WORLDVIEW: Fixing the Economy Means Fixing Health Care—In China?

Extrapolating from the Kevin Bacon theory of health care and the economy one arrives at the fortune cookie corollary of international affairs, which states that any major issue is made more interesting simply by adding the phrase, ‘In China.'

For example, fixing the economy means fixing health care. It's true in the U.S. and as a piece in the current issue of Newsweek argues, equally true in China.

With an economic crisis of increasingly global proportions, the article argues China must boost its domestic consumption to maintain a desired level of economic growth. But efforts to stimulate the Chinese economy have been stymied by the country's high rate of domestic savings. The World Bank estimates the average household savings rate to be around 25 percent in China, substantially higher than most developed countries. The disparity is even more apparent when you look at net national savings rates across the G-20 (Below. Hat tip, Alejandra and New America's Asset Building Program)

Why is China too scared to spend? The answer Newsweek argues, is health care. As Cornell professor Huang Ming tells the magazine, the "‘[Chinese] save because they are frightened of getting sick.' The costs of illness can be ruinous. A better health-care system would unleash domestic spending and thereby boost employment."

Those fears are all too familiar to Americans for whom more than half of all bankruptcies and home foreclosures are caused by the high cost of health care. Ironically, 30 years after the reforms of Deng Xiaoping, China's economy looks more like the U.S. and so does its health care. Briefly:

• Health care is unaffordable. Average out-of-pocket spending in China has risen from one-fifth of total health spending in 1980 to more than half in 2005.
• Fee-for service payments at the nation's hospitals has led to overprescription and overutilization of services.(How do you say "Dartmouth Atlas" in Chinese?)
• Employer-based health coverage fails to meet the needs of the population, while the individual market provides spotty coverage at best.
• The primary care infrastructure is frayed with a particular shortage of rural doctors.

The parallels continue and the situation described in China seems as true for Brooklyn as it is for Beijing. Whether you subscribe to the economic tenets of Adam Smith or the political theories of Mao Zedong, succeeding in today's modern, integrated global economy requires an equally modern integrated system for delivering affordable, high-quality health care. The wealth of nations is increasingly dependent on the health of nations—in China, the U.S. and the world.