Perverse Incentives in the Chinese Health System and Assessment of the April 2009 Reform
Since 1978, China has been primarily market-focused in its provision of health care and social services. The market-driven health care system has been characterized by perverse incentives for individual providers, patients, and hospitals that are inducing improper provision of care: overprescription of pharmaceuticals and high-tech testing, lack of effective primary care and gatekeeping, and competition for patients instead of referral. The national health care reform document that was made public in April 2009 recognizes this failure of the market in health care in China. The document suggests potential policies for improvement on the current system that are focused primarily on a targeted increase in government funding and an increased, changing role for the government. We assess the potential of this national health care reform to achieve the stated goals, and conclude that the reform as designed is necessary but insufficient. For the reform to meet its goals, the promised increase in funding should be accompanied by improved data collection, regional piloting, and a strong regulatory and purchasing role for the government in aligning incentives for individual and institutional payers, providers, and patients.
Asia health policy program hiring research assistants
Karen Eggleston, Director of the Asia Health Policy Program, seeks to hire two research assistants at the advanced undergraduate or graduate social science level to assist with several projects, including an international comparative study of government financing for health service provision and provider payment. The RA should have a solid background in microeconomics; some background in health economics and comparative health policy; and near-native fluency in English. Knowledge of another European or Asian language (especially Chinese, Japanese, or Korean) would be an advantage. Ideally the RA would be a student whose own studies are related to the topic of health care financing and payment incentives in developing and/or transitional economies, or more generally in public economics, the government sector, and social protection policies. The work would be for autumn quarter, with possibility of extension to winter quarter. Compensation is competitive and commensurate with RA experience. Please send CV and brief statement of interest and related qualifications to Karen Eggleston at karene@stanford.edu by September 24th.
Patient Preferences, Concerns, and Satisfaction with Providers before the Chinese Urban Health System Reform: A Social Groups Analysis
Many Chinese express dissatisfaction with their healthcare system with the popular phrase Kan bing nan, kan bing gui (“medical treatment is difficult to access and expensive”). Critics have cited inefficiencies in delivery and poor quality of services. Determining the pattern of patient satisfaction with health services in China—and the causes of patient dissatisfaction—may help to improve health care not only in China but in countries in similar predicaments throughout the world.
Using data from a sample of 5,036 residents from 17 provinces collected in a 2008 household survey by the National Bureau of Statistics of China, we analyze the patterns of patient preferences, concerns, and satisfaction among six social groups, classified by socioeconomic status including education level, income, and type of employment.
From regression results we conclude that the gap between what patients predict their service will entail and what they perceive the service actually did entail is the key determinant of lower satisfaction, especially for patients who care most about the quality of service and patients with higher social positions. Patients from lower social groups are more concerned with price and the attitudes of medical professionals, and generally express higher satisfaction with their health care experiences than their wealthier peers, despite receiving lower-level services. Patients with higher social positions are more concerned with the technical competence and quality of providers, and struggle with what they perceive as a lack of freedom to purchase and receive their desired services, as well as long waiting times and poor physician-patient interactions. These patterns of patient satisfaction appear to be the consequence of China’s unreliable basic delivery system, lack of advanced health service supply, and distorted health market. We discuss how what we have learned about patients’ dissatisfaction can be used to restructure the delivery system to better meet and shape patients’ needs.
Health Reform in the Pacific: Comparing Approaches to Universal Coverage in the Philippines and the State of Hawaii
The Republic of the Philippines began on the path to universal coverage with the passage of the National Health Insurance Act of 1995 (Republic Act 7875) which established the Philippine Health Insurance Corporation (PhilHealth) . Building on the Philippine Medicare program which began in 1971, PhilHealth has expanded coverage to more than 80% of the population with basic benefits, but accounts for only 10% of total health financing—wide population coverage with thin public benefits. An extensive system of private insurance provides additional benefits for high-income Filipino households. While the Philippines is pursuing a public insurance approach with private add-ons, Hawaii has mandated private employment-based coverage through the Pre-paid Health Care Act of 1974 and operates under a Congressionally granted ERISA exemption as well as an exemption from the Affordable Care Act of 2010. Combining the employer mandate with generous Medicaid and SCHIP programs, Hawaii has achieved a coverage rate exceeding 90% of the resident population with extensive benefit packages. The presenter will provide an overview of the two systems and present original research on the labor market effects and public insurance effects of the Hawaii system.
Daniel and Nancy Okimoto Conference Room
Catastrophic Payments and Impoverishment Due to Out-of-Pocket Health Spending: The Effects of Recent Health Sector Reforms in India
Out-of-pocket payments are the principal source of health care finance in most Asian countries, and India is no exception. This fact has important consequences for household living standards. In this paper the author explores significant changes in the 1990s and early 2000s that appear to have occurred as a result of out-of-pocket spending on health care in 16 Indian states. Using data from the National Sample Survey on consumption expenditure undertaken in 1993–94 and 2004–05, the author measures catastrophic payments and impoverishment due to out-of-pocket payments for health care. Considerable data on the magnitude, distribution and economic consequences of out-of-pocket payments in India are provided; when compared over the study period, these indicate that new policies have significantly increased both catastrophic expenditure and impoverishment.
Published in Economic and Political Weekly, November 19, 2011 Vol. XLVI No. 47, pp. 63 - 70
(Amy) Zhe Zhang
Shorenstein APARC
Stanford University
Encina Hall E301
Stanford, CA 94305-6055
Zhe Zhang is an assistant professor of organization management at the School of Management, Xi'an Jiaotong University, China, where she also received her PhD. Her research focuses on public-private partnerships, corporate governance, and corporate social responsibility. She has published in the Journal of High Technology Management Research, International Journal of Health Care Finance & Economics, Management and Organization Review, and the International Journal of Networking and Virtual Organizations.
Patient Trust in Physicians in China: A Survey of Beijing
The Chinese health care system has experienced profound changes like retrenchment of state financial support in the past decades. These changes have prompted the Chinese media and some academics to suggest that patients have a relatively low level of trust in physicians in today's China. In this colloquium, Dr. Tam reports the results of his survey of patient trust in physicians in Beijing's public hospitals. The survey was conducted by Horizon Research Group between November 2009 and January 2010, and 434 patients were interviewed.
The survey asked the respondents their degree of trust regarding the following three dimensions: physician agency, competence, and information provision. The survey finds a relatively high level of patient trust in physicians in Beijing public hospitals. Additionally, the survey data highlight three major determinants of patient trust in physicians, namely exposure to negative media reports about physicians and hospitals; the patient's self-assessed health status; and the patient’s level of education and income.
Waikeung Tam received his Ph.D. in political science at the University of Chicago in 2009. He is currently a Research Fellow at the LKY School of Public Policy at the National University of Singapore. His research focuses on public policy, political development, law and society, with special reference to China and Hong Kong. His research has been published in China Review, Asian Perspective, Journal of Contemporary Asia, and Law & Social Inquiry.
Daniel and Nancy Okimoto Conference Room
Health reform spans the Pacific
In early spring, historic health reform passes, extending insurance to millions of uninsured. Despite problems with workplace-based coverage, controversy over government subsidies for insurance premiums, and disparities across a large and diverse nation, dramatic shift to a single-payer system was seen as impractical.
Instead, reforms focus on expanding current social insurance programs as well as new initiatives to cover the uninsured, improve quality, and control spending. They provide a basic floor, subsidized for the poorest, but preserve consumer freedom to choose in health care. No government body dictates choice of doctor or hospital; investor-owned and private not-for-profits compete alongside government-run providers like community health centers and rural hospitals.
Left to be addressed in later phases are the difficult questions of how to slow the relentless pace of health care spending increases -- driven in part by technological change and population aging, but also perverse incentives embedded in fee-for-service payment and fragmented delivery. Pushed through despite multiple crises confronting the leadership, the final landmark health reform works in conjunction with measures enacted as part of the fiscal stimulus package to strengthen the healthcare system. Some provisions take effect immediately; others will take many years to unfold.
President Obama’s triumph on his top domestic priority? Actually, there were no votes along partisan lines, no controversy over abortion. I am describing health reform in China, which was announced almost exactly a year ago.
We do not hear much about the parallels in the US and Chinese social policy. But we cannot fully understand each other if we ignore these commonalities. We do not hear much about those who, in both societies, have been rendered destitute merely because they or a family member became sick or injured in a system with a social safety net full of gaping holes.
It will surprise many Americans to know that government financing as a share of total health spending was lower in socialist China over the last decade than in the United States. Now China has pledged about US$124 billion over 3 years to expand basic health insurance, strengthen public health and primary care, and reform public hospitals.
In China, the injustice of differential access to life-saving healthcare had sparked cases of social unrest. The April 2009 reform announcement was the culmination of years of post-SARS (2003) soul searching for a healthcare system befitting China’s dynamically transforming society. Special interests block change. (Sound familiar?) The CPC Central Committee and the State Council acknowledge that successful health reform will be “an arduous and long-term task”.
If the US can pass sweeping health reform despite an unprecedented financial crisis, and China can envision universal health coverage for 1.3 billion while “getting old before getting rich,” then together we should be able to look past our many differences to focus on our common interests. Our two proud nations must work together to confront numerous challenges, such as upholding regional stability (e.g. on the Korean peninsula); redressing global economic imbalances (increasing health insurance can help spur China towards more domestic consumption); and investing in “green tech” for a warming planet and “grey tech” for an aging society.
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When searching for insights about how other countries deal with similar challenges, Americans often look to Europe and Canada. Rarer is the comparison to counterparts across the Pacific. Yet President Obama has clearly articulated the vision of the US as a Pacific Nation, and there are developments around the Pacific Rim that merit consideration in our debates.
Australia pioneered cost-effectiveness in health care purchasing, while the US continues to debate whether cost should be part of comparative effectiveness research and policy decisions.
Both Japan and South Korea, like Germany, have enacted long term care insurance to smooth the transition to an aging society. Their experiences might be fruitful as we implement the first national government-run long-term care insurance program, a little-heralded component of the newly passed legislation (and a fitting legacy of Senator Edward Kennedy).
Japan and Singapore provide universal coverage to older populations than ours with health systems that, although surprisingly different from each other in terms of public financing and role of market forces, both ranked among the best in the world -- and far higher than the US -- in the World Health Organization’s ranking of health systems in the year 2000. Although one may quibble with the ranking, it is indisputable that Japan spends a much smaller share of GDP on healthcare than the US does, despite being one of the oldest and longest-lived societies in the history of the world and having (like the US) a fee-for-service payment system.
Japan and South Korea are also democracies, where health policies occasionally engender heated debates. In South Korea, physicians went on nationwide strike three times to oppose the separation of prescribing from dispensing. Although Japan’s incremental reforms rarely spur such drama, the passions aroused by end-of-life care – embodied in the bizarre “death panels” controversy in the US health reform debate of 2009 – has its counterpart in the bitter nickname for Japan’s separate insurance plan for the oldest old: “hurry-up-and-die” insurance.
Yet Japan, Singapore, and Hong Kong all offer health systems that provide reasonable risk protection and quality of care for populations older than ours, with a diverse range of government and market roles in financing and delivery, while spending far less per capita than the US.
No system has all the answers. But the US and our neighbors across the vast Pacific have a common interest in sharing what we’ve found that works for health reform. Despite divergence in our political and economic systems, we all value long, healthy lives for ourselves and our children -- and we’re united in health reforms that try to further that goal.