Health cover boost to jog China's economy

All-round Country Edition

WORLD; Pg. 10

Rowan Callick, China correspondent

CHINA has begun counting down to a three-year deadline to meet a challenge far greater than hosting the Olympic Games: providing health cover for its 1.3 billion people.

Yesterday, Social Security Vice-Minister Hu Xiaoyi announced that three pilot schemes were under way: for rural people, for the urban workforce, and for children, old people and the unemployed in the cities.

He said the target was for workers to contribute 2 per cent of disposable income -- a similar figure to Australia's -- towards their scheme. But there will then still be a gap of 40 to 50per cent of medical costs that patients will have to meet.

In recent surveys, about half China's population say they do not visit hospitals -- there is no family doctor network as in Australia, although there are plans for ''community medical service centres'' -- because they cannot afford consultation fees or the medicines prescribed and sold there.

This acts as a significant constraint on economic development because Chinese workers save more than 40 per cent of their disposable incomes out of concern over the impact of an accident or illness. A common saying is that ''the middle class is one serious sickness away from poverty''.

Mr Hu said with a safety net in place, ''the general public will be confident to consume instead of over-saving'', triggering the next big economic transition.

Historically, government provided very little healthcare in China until the Communists came to power in 1949. Then it was delivered as part of a rudimentary cradle-to-grave workplace package that has fallen apart as many state industries folded over the past 25 years, leaving a user-pays health system only marginally funded by government
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Mr Hu said the new insurance plans would be managed locally, but the central Government would have oversight.
 
The Government has increased its contributions to about 40 per cent of all healthcare spending, which has risen in the past decade from 3.7per cent of the economy to 5.6per cent, and is expected to reach 8per cent by 2010, the year the Government says everyone will be covered by insurance.

Mr Hu said employers of China's 200 million migrant workers ''will pay'' for their treatment for serious illnesses. But he conceded the Government will need to invest more for people to feel secure.