Health Care for 1.3 Billion People? [WSJ Commentary]
Leave It to the Market.
By SCOTT W. ATLAS
May 1, 2006; Page A15
The economic reforms of the past two decades have been accompanied by a breakdown of the health-care system in China. Ironically, overall data shows that health and nutrition indicators have improved -- a result, no doubt, of increased prosperity. But the government seems to recognize that access to quality health care is essential to the nation's further development, and its absence is becoming a major cause of public unrest among rural populations.
The fifth plenary session of the 16th Central Committee held last October confirmed that "economic development is the top priority," but the government wants development to be "comprehensive, harmonious and sustainable."
This implies a shift in government spending, from a focus on investment to one on social programs like health and education. This philosophical shift is based on the belief that if government takes more financial responsibility for areas such as education and health care, it will add security and free up money for private consumption and support the drive to a "harmonious society."
Although complex, one fundamental change regarding China's health-care system has been the central government's shift away from financial responsibility without having an alternative system of health insurance and other backstops in place. This has shifted responsibility for funding health care to regional and local governing authorities and, in fact, to patients who are uninsured and cannot afford out-of-pocket payments.
Other factors, including misaligned incentives for providers, have also contributed to the problem. Moreover, patients in China are less equipped than many in the ability to navigate the complex issues in formulating their own health-care decisions.
The question for China is: What is the appropriate role for government in health care? In an attempt to curb over-usage of medical services by the insured, China's government has focused on cost-sharing by patients through a complex system of medical savings accounts. These accounts put patients in charge of purchasing decisions, with the idea that they will be more likely to consider price when they directly spend their own money. Empowering patients with decision-making authority and control of the health-care dollar is generally the correct direction.
Yet there is a problem when "empowerment" occurs without knowledge. China has not made sure patients have the information to make appropriate purchasing decisions. While at least some degree of information asymmetry between provider (seller) and patient (buyer) will always exist in medicine, China needs to become far more focused on information access and education of their consumers.
True empowerment means unfiltered access to information. This presents an important opportunity for China to demonstrate freedom of information that is truly essential to the health of its people -- limited, government-controlled access to health information will not suffice.
China's government should not follow the misguided path of much of the world by interfering with prices. In what was undoubtedly a well-intentioned attempt to ensure access and affordability of basic medical care, the Chinese government set prices at levels that made basic care a money-loser while higher level pharmaceutical and technology-dependent care became profitable. This has incentivized providers to tilt practices away from low-tech care to drugs and high-tech procedures.
This is not just an illustration of a mistaken method of price setting by the government; it is an illustration of the flaw in the entire logic of price-setting for medical care. Setting prices based on bureaucrats' calculations rather than on allowing a consumer-driven market to determine what is fair and worthwhile is always erroneous. It interferes with supply and demand, creates false incentives for sellers and results in shortages of supply, or rationing.
As China has forged ahead in its quest to become a world economic leader, its health-care system must undergo dramatic modernization and restructuring to meet the explosive growth in its urban centers, while not ignoring health services in rural provinces. The government can certainly play an important role in health care by: supporting a medical education system; devising a health insurance system without overregulation; enforcing hospital standards; facilitating the dissemination of accurate, unrestricted information to its citizens about health; and creating an environment which fosters innovation and facilitates the funding and delivery of health services to those without means.
But the government must also be determined to avoid repeating the mistakes of the West.
Those mistakes include sheltering patients from direct payment of health costs, overregulating health insurance, linking health insurance to employment and giving special tax treatment to health-care expenses. With the right decisions, a new health-care system can be a positive force for advancing China's position in the world economies. China has a unique opportunity to build a successful, modern health system that could once again be viewed as a model. It has a chance to accomplish what other countries have so far failed to do -- create a health-care system that works well -- and they are starting almost from anew.
It is essential, however, for China's government to encourage policies that empower patients with knowledge and with control of the money for their own health care. It must resist the temptation to artificially set the prices of health-care services by top-down pronouncements, which skew the forces of supply and demand and interfere with physician-patient decisions about what could be considered the most personal choices of all, medical care.
The temptation is to listen to health policy "experts" from the West on how important it is to prevent health care from being exposed to the free market. But China would do well to heed its own ancient proverb: Those who say it cannot be done should not interrupt the one doing it.
This time, China can show the way, not only for emerging nations, but even for the most developed countries of the world, all of whom are grappling with their own health care mistakes.
Dr. Atlas, a senior fellow at the Hoover Institution, is a professor of radiology and chief of neuroradiology at Stanford University Medical School. He is editor of "Magnetic Resonance Imaging of the Brain and Spine" (Lippincott Williams & Wilkins, 3rd edition, 2002). |
