How China's decentralized health-care system is failing hundreds of millions, as diseases like SARS spread

The doctor was polite but adamant. "I am not allowed to talk about my country's public health," the physician, from one of Beijing's premier hospitals, said to a reporter arriving for a scheduled interview. "I'm sorry -- but the ministry has just informed me of this order."

Even as top Chinese officials scramble to assure the world of their new openness in facing severe acute respiratory syndrome (SARS), the doctor's refusal is a powerful reminder of how difficult it is for China's health system to change. That's not just a problem for the Chinese. It's a problem for the world. China's vast network of public hospitals, rural clinics, and private facilities is now so inequitable and inefficient that many public health professionals see the country as one of the weakest links in the global medical system. Already, more than 5 million Chinese suffer from tuberculosis, the second-highest number on the planet -- and a large number of the cases are drug-resistant. Despite China's impressive growth in gross domestic product and per-capita income, it is still plagued by diseases usually associated with much poorer countries, including rates of neonatal tetanus and hepatitis B that put it among the worst in Asia. China is also belatedly waking up to a crisis with AIDS, already estimated to affect more than 1 million people. That number could soar to 10 million to 20 million by 2010, making China one of the hardest hit countries in the world, says a recent report by the Center for Strategic & International Studies in Washington. "They don't have the infrastructure to deal with epidemics of this sort," says Bates Gill, a China expert at CSIS and co-author of the report. "This will have an increasing impact on the social and economic viability of China."

And now, SARS. The spread of the disease from southern China looks to be producing the first global epidemic in the 21st century. "As China becomes a much more mobile country, infectious diseases that hit one place can quickly become a national and international problem," says Yuanli Liu, an assistant professor of international health at Harvard University. "Out of the current crisis, we are all learning this lesson."

The larger question is what lessons the Chinese are learning. Sources say Vice-Minister Wu Yi has just pledged $55 million to fight SARS. "We are setting up epidemic prevention divisions for railway, road, and airline transport across China," says one deputy director at the Chinese Center for Disease Control and Prevention. The Chinese are also showing a new level of candor: Premier Wen Jiabao, on Apr. 13, said that although progress against SARS had been made, "the overall situation remains grave."

But a partial lifting of the veil is only a start to what's needed. In many ways, China's health system has actually slid backward since the days of Chairman Mao Zedong, when the country developed one of the world's most comprehensive health-care systems. A pillar of the network was an army of "barefoot doctors," workers trained to serve basic health-care needs. With relatively low expenditures, the mainland was able to ensure basic health for 85% of its population, slashing infant and maternal mortality rates. "China used to be regarded as one of the great success stories" in public health, says Jagadish Upadhyay, a lead project officer for health in China at the World Bank in Washington. That quickly began to change, however, when Deng Xiaoping launched economic reforms in 1979 and carried out a massive decentralization that devolved responsibility and funding of public health to the provinces, cities, and even townships.

As a result, the portion of total health care funded by Beijing has fallen from 36% in 1980 to less than 20% now. In principle, that's not bad: After all, China's total health expenditures have soared more than tenfold in that period, to $48 billion today. But tremendous inequalities have emerged. A full quarter of health-care spending goes to the wealthy areas of Beijing, Shanghai, and Jiangsu and Zhejiang provinces. The seven provinces and autonomous regions in the far west -- a vast area home to China's poorest people -- only get 5%. That inequity has ominous implications as SARS spreads to the countryside.

Huge inefficiencies also dog the system. Price limits set on basic procedures and services -- a holdover from China's more socialistic past -- force struggling clinics and hospitals to sell patients excessive amounts of pharmaceuticals, many of which are not subject to price caps. The result: Health-care costs have jumped 500% to 600% over the last 10 years. "There is massive overuse of drugs in order to subsidize the health system," says Dr. Ray Yip, a senior advisor to the UNICEF Office for China in Beijing. "This has undermined the relationship between the public and health-care workers, and created an avoidance phenomenon [where people avoid seeking medical care]. The few that do show up for treatment get squeezed."

Not only is the care available markedly worse for China's 800 million rural inhabitants and migrant workers but the vast majority of the rural population, some 90%, are without any insurance at all. Urban residents are much better served under a medical social insurance program initiated in 1998 by former Premier Zhu Rongji or through other programs. But a full 45% who are self-employed, jobless, elderly, or work for private companies are uninsured. This inability to afford care contributes to the spread of diseases and pushes families into poverty as they struggle to pay bills.

The decentralization of the overall health sector has also badly weakened China's ability to respond to national health crises. "Before, surveillance, reporting, and research could be quickly mobilized," says Harvard's Liu. "Now, this is a major challenge."

To be sure, China is taking some steps. It wants to end the practice of the same doctors prescribing and selling medicine to patients. President Hu Jintao and Premier Wen appear more attuned to the needs of the poorest. Last October, a rural cooperative medical system was launched, with the central and provincial governments pledging to match funds contributed by rural workers. That may be a challenge. "So far, there is not enough funding to meet the expenditures of the localities," admits Gao Hongbin, deputy director of the State Council's poverty alleviation agency.

For many Chinese that is no longer acceptable. Take one 23-year-old Beijing tour guide, whose business has been badly hit by the SARS scare. Like millions of other Chinese who aren't part of the national health plan, she doesn't know what she would do if she faced a medical crisis. "For now I am young, so I probably don't have to worry," she says. "But later, when I am older, I'm not so confident about how I'd cope." For China's health-care network, business as usual looks increasingly like a dangerous choice.

By Dexter Roberts in Beijing

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