China's Health Care Reform Could Save Consumers $1.5 Billion

Chinese man riding bike and smoking

China announced wide-sweeping health care reforms this week, focusing on building more hospitals, reducing the price of common drugs, banning smoking from public spaces, and increasing state insurance subsidies.

China--despite heavy reliance on government funding for social programs--has developed a curiously excessive reliance on the sales of drugs to fund hospitals, a feature of its health care system that doesn't quite sit right with the nation's overarching philosophy--or with its citizens.

"I think that no matter what kind of hospital, you should rely on medical technology and improved services to gain income," said Sun Zhigang, the National Development and Reform Commission's deputy director.

The new reforms will lead to a 21% reduction in antibiotics prices, and a 60% increase in subsidies for insurance.

And anti-smoking campaigns have been picking up steam as well. The country piloted several city-specific smoking bans over the last two years and this year marks the first time that an actual smoking ban proposal was made in the government's newly formed five-year plan. Over one million people die every year in China due to tobacco-related causes.

"China has a double whammy," anti-smoking champion and Senior Advisor at the World Lung Foundation in Hong Kong, Judith Mackay, tells Fast Company. "Not only are foreign companies marketing tobacco aggressively, but it's a state industry at the heart of the government."

An area where China has shined with regard to its health care system is in times of crises, says Mackay. "If you have something like SARS, Beijing built a hospital in a week. They have the ability to move very fast when there's a crisis. But chronic diseases aren't seen as an emergency."

"China is now lagging behind its neighbors," says Mackay. "Hong Kong has the lowest smoking rate anywhere in the world, so what we've shown is that it can be done in a Chinese population. When Hong Kong banned smoking, the restaurants didn't suffer economically. Income went up, not down!"

It's that kind of economic data, says Mackay, that will ultimately push China to drive home anti-smoking messages and implement full-blown bans in public spaces.

But the issue is far from being just about smoking. Only 1.2% of the country's GDP is dedicated to health care, compared to 4% for education. And as the country's middle class grows and health awareness grows, as Fast Company has previously detailed, demand for a fair health care system that is consistent with the rest of the country's policies will increase.

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[Image: Flickr user ernop]

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