First there were the “barefoot doctors” of the Mao period. They were minimally trained cadres who brought basic health practices to largely illiterate rural masses. Then, as the country opened itself to a State controlled market economy and tens of millions now literate people headed for jobs in the cities, health care was set loose to fend for itself—market style. Hospitals and doctors, with minimal support from the State figured out how to stay open and make a living by charging patients directly, both in the open through highly profitable pharmaceutical markups and under the table payments/gifts to doctors. There were many unintended consequences from this arrangement.
Now, in a third reform announced in 2013, the country has decided to rely on a health insurance mechanism to address the distortions created by reliance on the market. In just a few years, almost everyone in China has gotten at least some form of health insurance protection though one of three schemes. The goals of the current reform include shifting the location of care from overreliance on big tertiary care hospitals to a community based primary care system; improving the quality of the health workforce; reframing delivery into patient centered care, reducing out of pocket expenses through expanded insurance coverage, adopting “health in all policies” to improve population health and strengthening the medical device and pharmaceutical industries.
One example helps make several of the key points about the current health reform, a large community health center in Beijing, pictured above. Western and traditional Chinese medicine are practiced side by side here, which is rare. The center does about 600 outpatient visits a day and has 60 long term “rehabilitation” beds that are mostly end of life care for severely ill patients. This community health center, like many others in China, serves an older population. They use the Center to get their chronic disease medications more conveniently and at lower cost than going to the tertiary care hospital. They also make heavy use of the traditional Chinese medicine doctors and therapies. However, when many of these older residents are ill, they go directly to the big hospital. Unlike community health centers in virtually all the other countries I have visited there are very modest services for younger people and very little maternity and infant care. Routine prenatal and infant care, I was told, is at the big hospitals.
In China, a very high percent of the people regularly bypass the community health centers and smaller hospitals to go directly to the tertiary care hospital to get their care, even though that often means long waits for access, higher out of pocket costs and very brief physician encounters. Changing the pattern is a major objective of the current reform. All the policy makers I met talked about remaking community health centers into models of primary care and population health. Some of the academics and most of the doctors I have met so far are quite skeptical that the hospitals and patients will change their behavior.
Two days before I visited the Center, a major pricing reform was announced for all Beijing health providers. It is a major pilot program for the reforms. Signs describing the new prices were posted all over the Center. Hospitals and health centers in Beijing were ordered to stop marking up the price of medications. A new fee schedule was put in place under which patients will pay lower prices for medicine and most tests but higher prices for physician visits. There are two main reasons for the change. During the free market reform period when public money for hospitals and doctors was limited they financed themselves, in part, by the profits they made marking up medicines and tests. The incentive, of course, is to prescribe more and higher priced medicines and tests; and they did. By ending markups the government hopes to achieve more rational use of medicines. (40% of National Health expenditures are for medicine now.) The higher physician fees have two goals: helping make up for the losses the hospitals will take on medications and increasing respect for physicians as skilled professionals by having patients pay them more. (The most senior policy advisor I met said that the change won’t affect patients directly because insurance coverage for doctors’ fees will be “aligned” with the new prices. No one else said that has happened yet.)
According to most of the experts I have met and the doctors I interviewed at the Community Health Center, doctors, especially at the community health centers and district hospitals are held in low respect. Sometimes patients are disappointed that they don’t get the “cure” they paid for and blame the doctor for treatment failure. Sometimes they see the doctors and centers as just grabbing as much money from them as they can. Finally, patients know the doctors at the lower levels are not as well trained as the specialists at the tertiary care hospital. As one of the students at my presentation said: Every time I go to the Community Health Center I get referred to the specialist, so now I just go directly to the tertiary hospital. Why raising fees, without changing other aspects of the patient/doctor relationship will address issues of respect is still a mystery to me.

A note on Beijing.
Just because our hotel was tucked between the AstonMartin and Ferrari/Maserati dealers is no reason to think that Beijing is in an economic boom in which at least some people are getting very rich. We saw no significant signs of poverty or anything that resembled a “slum” in travels throughout the city. But many of the people we talked with spoke of rising income inequality in Beijing. Central Beijing looks a lot like Mid-town Manhattan, except the main streets here are wider. EVERY western retail fashion brand is present on a huge scale, especially the luxury lines. The monuments of ancient China like the Forbidden City and the spectacular National Museum amply demonstrate China’s 5000 year old culture. There are remnants of the old structure of the city called hutongs that are one and two story buildings with small courtyards where some semblance of another time can be seen. However, the dominant image is a huge western city of new high rise offices and apartments with the streets filled by young sophisticates in the latest hip styles. We saw very few children.
All street and building signs are in Mandarin and English. The younger a person is, the more likely she is to speak some English. The sidewalks and streets are spotless because there are uniformed public works people constantly sweeping and picking up paper. However, the air pollution is so thick it hurts the eyes, even on an otherwise beautiful Spring day.
The picture at the top of this post was taken from our hotel room. It makes several of the points I mentioned. In the near foreground is a small hutong. Then there are many high rises, obscured by smog. About 20 miles behind the high rises there are steep mountains that surround most of Beijing. We saw them through the smog only once.
Tianaman Square is a weird place. It is vast, surrounded on most sides by monumental government buildings and Mao’s tomb (currently closed for repairs). However, access to this great open space is completely controlled. They are taking no chance that the place will ever again be used for a gathering/protest that is not approved by the government. The space is completely gated and can be closed down in minutes. Everyone entering the square must go through a security checkpoint. Bags go through an xray machine and people go through a metal detector and physical pat down. On a recent weekday afternoon there was a heavy—though seemingly normal—police presence.
I am writing this on a train to Xi’an that is going 160 miles an hour and is every bit as comfortable and smooth as American trains are not. It makes the Acela look like an outdated trolley. We are passing through very intensively planted farmlands. Every few miles there is a new city rising out of the farmlands. Each new development has broad paved streets leading through dozens of 20 story apartments under construction or recently completed. The train just stopped in a city where we can see hundreds—really—of high rise buildings under construction. Some seem stalled in construction. Others are finished but it is not clear how full they are. We saw some sights like this just outside of Delhi and some other Indian cities but the infrastructure and building scale are vastly larger here. Even more breathtaking, however, is the smog. It is difficult to describe how thick it is. Even on this ultramodern train with great air conditioning my eyes hurt and it is hard to breathe. The Chinese government and people know how bad the problem is. Addressing air pollution is an explicit part of the new national health plan. The untrammeled development of the past 20 years is taking a toll that will be costly and slow to fix.