A conversation with Winnie Yip, Professor of Global Health Policy and Economics
As China emerges from the COVID pandemic, is the country’s healthcare system sustainable? Winnie Yip, Professor of Global Health Policy and Economics, recently mapped out the challenges facing China’s plans to build an effective, equitable healthcare system. First challenge: Slowing economic growth will impinge on the government’s ability to fund reform. Second challenge: Profit-driven mega-hospitals continue to expand, sucking up resources that should be going to the development of primary care. (Example: the Zhengzhou Hospital, in Henan province, has 10,000 beds—“beyond what you can manage!” says Yip. By comparison, Mass General Hospital has about 1000 beds.) Third concern: The government isn’t paying enough attention to serious mental health issues that have been exacerbated by the pandemic. In a recent Critical Issues Confronting China talk, Yip and Professor Emeritus of Economics William Hsiao noted that the government’s plans to build a system focused on primary care and prevention make sense. But they warned that a distorted incentive system continues to hamper much-needed fundamental change. To watch the full video, click here.
Following the talk, Yip elaborated her concerns with Dorinda Elliott, Executive Director of the Fairbank Center for Chinese Studies. A surprise: After decades of “benign neglect” during the 1980’s to 2000’s, Yip notes that China’s healthcare problems in many ways mirror those in the United States:
Elliott: In its health care reforms, what is the Chinese government trying to solve for?
Yip: They are trying to address many things—trying to find the most efficient way to get the best care, defining it as people-centered, affordable, convenient, quality health care, and implicitly, with some focus on equity. Equity is not as explicit as it was in the last wave. There is a recognition now that resources are limited.
There is also recognition that with the economy growing more slowly, the government’s spending on healthcare can’t grow as fast as the past 15 years or so.
Q: You said that 96 percent of the Chinese population have health insurance coverage. But aren’t there all sorts of stories of people going bankrupt if someone in the family gets sick?
A: Well, coverage in China is not as good as a Harvard professor, but if you’re someone in the informal sector or lower income, then you are more protected in China than you are here in the United States. …. There is a level of disparity in China, but it’s still more equal than here.
Q: Why is the focus on big hospitals such a problem?
A: The government knows that the delivery system needs to change. It’s hospital centric. The government only covers 10 percent of hospitals’ budgets, so their incentive is to find ways to make profit. Meanwhile, hospitals don’t talk to the primary care sector. The system is focused on curative not preventative approaches.
Q: That sounds like the U.S.!
A: I always cringe when I hear that health experts are coming to the U.S. to learn from the U.S. system. Why do you want to learn from the U.S.? Yes, their public health care system is in many ways similar to the U.S., including the problem of healthcare cost escalation.
The government is trying to develop the primary care sector. But it’s difficult. Primary care is quite weak, so people don’t want to go to a primary clinic. They want to go to the top hospital. But you don’t need to go to the best hospital for a headache. Meanwhile, the hospitals are trying to expand their market share: the more patients the better.
And there’s a hierarchy in the medical profession. If you’re a community worker, or a nurse, people will say, who are you? It is possible to change the incentive, of course.
Yip presented on China’s health insurance system and medical assistance in a March 2023 installment of the Critical Issues Confronting China series.
Q: How did this profit-focused system emerge?
It all started in the 1980s, when the government turned to the market for the economy to grow. The health care economists said, ‘let’s do the market system for health care as well.’ In the decades following that, you had so many people in the countryside going bankrupt when a family member got sick.
In the early 2000’s, the government produced a report that said the market doesn’t work for health care. They said ‘health care reform has failed.’ There was a new emphasis on ‘harmonious society’ under [Party Chief] Hu Jintao and [Premier] Wen Jiabao. It was a turning point, and the government said, ‘we have to invest in health care.’ They decided the market doesn’t work, and that the government needs to play a role in financing health care. For 10 years, the aphorism was “看病难,看病贵,” “it is difficult and expensive to get medical treatment.” The government decided to change that.
Q: Then why is it so difficult to change the system?
A: The insurance system emphasizes coverage for hospital charges, not outpatient care. And the “fee-for-service” system perpetuates problems, too. So the model, the culture is expand, expand, expand.
Q: Again, this sounds like the U.S.!
A: The hospitals in China are so powerful. And they are still expanding. I understand that rich cities like Suzhou plans to increase hospital beds by 50%—for what? And key hospitals are very connected with politicians. The barrier for change is the big hospitals. They suck up enormous resources. So there is an intention to deliver and develop primary care, but it is very difficult to do. There is entrenched behavior resulting from decades of focus on the market.
Q: The irony to me is that many China watchers are concerned that China’s recent moves against the market economy are going to hold China back. But in the case of healthcare, you are saying that the market has created big problems.
A: Yes, and it has gotten worse during COVID. COVID gave hospitals a new life. They are the ones who came through during COVID. And since primary care is so poor, hospitals now have an additional justification to say they need to expand.
My colleagues in China are all shaking their heads, saying ‘we are going in the reverse direction again.’ I’m really worried about this. China has to deal with efficiency. Health expenditure is growing so fast that government spending on health will be hard to keep up. Who will bear the burden for paying for health care? The people!
Q: You mentioned that you are concerned about mental health issues in China. Why is this a growing problem, and what needs to change?
China had mainly paid attention to serious mental health problems such as psychosis. But many (close to 17%) have problems like depression, anxiety; but many do not know they have these conditions and remain undiagnosed and untreated. Meanwhile, we know how to diagnose and treat them. People can continue to have a normal life, return to work, perform in school. …missed opportunities.