You Probably Thought Communist Health Care is Free
The biggest obstacle to fixing health care in China is public hospitals that see reform as a threat to their for-profit status—and to the income of both doctors and administrators.
Public hospitals, historically the backbone of treatment in China because of the lack of primary-care facilities, have fought the overhaul. They benefit from the current system in which they are allowed to make up for low government-set prices for beds, nursing care, operations and other services by reaping profits from the sale of drugs and diagnostic tests.
The system has led to massive over prescription of expensive drugs, and needless testing.
Full article by Shirley S. Wang on reforms at public hospitals in The Wall Street Journal.
Aha!
A perfect example of the effects of government rigging an industry.
That reminds me of privatization in Russia 20 years ago. Factories were subsidized during the transition. One company began exporting titanium shovels. Who would want a titanium shovel? Cronies would. The raw materials were subsidized, the only customers were cronies who took the exported titanium and sold them for scrap.
What really struck me was that in communist China, where health spending is only 5% of GDP, the government only accounts for 28% of that and has a goal of increasing its share to 30%.
In the U.S., government’s share is over half and the government is still not satisfied!
What’s also interesting, but unsurprising, is how government’s goal of restraining costs is failing. E.g., hospitals use even more expensive drugs when the standard drugs are put on a list where the government forces discounts.
Maybe we would run a wager of how much health costs will be as a share of GDP in China in ten years….. Maybe as high a share as in the US?