Since the shock of SARS in 2003, the government of China has invested heavily in public health programmes to strengthen control of infectious diseases, WHO China representative, Henk Bekedam , tells Nick Young in the following interview. However, he cautions, the health system as a whole still has grave, structural problems; Rural Cooperative Medical Schemes that are now being rolled out are unlikely to guarantee universal access to basic services; and until the government decides what its role in the health sector should be it will find it hard to create efficient and effective regulatory frameworks for quality and cost control.

You’ve been leading WHO’s efforts in China for four years. Before you started there had been several quite tough, international critiques of China’s health system—from the World Bank, for example, in a 1997 report, and then in 2000 WHO had placed China very low in a comparative, global ranking of health equity. Given that background, I want to start by asking: across the whole set of issues identified in international critiques, have there been any major breakthroughs during your tenure? Where do you see the points of light?

When I came in August 2002, we made an assessment of health issues in China and came to the simple conclusion that health was not on the agenda of senior leaders. When I read the [annual work report] speech of [then premier] Zhu Rongji in March 2003, the text was about 42 pages and only on page 32 did the word “health” first appear. Later on there were just a few references to health, AIDS and tuberculosis etc. You could see very clearly that health was not on the agenda. Yet when I and my Director General met together with the new premier, Wen Jiabao, in April 2004, he proudly mentioned that 6% of the characters in his March 2004 [annual work report] speech were about health! Another time when I met the premier to talk about Avian influenza I was saying to him, politely of course, that the government needs to get far more engaged, especially on the surveillance system: this is the part that they need to invest, no one else will do it. He said to me, “Before SARS we knew one abbreviation: GDP. Since SARS, we also know another: CDC [Centre for Disease Control].” This was a very good way of his symbolising that even at his level he saw it was no longer just about economic development, there were also issues in health that need to be on the agenda. That, I think, has been changed through SARS.

We, with other health partners in the UN and bilaterals, had set ourselves a very modest goal: if we could get public health on the agenda within 3-4 years, we would have done a good job. But with SARS it became quite quickly accepted that not all was well, and things have changed a lot on public health programmes. With SARS, okay they were late, but when they did it they did a very good job and we couldn’t be in a better country to work. Avian influenza: politically, they are absolutely motivated to do a good job. I still have many comments about how integration could be done better and about capacity problems, but it’s not about political commitment any more. HIV/AIDS: they were in a denial phase in 2002. Our UN report, AIDS: China’s Titanic Peril was saying “Look here, China has a problem and please face it,” but in 2002 the response was only “Well, we might have a problem but we don’t agree with your figures,” and there was no action. Madame Wu Yi [who was appointed as Health Minister during the SARS crisis, and was later promoted to vice premier], after SARS, said “Okay I’ve done SARS, I’m ready for something else,” and she picked on AIDS. We all know that from Fall 2003 the AIDS epidemic was picked up. Over the last three years from a policy point of view China has done very well. They have many problems of scaling up and quality of programmes but that’s another issue. They’ve moved from denial to—at least at central level—being willing and having all the policies in place, ready to reach out to marginalised groups. At a policy level China has gone all the way, although there are many challenges still in implementation in the prefectures and counties. Tuberculosis: case detection rates were extremely low, around 30% in 2002. Within a very short period of time they are up to 70%. There are issues about quality and if all that data is exactly right, but the level of commitment and the level of resources is enormous. I think you’re talking about tenfold budget increases since 2002 in certain areas. So in these areas we really think things have greatly improved.

But where China still has not made up its mind is what actually is the role of government in health. Obviously their answer is that in public health they have to do more, but they still haven’t sorted out what their overall role is. If you look at the current expenditures, China as a government is still spending only 16 to 17 per cent maximum of the total health expenditures. Most of it is coming from people’s pockets—around 55 per cent—and the rest is coming from insurance.

China’s government is still not well engaged in health. Even in the US, 44% of health expenditures comes from the government. In China, from a socialist structure where they were taking care of everybody, they have swung too far towards government not doing enough. It fitted in their philosophy. Everything they have done since the late 70s was in the use of markets. The economic development they’ve done well, no doubt about that, everyone is amazed what the progress has been. But if you look at health they started treating it also classically as a market. And they have all the market failures you can think of. Market failures are around the fact that health is not a normal market commodity. There are many areas where it doesn’t fit. In a surveillance system you can’t sell it in the market, you can’t go on the street and say “Look here, I’m doing surveillance, give me money!” No-one gives money for that. On safety issues, this is where the government needs to act. The information gap is so huge in the health area, and therefore it’s not a normal business. If you and I want to start a business in chairs, everybody can judge if the chairs are good and if they like the colour, etc, but if you look at the quality of health care that is being delivered, nobody knows! The information gap is huge so the government needs to come in to protect people.

Now, because of the limited resources the government puts in, the major aim for health care facilities and health care workers is to make money. And I can’t blame them. You can see at the moment in the media that people are angry with doctors. But they have to feed their families and they don’t get it from the government. Health care workers in the clinical field get five to 20 per cent maximum of their salary from the government, so 80 to 95 per cent of their salary has to come from the patient. They have to charge patients and only those who can pay can have access to services. That’s the remaining challenge that China has. They don’t invest enough, the system is very much weakened because of wrong incentives within the system. And as a result people don’t have access to services. The [Ministry of Public Health] national health survey shows that 40 per cent of people in rural areas, just among the ones who were able to go to doctors, when they were told they had to go to hospital, 40 per cent of them said “No I can’t,” and finance was the main reason. Even in urban areas it was around 35 per cent. And these were the ones who went to the first line doctor, and I am sure that many were unable to go even to the first line doctor. So roughly 50 per cent of the people in China cannot afford to go to the hospital. That’s not very good.

The issue of access to health services has gradually been accepted as the major key. In the national health conference in January the minister said access to health services is a major problem. But what we haven’t seen is a lot of movement in reforming the sector. With public health programmes, they’ve pumped in money, they’ve said that it is important and because it was important everybody was mobilised and things have improved. But if you talk about health system issues you need to do an awful lot more to start changing it. Now, they have accepted access as a problem but we had not seen much movement in this area until the National People’s Congress this year [March].

We were wondering what was happening with this emerging agenda because we have a lot of contact with people in the ministry, universities, think tanks like the State Development Research Centre. There’s not an issue any more about diagnostics, what the problems are, but we saw very little movement from the government in thinking about solutions. What was very interesting was that the members of the National People’s Congress [NPC] started hotly debating health. And a few things have changed since then.

First of all, they have now established, at State Council level, a committee that will be looking at health sector reform. It will be led by NDRC [the National Development and Reform Commission], the old planning commission, and the Ministry of Health, together with 13 other ministries. (By the way, for your information, there are 17 ministries that have responsibilities for public health, that’s another problem, an institutional issue). So they have now established this at State Council level and they have asked the Ministry of Health, they said, “Look here, you have to brief us about the feasibility of moving towards universal access to a basic package of basic services that people are all assured access to without having to look in their pocket first.” That was the most encouraging thing we have heard so far.

In my view the government has accepted it needs to start balancing economic development with social development. In education they moved forward. The NPC in 2006, if you look at the education part, it looks good. They say “Education for all, we are spending out 2.8 per cent of GDP, we are ready to spend 4.5 per cent of GDP, and we will make sure that for people who can’t afford to pay, we will be paying of it, and we will make sure that everyone in China can afford to have nine years of basic education and everyone can access it.” The health sector: very little to show. They were talking about the Rural Cooperative Medical Schemes they introduced in 2002. They were talking about the community health services they wanted to improve but they didn’t talk about how it can be financed and how they will do it. They were talking about the pharmaceutical sector—and many of the high expenditures were blamed on the drugs. They say were saying “We need to get the price of the drugs down, that will be the key in making people able to afford services.” And we said fairly clearly: “Look here, don’t do that. We know from the European reform that if you start tampering with the price, the provider will answer with volume. You bring the price down, the volume will go up. If you halve the gain for the provider, they will prescribe twice as much: especially in China where the quality of services is not being monitored, that’s a very easy mechanism.” We were disappointed in the sense that we felt this will not help health reform. But when they started talking about universal access we said “Okay, now you are talking about a tool that can really start changing things.”

In our view, what needs to be done is that you need to undermine this relationship between the patient and the provider being that, if you are the provider, the more you prescribe the more money you get out of me, the more diagnostic tests you do on me, the more money you will get out of me. If you do not start changing the way that providers are paid, you will not improve access to health services.

The other aspect is that you need to move more towards pre-paid mechanisms and pooling mechanisms.

The Rural Cooperative Medical Schemes have major problems. They are based on reimbursement and that means you have to come up with the cash. But the poor do not have cash. The reimbursement levels are currently around 30 per cent. Make it 40 per cent, make it even 50 per cent. The poor cannot afford 50 to 70 per cent of their medical bills. The scheme focuses only on catastrophic ailments. Catastrophic ailments on a population basis usually affect only three to four per cent maximum, and they end up in hospital. That means that 95% of people will not benefit from the scheme on an annual basis. If the poor don’t benefit in year one, if they don’t benefit in year two, I’m sure in year three they will say: “I’m not going to join the scheme, I’ve got a very healthy family, why should I put my ten RMB on the table for each family member, we have a healthy family.” Then you get what is called “adverse selection:” you end up with [schemes mainly joined only by] those who have been going to the hospital, and you make the schemes very expensive. Because that’s the other element of the RCMS, it’s a voluntary scheme, it’s not a compulsory scheme.

Again, a lesson from Europe is the way that Europe started dealing with this issue of access. First of all they made it [universal access] the major objective; and they made sure they started moving to pre-payment, pooling and, if they had an insurance scheme (because sometimes its done through taxpayers) they made it compulsory. And in the package, whatever the government gave through the tax system or whatever came from insurance, they started off with making sure that people had access to essential services. And that’s the reason why now in Europe everybody nearly everyone has access to services, not only basic services but general services.

Now, we still believe that there might be opportunities [for the RCMS in China] if you look at universal access, if that becomes a far more accepted modality you can possibly start changing the schemes. You can make the schemes not only look at catastrophic ailments but at a package of catastrophic ailments and essential services. If some of the funds generated from that are put in the schemes they might work. But you are also going to have to make sure that with an insurance scheme you start undermining the fact that there is a reimbursement part. Then you do it a different way around: you’re going to give the provider a certain amount of money to look after the population. And then you will be beginning to undermine the fact that the provider will constantly prescribe more or diagnose more in order to get a better salary.

Let me try to summarise some of your main points. SARS was a wake-up call and the government did wake up. But outside of surveillance and preventive public health programmes, it doesn’t really know what to do. So it has backed the RCMS as being where they think the future lies; but unfortunately that system is not really working at the moment. But can I ask: what’s the level of debate within government? In your picture of the decline of the health services you seemed to be saying that it was ideological—the belief that the market would take care of it—rather than mere neglect. Within this committee that’s been established under the State Council, the academics, the medical research institutes, the Development Research Centre . . . how do you take the temperature of those groups? Is there debate in them between people who believe the market is the way to go and people who belief in a more social welfare system? Or are they scratching their heads?

There is a debate. Because obviously the market is doing well: look out the window! [at the Beijing skyline]. So people who believe in the market will constantly argue that the market is a solution. The market is a solution for many things. So there are groups who say “Let’s sell the hospitals, let’s privatise them, then at least on the government budget we won’t have an expenditure.” People like myself, I believe that in China you cannot go back to a national health service for the whole country, it’s impossible. But it also not true that privatisation is the solution. What we strongly believe is that at this stage what’s important is first to start agreeing what is the government role in health: you have to look at what needs to be the kind of investment, what is necessary on the regulatory side. China as a government is not doing their part. It is not regulating quality. There is nobody monitoring what you should prescribe for what . . .

And presumably if government doesn’t really have the capacity to set and monitor standards, then privatisation would very dangerous?

I am a strong believer that you have to have a regulatory system even when health care is only provided by government; in a privatised system for sure you are right that if you don’t have a regulatory mechanism in place it becomes worse. There are a few provinces where pharmaceutical companies own hospitals. There’s a conflict of interest. In any regulatory system outside China you would say “That’s not possible: you cannot have a pharmaceutical industry having a hospital because for sure whatever drugs are produced are going to be prescribed over there.” In China it can happen. That’s the part where China needs to do its bit. It needs to regulate quality, it needs to regulate ownership and some of the things around it. What we strongly believe is that as a government you need to have a much clearer answer as to what your role should be, and then put it out as a vision; and then you move step by step, you still need to improve the services.

I also believe that not one policy fits all in China, the circumstances in the coastal areas are drastically different than in the poorer western counties or some of the central provinces—but to at least be clear about the government role is very important. And it’s even more important in China because you have 17 ministries somehow involved in public health. We see now that ministries—with all good intentions, I would really like to stress that, with all good intentions—they go this way, but the other ministry goes that way, and another one goes this way! We even find that within ministries they are not clear which direction to go. So this part needs to be clarified, and after you have clarified that, other pieces will fit in. And of course within those other pieces there will be a private sector. At the moment, five per cent of the hospitals will be privatised, and if you clarify the government’s role very clearly perhaps it would make sense to privatise a few more. But if you haven’t clarified the government’s role we think it is extremely dangerous to start doing this. And if you haven’t got mechanisms in place to start controlling costs you are in difficulties, especially if you’re going to privatise.

Cost control is a concern for every government. The way normally governments deal with cost control is looking at their own expenditure and making it more tight where they put their funds; or you do it with insurance mechanisms, you say, ok, we’re going to reimburse only those drugs that are cost effective, we don’t allow that you always use the latest fancy pants thing that has not yet proved it is any better than other drugs. These things are very normal for governments to do, but in China you have a problem. Look at the government expenditure: it’s only 16-17 per cent [of total health expenditure]. Look at insurance: it’s maximum 30 per cent of the total expenditure, most likely a bit less. So for about 40 per cent of expenditure you have tools and mechanisms to control the costs. But the 50 to 60 per cent that comes from people’s pockets, you do not have tools—at the end of the day the provider says “I gave you all those drugs, you have to pay me”—there are no mechanisms to control. That’s the part where China has major difficulties. China is now spending 6 per cent of GDP [on health] and it has no tools and mechanisms to actually control the costs, and that’s very troublesome.

Fortunately some of the solutions are the same. At the moment that you start engaging as a government more you increase your government expenditure and you make sure it reaches where it’s most needed—around public goods, the poor—and you start increasing the insurance share. Then you will not only be increasing access to services for the poor and people in general but you will also get more mechanisms to start controlling costs. These things will help on both sides. That’s the way that China needs to go.

We see a debate that is moving in that direction but, just as your question was indicating, of course those market people are still there and they will constantly raise it. We believe that therefore it needs to be at very senior level, the president and the premier need to outline their vision. And then you move forward. And then, no problem: within the health sector there is a place for the market, but when the government is properly regulating the market, or at least has clarified its own role. [Joseph] Stiglitz came over here earlier this year, he said the same, and he comes from a different corner. He said the private sector needs strong government. In the health sector you need a strong government. That doesn’t mean the government has to do everything or has to pay for everything, but it needs to be strongly there to do its bit.

I had a very interesting discussion with health insurance companies, a few from the US and elsewhere, they see a market over here. But they came to me and said “For us it’s so difficult because the government is not doing their part. We get bills we have to pay but the quality is appalling. There are things being prescribed that you shouldn’t accept. As private insurance companies we need boundaries, there need to be boundaries set by government.”

Who is the senior leadership really going to listen to on these issues? Are there, within the Chinese academic, research and policy community, coherent and strong voices putting the kind of case that you have been making?

I am now quite happy that they have institutionally at least created a clearer mechanism: this committee at State Council level, I really think it is institutionally the right thing to do. In my view that was a very clear signal that senior leaders are asking for solutions. They’re fed up hearing about the problems and now they’re asking for solutions.

WHO spoke about an essential package and about access to services as major goals two and a half years ago. One time I said in an interview—I can’t remember if it was the BBC or CNN, but pretty public anyway—I said the public health system in China has collapsed. Not something the government of China would like to hear, but the premier took it on and he said “The public health system in rural areas has collapsed,” he said it three or four weeks later. So there has been a kind of acknowledgment that certain things are not right. Initially what happened—and understandably, because China had to show to the whole world that they were able to deal with SARS, China had to show that they were on top of avian influenza and that they were not endangering others—so there was a lot of investment in public health programmes. In the debate about the overall role of government, you have some universities still promoting far more the private sector, but you have a few other ones who are saying the government needs to do more. I think all of those voices need to be heard—and it will not be either or—but you need to start at least agreeing what government needs to do and then all the other bits and pieces will fall in place, and in ten years you will be able to do quite a lot. You cannot fix this system in a few years time. I hope that in five years it will start looking better, but it might take ten years before things start improving. We see now there’s so much energy around these issue, there’s a lot of discussion. Last year, after the DRC report [Development Research Centre; click here [1] to see China Development Brief’s summary], there was a lot of energy around that. This debate will continue until senior leaders say okay, this is the way forward. And that vision needs to be developed and it needs to happen soon, because if you have a lot of energy, and it goes in the wrong directions, or in no clear direction, that would be very sad.