One major reason why China is interested in pushing foward in reforming health care is due to “over-saving among the public”. China currently boasts one of the highest household savings rates (28%).
Why is this a problem?
Over-saving by the public causes consumer spending to be down and is one of the main contributors to the sky-high trade surpluses with the US and other countries. One reason why the Chinese save so much of their money is because Chinese individual households are responsible fully for their own healthcare and retirement expenses. Not to mention any money they might need if they lose their jobs.
China is continuing on with the reform plans that were announced by the State Council in April 2009, which goal is to provide basic medical coverage by 2011 and universal coverage by 2020. Health care would become a “non-profit oriented service” with the “existence of private health care services”. The Chinese government will provide subsidies for medical fees and prescription drugs.
Because high medical fees is one of the major reasons why the Chinese are saving all their money…the hope is that they will start spending their money rather than sitting on it.
Image: Maoist public health poster. Source: Google Images