Healthcare reforms to be good for China's economy: US Nobel laureate

Want China Times, Xinhua 2014-06-05

A children's hospital in Taiyuan, capital of Shanxi province. (File photo/CNS)

China's planned healthcare reforms will be beneficial for the whole of the country's economy, Daniel McFadden, presidential Professor of Health Economics and Policy at the University of Southern California, said in a recent interview.

"I know about the efforts to reform the Chinese system. It is a very ambitious and very difficult program that they have undertaken," said McFadden, who received the 2000 Nobel Prize in Economics for developing methods and theory used in analyzing how consumers and households make choices from sets of discrete alternatives.

The Chinese State Council has recently issued a guideline to boost healthcare reforms this year, which puts forward 31 tasks in six fields to deepen the reforms and expedite the building of a universal healthcare system.

In McFadden's view, the reforms would work very well in the cities, while will be a much more difficult challenge to accomplish in some of the rural areas.

"But I believe they would be very good for the citizens of China and also for the economy as a whole," said the U.S. professor, who was in Italy to participate in the Trento Economics Festival which closed earlier this week.

McFadden noted that over the past years, due to a fairly weak system of social insurance, individual savings rates were extremely high in China.

One of the results of this trend, he added, was that "China had been growing primarily by exporting than through domestic consumption, which was a very successful strategy in the past but is not a strategy that can be continued indefinitely."

Therefore, he said, "it is important for China to have a vast consumer sector in which citizens spend most of the money they earn on goods rather than saving to have them for the health costs in the future."

The Nobel Economics Prize Winner praised China's economic success which he defined as "remarkable."

The opening up in China, he said, "has been a great success."

"But I would hesitate to free up the health sector so quickly. I think that is one of the sectors in the economy where the public control actually makes sense," he pointed out.

"Looking at the healthcare systems around the world, the ones that are most efficient in terms of keeping people healthy and less costly are the ones where the community medical providers are either employed by the government or employed by companies that are largely contracting to the government and not operating as separate businesses," McFadden elaborated.

"Do not copy the United States, that is a very inefficient healthcare system," he underlined.

The professor noted that in most countries the healthcare system accounts for around 10% of the gross domestic product (GDP).

"In the United States it is 17%, very expensive, while there are some countries including China which need to put more of the national income into health," he explained to Xinhua.

However, McFadden stressed, the benchmark should not be how much a country spends on health but how healthy it keeps the population and how truly concerned its doctors are about the health of their patients.

By these standards, he said, "China still has a ways to go" but has started a reform process which has already led the country to "doing a lot better than it used to."

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