While we’re talking about healthcare in various countries, here’s the greatest experiment yet in moving from a public to a private system. It failed.
Over the past few decades of economic reform, the Chinese healthcare system has witnessed a dramatic transformation from a government funded and managed sector, to a predominantly market based one. While marketization has helped in modernizing Chinese healthcare, it has also precipitated dramatic price increases and increasing inequality in access to healthcare. During the period of market reform, healthcare coverage diminished in urban areas and the rural social healthcare system collapsed altogether. Healthcare was increasingly paid for out of pocket by individuals on a per visit basis. In 1975, 85 percent of the rural population was covered by some form of Cooperative Medical Schemes, but by 2003 had dropped to 9.5 percent.
… during the Deng Xiaoping era of "reform and opening up", government funding to the healthcare sector changed from a system of flexible government reimbursements, to one of government grants to subsidize healthcare costs. These grants were usually below operating costs and healthcare providers were encouraged to seek their own funding. At the same time that healthcare providers were required to furnish 70-90% of their revenues from service fees. Liberal international trade policies, and the development of a domestic medical technology industry and pharmaceutical industry spurred massive growth in high-tech luxury medical care, and rent-seeking behavior by healthcare providers in issuing prescriptions and referrals. To make matters worse, governance of the healthcare sector was also decentralized exacerbating the potential for predatory behavior.
[NB: slightly amended for punctuation]
This process is currently in the process of being reversed. The article notes that the privatization of medical services was a major factor driving China’s astronomical savings rates – rather than, say, a cultural predisposition to thrift. Many of these savings go to subsidise US national debt. And it is in the face of that debt that the US will have to establish some form of more widely available public provision, if it in fact does so. Britain founded the NHS when national debt was running at around 250% of GDP so it can be done. But it’s amazing how the US has managed to get itself so far in hock to the Chinese peasantry while providing so little for its own people.
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