WORLDVIEW: We'll Have Health Care for 1.3 Billion, Please

You may have seen reports last week (New York Times, Wall Street Journal, among others) that China is planning to dedicate $123 billion by 2011 to covering its 1.3 billion people. Analysts saw it as both a move to protect and improve health care in both rural and urban China as well as a stimulus to domestic spending in a country with a high savings rate. One reason the Chinese save: concern about high out-of-pocket health costs.

The state news agency Xinhua reported. "Growing public criticism of soaring medical fees, a lack of access to affordable medical services, poor doctor-patient relationship and low medical insurance coverage compelled the government to launch the new round of reforms." Sound familiar? Alas, in China the health insurance subsidies cost around $17 per person. The goal is to cover 90 percent of the population by 2011, and get that last 10 percent by 2020. (We've read several articles about the plan but aren't sure who the uncovered 10 percent are.)

Today, the International Herald Tribune has an article that starts out being about Euro-bashing at at the World Economic Forum in Davos, Switzerland but then analyzes how the Western Eureopean social welfare system may turn out to be a model for both China and the U.S.

The IHT argued that it's no coincidence that this change is occurring simultaneously in America and China:

In the United States, the crisis exposed an unsustainable credit culture and undid a highly sophisticated financial system that accounted for 8 percent of GDP and now needs rebuilding from scratch.

In China, where 65 million jobs have been lost in recent years, the export-led model of the past two decades has faltered, in part because America's insatiable demand for Chinese goods has cooled. With Chinese families committed to saving for retirement, health care and education, domestic consumption in China is stuck at 35 percent, half the share in the United States.

"The crisis has accelerated things and made domestic demand even more of a priority," said Victor Chu, chairman of First Eastern Investment Group in Hong Kong, the No. 1 direct investment group in China. "Therefore China is strengthening and deepening the social safety net."

As Pascal Lamy, director general of the World Trade Organization and another Davos regular, told the IHT, "It's a cultural revolution."