As the healthcare debate continues raging in the US, universally coveredÂ Europeans look on smugly from the sidelines.Â (Well, not allÂ Europeans.Â Â Â Tim Worstall argues that high US health spending is the successfulÂ application of the will of the market.)Â
Meanwhile, President Obama has been telling his staff to read Atul GawandeÂ on the weak relationship between spending and the quality of health provisionÂ across the US.Â Gawande argues that high costs are driven by unnecessary treatment rather than better care.Â
There’s a similar story to tell across the Pacific.Â In the 1970s, ChinaÂ had a cooperative medical system that provided coverage to 90 percent of the rural population.Â Â A series of reforms since then have introduced fee for service and health insurance schemes.Â These reforms have increased costs, but it is hard to see much impact on improved levels of health.Â Per capita health spending increased seven-fold in rural areasÂ over the period 1990-2002, but rates of progress in health outcomes have dramatically slowed.Â
That’s in part because the quality of care provided can be pretty grim,Â not leastÂ because of the incentives of theÂ fee for service model.Â Over-prescription of drugs is a particularly big problem.Â In 1999,Â a study of eightÂ village clinics inÂ Chongquing and Gansu provinces found less than 0.06%Â of prescriptions handed out were deemed reasonable by the doctors in theÂ survey team.Â Â
China isn’t the United States, of course.Â But it does provideÂ stark evidence thatÂ health care reform can have a dramatic impact on the efficiency of provision –for good or ill.