centers, and county hospitals in the rural sector and street health stations, community health centers, and district hospitals in the urban areas.

http//www.chinamed.org.cn/healthcare.htm Village stations are staffed by village doctors who are trained for three to six months after junior high school and receive an average of two to three weeks of continuing education each year.

http//www.chinamed.org.cn/healthcare.htm Township health centers usually have 10 to 0 beds overseen by a physician with three years of medical school education after high school, aided by assistant physicians and village doctors.

http//www.chinamed.org.cn/healthcare.htm County hospitals usually have 50 to 00 beds and are staffed by physicians with four to five years of medical training after high school, as well as by nurses and technicians.

http//www.mtholyoke.edu/courses/sgabriel/health.htm Gongfei yiliao or Government Employee Health Insurance, provides coverage for government workers at all political divisional levels (central, provincial, county, township, and village), including officials of labor unions, youths and womens leagues, the staff of cultural, educational, health and research institutes and students at approved colleges and universities.

http//www.mtholyoke.edu/courses/sgabriel/health.htm The laobao yiliao, or Labor Health Insurance, is a system under which employees in state and collective enterprises and their immediate family members are entitled to full (for the employees themselves) or partial (for immediate family members) benefits.

http//www.mtholyoke.edu/courses/sgabriel/health.htm … funded by yearly contributions paid by participants and subsidies from collective welfare funds.

http//www.mtholyoke.edu/courses/sgabriel/health.htm The accomplishments of this system were internationally regarded as an unprecedented feat in the creation of a nationwide medical system which effectively met the basic health care needs of the general population, including the widespread use of what is now called preventative medicine, while simultaneously taking major steps toward the eradication of major infectious diseases.

http//www.chinamed.org.cn/healthcare.htm At the peak or expansion prior to economic reforms, CMS [Cooperative Medical System] covered 0% or China’s rural population.

http//www.mtholyoke.edu/courses/sgabriel/health.htm …5% of the rural population had a collective medical system administered by their brigade with their own village health clinic.

http//memory.loc.gov/cgi-bin/query/r?frd/cstdy@field(DOCID+cn006) Since the founding of the Peoples Republic, the goal of health programs has been to provide care to every member of the population and to make maximum use of limited health-care personnel, equipment, and financial resources.

http//www.mtholyoke.edu/courses/sgabriel/health.htmThe disparity between rural and urban health has been exacerbated due to increased privatization. During the 180s, the rural peoples communes were dismantled, as was the cooperative medical system, which was organized and highly subsidized by the production brigades under the communes.

http//www.mtholyoke.edu/courses/sgabriel/health.htm Consequently, hospitals use more drugs and tests such as MRIs and CAT scans to generate greater profits.

http//news.beststar.com/ll/english/705.shtmlFor hospitals, the drug income accounts for more than one half of their total income and in some medium-sized and small hospitals it is as high as 70 to 80 percent,

http//www.insp.mx/ichsri/main/5.html More than twenty years have elapsed since China changed its agricultural economic system and China is still struggling to find an equitable, efficient and sustainable way of financing and organizing its rural health services.

http//www.mtholyoke.edu/courses/sgabriel/health.htm Staff directors have not always taken good records of finances in their hospitals. Administrators in the past have not had the power to fire or promote employees, which has led to virtually no incentives for employees to improve working skills or even provide quality health care.

http//www.mtholyoke.edu/courses/sgabriel/health.htm In fact, the number of village health officials has been decreased by 18-% while the number of hospitals and health care centers have also decreased significantly at the township and village level.

http//www.mtholyoke.edu/courses/sgabriel/health.htm With China’s transition to a more market economy, there is a rise in the private sector of business and many jobs are created that are not required to provide employees with health care.

http//www.mtholyoke.edu/courses/sgabriel/health.htm On top of that, there is really no purchasable private or public health insurance available to individuals.

http//www.mtholyoke.edu/courses/sgabriel/health.htm Unfortunately, with China’s residency requirements migrant workers cannot qualify for state run jobs that provide health care.

http//www.mtholyoke.edu/courses/sgabriel/health.htm This is only a small portion of the problem for the government who has only been able to provide some sort of medical care for one-half of the Chinese population.

http//hcs.harvard.edu/~epihc/currentissue/huang.php Rural and urban fieldwork conducted in the reform era indicates that most respondents believed in the governments responsibility to provide social welfare programs.

http//hcs.harvard.edu/~epihc/currentissue/huang.php is rooted in a rhetorical and practical legacy of state socialism and such expectations of welfare support by the state have been fostered by an increasing sense of insecurity as a result of the rapid pace of market of welfare services and a new sense of inequality.

http//www.mtholyoke.edu/courses/sgabriel/health.htm Unfortunately, quality health care is becoming a fee for service provided….leaving ninety-five percent of rural people without health insurance.

http//www.chinamed.org.cn/healthcare.htm the cost of one average hospitalization would exceed the average annual income of 50 percent of the rural population.

http//news.beststar.com/ll/english/705.shtml Meanwhile, medical costs nationwide have risen by 8 times in the past 0 years, making it too expensive for many Chinese to seek medical help, while leaving hospital beds in many regions empty.

http//news.beststar.com/ll/english/705.shtml Over eighty-percent of medical resources are now concentrated in urban areas, while poor rural residents suffer from shortages of medicine and doctors.

http//hcs.harvard.edu/~epihc/currentissue/huang.php In contrast to the determined efforts of the 180s, the health care reform movement had lost momentum in the 10s.

http//news.beststar.com/ll/english/705.shtml The officials, however, insisted reform was drastically needed as Chinas decrepit health care system was falling apart after 50 years of doling out increasingly inefficient and backward medical services in the cradle-to-grave social welfare system.

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