China - The health sector

Report No. 4664-CHA The Health Sector in China April 13, 1984 . , Population, Health and Nutrition Department FILE COPY FOR OFFICIAL USE ONLY Document of the World Bank This document has a restricted distribution and may be used by recipients only in the performance of their official duties Its contents may not otherwise be disclosed without World Bank authoeization  CURRENCY EQUIVALENTS The Chinese currency is called Renminbi (RMB). It is denominated in yuan (Y). Each yuan is subdivided: 1 yuan = 10 jiao = 100 fen Exchange rates used in this report are as follows: 1979 $1.00 = Y 1.55 1980 $1.00 = Y 1.50 1981 $1.00 = Y 1.71 1982 $1.00 = Y 1.89 1983 $1.00 = Y 2.00 WEIGHTS AND MEASURES Chinese statistics are usually in metric units; in addition, mu and jin are often used: I mu = 0.1647 acres = 0.0667 hectares (ha) 1 jin = 0.5 kg FISCAL YEAR January 1 - December 31 TRANSLITERATION The Pinyin system is used in this report.  FOR OFFICIAL USE ONLY Preface This report is based on the findings of a World Bank rural health and medical education mission that visited China for four weeks during September and October of 1982. The mission consisted of Mr. Dean T. Jamison (mission chief and economist), Mr. Timothy King (population specialist), Dr. Stanley Music (epidemiologist), Mr. Nicholas Prescott (economist), Dr. Andre Prost (public health specialist) and Ms. Khanh Lac Truong (mission secretary). The mission was joined in the field for part or all of its stay by the following Bank staff members and consultants: Dr. John R. Evans (then Director, Population, Health and Nutrition Department), Mr. Ian Porter (economist, China Division), Mr. Jacques van der Gaag (economist, Development Research Department) and Dr. Mary Young (child health specialist, consultant). The World Health Organization (WHO) made two staff members available as resource persons for part of the mission; these were Dr. Eric Goon (WHO representative to China) and Dr. John Krister (WHO regional office for the Western Pacific, Manila). In addition, WHO (Geneva) hosted a seminar -- chaired by its Director-General, Dr. Hlalfdan Mahler -- to review the mission's findings concerning medical education; the seminar provided valuable information and perspectives for preparation of the report. A draft of the mission's report was submitted to the Chinese government in September, 1983, and discussed with the government in February, 1984; this version of the report has been revised in light of government comments. This report was written by Dean T. Jamison, John R. Evans, Timothy King, Ian Porter, Nicholas Prescott and Andrd Prost. Catherine Fogle provided research assistance. Available separately from the report are eleven supplementary papers; a list of the titles and authors of the supplementary papers follows the table of contents. The mission worked closely with numerous officials of the Ministry of Public Health and of the Health Bureaus of Shandong and Sichuan Provinces. Their tireless help, their patience and, above all, their valuable insights were essential to preparation of this report. | This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.   - ii - Contents Page Preface .................................................................. i Contents ................................................................. ii List of Supplementary Papers ............................................. vii Summary .................................................................. viii Part 1: The Main Report Chapter 1. Introduction ................................................ 1 Chapter 2. The Population, Health and Nutritional Status of the Chinese People: Trends and Current Situation ............... 4 2.1 Trends in Population Size and Fertility Levels ......... 4 2.2 Achievements in Reducing Mortality - Levels, Trends and Regional Differences in Life Expectancy and Infant Mortality ....................................... 7 - Trends in Life Expectancy and Infant Mortality - Regional Variation in Mortality 2.3 The Changing Disease Pattern and the Epidemiological Transition ................................... 11 - The Epidemiological Transition - Progress in Reducing Mortality - Progress in Reducing Morbidity - Other Causes of Morbidity 2.4 Improvements in Nutritional Status . . 19 - Secular Improvements in Nutritional Status - Micronutrient Deficiency Disorders 2.5 Current Disease Problems ...... 21 - Emerging Problems of Chronic Disease - Lingering Problems of Infectious Disease - Malnutrition and Child Development  - iii - Page Chapter 3. The Health Sector and Its Financing ....... 33 3.1 Health Policies ...................... 33 - General Policy Directions - Overview of Current Health Policy 3.2 Organization of Health Service Delivery ................ 40 - Organization of Health Services - Health Campaigns and Epidemic Prevention Services - Traditional Medicine 3.3 Inputs to Medical Services ............................. 48 - Personnel: Categories, Training and Growth in Numbers - Facilities - Pharmaceuticals 3.4 The Impact of Health Resources .... 60 3.5 Health Sector Financing and Expenditures ............... 62 - Health Sector Finance - Health Sector Expenditures - International Comparisons Chapter 4. Beyond the Health Sector: Other Factors Influencing Population, Health and Nutritional Status ................... 77 4.1 Food Availability and Food Policy ...................... 77 4.2 Water Supply and Sanitation ............................ 81 4.3 Population Policies and Fertility Decline .............. 82 Chapter 5. Problems and Issues .......................................... 91 5.1 Health Services for the Rural Poor: Completing the First Chinese Health Revolution .92 5.2 Addressing the Emerging Problems of Chronic Disease: Tasks for a Second Chinese Health Care Revolutionvn...... 96 5.3 Issues in Rural Health Care . .. 98 5.4 Issues in Medical Education . ........................... 102  -iv - Part II: Statistical Annexes Page List of Annex Tables .................................................. 106 Annex A: Demographic and Economic Indicators ............................ 112 Annex B: Health Status Indicators ..................................... 119 - Mortality - Morbidity - Provincial Data Annex C: Health Facility and Manpower Availability Indicators .142 - Data for Recent Years - Historical Figures - Provincial Data Annex D: Food Availability and Nutritional Status Indicators .162 - Food and Nutrient Availability and Prices - Estimates of Nutrient Requirements - Anthropometric Data Annex E: Economic and Financial Indicators .179 - General Data - Provincial Data Charts and Maps Charts (at end of report) Chart 1. Organization Plan of the Ministry of Public Health Chart 2. Institutes of the Medical Academies Chart 3. Organization and Function of the State Pharmaceutical Administration Maps (at end of report) Map 1. Crude Birth and Death Rates by Province, 1981 (IBRD 18207) Map 2. Life Expectancy and Gross Per Capita Output Value of Industry and Agriculture by Province (IBRD 18206) Map 3. Tuberculosis Prevalence by Province, 1979 (IBRD 17129R1) Map 4. Hypertension Morbidity by Province, 1979-1980 (IBRD 17042R1) Map 5. Health Facilities and Personnel, 1979 (IBRD 18208) Map 6. Nutrient Production Data, 1980 (IBRD 18210)  v Figures and Tables Page Figures in Text 2.1 The Total Fertility Rate in China, 1950-81 .................. 6 2.2 Expectation of Life at Birth, 1950-82 ....................... 9 3.1 Organization of Health and Birth Planning Services .......... 36 3.2 Total Number of Doctors of Western and Chinese Traditional Medicine (per 1000 population) ............................ 53 3.3 Recurrent Expenditure on Health, 1981: Sources of Finance, Resource Inputs and Delivery Systems ............. 63 3.4 Distribution of Population by Insurance Status .............. 65 3.5 Urban-Rural Differentials in Recurrent Health Expenditure, 1981 ................ 65 4.1 Infant Mortality Rates and Total Daily Per Capita Food Energy Availability, 1950-82 ......................... 79 5.1 Projected Population Over 50 Years of Age, 1980-2030 ........ 95 Tables in Text 1.1 Selected Development Indicators, China and Other Countries ......... 3 2.1 Summary Measures of Estimated Fertility and Mortality for Five Year Periods, 1940-1980 .......................... 5 2.2 Official Estimates of Life Expectancy and Infant Mkortality, 1949 and 1982 .................................. 7 2.3 Percentage Distribution of Deaths by Cause, China 13 and Model High- and Low-Income Countries. 2.4 Principal Causes of Death, Rural and Urban Areas, 1980 .. 22 2.5 Percentage of 7-Year Old Boys Malnourished, Selected Provinces, 1979 ............... .. ..... 32 3.1 Selected Health Care Workers - Education and Role . .51 3.2 Availability of Health Care Personnel - China and Other Developing Countries .............. ........... . 54 3.3 Medical School, University and Secondary Enrollments - China and Other Countries . ................................ 55 3.4 Medical School Graduates and Increases in Senior Medical Manpower, 1977-81 ................................. 56  - vi - Page 3.5 Increases in Numbers of Hospital Beds, 1979-81 .............. 57 3.6 Ministry of Public Health Expenditure, 1977-81 .............. 66 3.7 Estimated Distribution of Recurrent Expenditure by Input .... 74 3.8 International Comparisons of Health Expenditure ............. 76 4.1 Total Daily Per Capita Food Energy and Protein Availability and Requirements, Selected Years . . 78 5.1 Rural-Urban Differences Related to Health ................... 93 5.2 Hypertension Prevalence in China, 1980-2010 ................. 97  - Vil - List of Supp lementary_Papers 1/ Population 1. China An Evaluation of Demographic Trends -- 1950-82 (PHN Technical Note DEM 4) by Kenneth -lill 2. Population Policy in China Since 1950 and its Demographic and Economic Implications (PHN Technical Note GEN 11) by Timothy King 3. Income and Other Factors Influencing Fertility in China (PHN Technical Note GEN 12) by Nancy Birdsall and Dean T. Jamison Health 4. Determinants and Consequences of Health Resource Availability in China (PHN Technica Note GEN 13) by Nicholas Prescott, Dean T. Jamison and Nancy Birdsall 5. Health Sector Finance and Expenditures in China (PHN Technical Note GEN 14) by Nicholas Prescott and Dean T. Jamison 6. Medical Education in China (PHN Technical Note GEN 15) by John R. Evans Nutrition 7. Trends in Food and Nutrient Availability in China, 1950-81 (PHN Technical Note GEN 16) by Alan Piazza 8. The Nutritional Status of Children in China A Review of the Anthropometric Evidence (PHN Technical Note GEN 17) by Dean T. Jamison and F.L. Trowbridge Case Study on Shandong Province 9. Health Sector Issues in Shandong Province (PHN Technical Note GEN 18) by Andre Prost, Jacques van der Gaag, John Krister, Nicholas Prescott and Mary Young 10. The Barefoot Doctor. Training, Role and Future (PHN Technical Note GEN 19) by Mary Young 11. Commune Health Care in Rural China (PHN TechnLcal Note GEN 20) by Jacques van der Gaag 1/ These papers are available in the Population, Health and Nutrition Department Technical Notes Series, the number of the paper in the series appears in parentheses following its title. Papers may be obtained from the Population, Health and Nutrition Department Library.  - viii - Summary 1. Before 1949, China's population suffered a crippling burden of disease and premature death; perhaps the most striking success of China's subsequent anti-poverty struggle has been a dramatic increase in life expectancy, with a concomitant reduction in the burden of illness. Public health measures -- combined with reductions in malnutrition, improved water supplies and close attention to hygiene and sanitation -- have increased life expectancy from about 32 years in 1950 to 69 years in 1982, which is only about six years less than in the industrialized market economies. Nonetheless, progress in improving health conditions has been far from uniform, and major rural-urban differences (and differences among rural areas) exist. 2. The multi-sectoral influences responsible for improving health conditions in China -- as well as the emphasis within the health sector on prevention, on community mobilization and finance, and on barefoot doctors -- have strongly influenced the thinking of health care professionals throughout the developing world. Indeed the 1978 Alma-Ata declaration, on 'health for all by the year 2000' through a strategy of primary health care, was much influenced by the Chinese model. But because China's system has matured and the problems it must address have changed, health conditions and health care delivery in China should now be re-evaluated in light of the substantial new information available. 3. To assist Bank staff working on health projects in China, as well as health care professionals in general, this review of the health sector begins by noting China's achievements in population control, health status and nutrition. A section specifically on health then looks at the policies, sources of financing and resource use that have contributed to China's successes. The report then discusses the evolution of several influences on health from outside the sector -- nutritional improvements, greater access to clean water and sanitary waste disposal, and fertility reduction. A discussion follows of the problems that remain as the two major challenges to the health sector through the rest of the century. The major findings of the review are highlighted in this summary. Achievements 4. Population. China's census of June 30, 1982, recorded a population of 1008 million; this exceeds by 73 percent the total recorded in the PRC's first census, conducted in 1953. The population growth rate in the intervening 29 years was thus 1.9 percent per annum. Trends in total fertility and mortality during this period have been far from steady, however, and demographic conditions still vary markedly among regions in China. Birth rates were around 45 per 1000 in the mid-1950s, implying a fertility rate of about 6.5 births per woman. Death rates fell from about 30 per 1000 at the beginning of the 1950s to about 23 in 1957, equivalent to a life expectancy of about 38 years. Successes prior to the Great Leap Forward of 1958 were, however, followed by a period of catastrophe: mortality rose sharply around  - ix - 1960 and the birth rate plunged, resulting in a population loss of more than 1 percent. Following the 1959-62 famine, the birth rate surpassed the 1950s level and then declined slowly until the end of the decade. The drop in fertility since 1970 has been remarkable, with the total fertility rate declining to about 2.5 over 1975-80; however, the total fertility rate rose to 2.8 in 1981. The population growth rate rose to about 1.3 percent per annum in 1981 from its low in the late 1970s of just over 1 percent per annum. 5. Fertility declines have been much more rapid in urban than in rural areas. The rural birth rate, indirectly derived from the 1982 census data, is almost double the urban rate (22.5 per thousand versus 12.4), and the rate is about 7.2 higher in autonomous regions. These findings are roughly consistent with estimates by the State Family Planning Commission, which suggest a 1982 total fertility rate of 2.9 in rural areas and 1.5 in urban areas. 6. Health status. The World Bank has constructed a set of estimates of post-1940 trends in life expectancy and infant mortality, and two points concerning the results bear particular comment. First, the Bank's estimates generally agree with official estimates on the dramatic improvements in life expectancy and reductions in infant mortality. Continuing a pattern of improvements that had begun five or ten years earlier, life expectancy rose from less than 35 years in the immediate post-1949 period to almost 70 years in the early 1980s; the estimated infant mortality rate declined from 250 in 1950 to less than 50 in 1981. Second, while the Bank's estimates agree with official figures on the general pattern of improvement, Bank estimates of infant mortality are substantially higher than those of the government. Under-reporting of infant births and deaths could well account for this difference and, if so, this indicates that the problems of antenatal and early postnatal care in China deserve more attention than the official data suggest. 7. Estimates have been made of life expectancy by municipality, province and autonomous region, based on data from a major 1973-75 cancer mortality survey. These estimates range from 59 years in Guizhou to 72 in Shanghai, denoting very substantial inter-provincial differences. Some (but far from all) of these differences can be accounted for by differences in income. Statistical analysis of the cancer survey concluded that life expectancy in urban areas is, on average, 12 years higher than in typical rural areas; life expectancy in low-income rural areas (defined as having a distributed per capita income of less than 50 yuan in 1979) is 5 years less than in typical ones. Analysis of data on death rates from the 1982 census reached similar conclusions. This rural-urban difference exceeds that found in most other developing countries, strongly reinforcing the importance of stated government policies to improve conditions in rural areas. 8. Periodic epidemics, together with a high level of infectious disease morbidity and malnutrition, earned pre-1949 China its reputation as the "sick man of Asia" and led to the low levels of life expectancy just indicated. China's substantial success against infectious disease has resulted not only in increased life expectancy, but also in the emergence of new leading causes of morbidity and mortality. In urban areas and much of rural China, parasitic and infectious diseases have been substantially replaced as causes of death by  heart disease, cancer, stroke, accidents and chronic respiratory diseases. For example, the mortality rate of heart diseases increased from 71 per 100,000 in 1958 to 141 per 100,000 in 1979 in four urban Beijing districts. Infants, children and young women have been supplanted by the middle-aged and elderly as the population groups with highest mortality, and older age groups are consuming an increasing proportion of medical care. 9. This transformation, which has already occurred in the industrialized countries, is now referred to as the 'epidemiologic transition'. Although urban Chinese disease patterns are increasingly similar to those in high income countries, the transition is still progressing in rural China. Some communicable diseases -- such as dysentery, tuberculosis and hepatitis -- remain important national problems. In poorer parts of China, health conditions probably lag 20 years behind those attained in more developed areas. Further, in vulnerable geographic or climatic areas, infectious and parasitic diseases such as leprosy, malaria and schistosomiasis remain major problems. 10. Nutritional status. Available data suggest steady improvements in the nutritional status of school-age children in China, at least in urban areas. Data on changes in nutritional status are often reported in growth rate per decade. Rates of increase in average height in China for two recent decades were 1.55 cm per decade in rural Shanghai, 2.49 for Guangzhou city, 1.48 for rural Guangdong, and 3.8 for urban Beijing (for 9-year-olds). These data are difficult to interpret without comparative data from earlier periods in China, or from other developing countries. These rates are, however, as high, or higher, than those in 20th century Europe, which suggests important successes. If the European experience is any guide, these increases can be expected to continue well into the next century. II. In urban areas, malnutrition has been substantially reduced and can no longer be considered an important problem. Many children in rural areas, by contrast, continue to suffer moderate-to-serious malnutrition. A 1979 survey of 16 provinces and municipalities provides a basis for assessing urban-rural and inter-provincial differences in child malnutrition. A clear pattern of moderate rural malnutrition can be seen, with an estimated 12.7 percent of seven-year-old rural boys having stunted growth in the 16 provinces surveyed; for Sichuan, the figure was 37 percent. In urban areas, only 2.6 percent of children are stunted. Reasons for the better situation in urban areas include lower prevalence of disease and more food of better quality (urban food subsidies were an estimated 96 yuan per urban dweller in 1981 and accounted for over 4 percent of GDP). The persistence of substantial undernutrition in rural China provides further evidence that the epidemiological transition is far from complete and that continued attention needs to be paid to disease problems typical of low-income countries. The Health Sector 12. Health policy. Relative to most other countries, China has emphasized public preventive over curative health services, without neglecting the importance of curative measures both for the well-being of the population  - xi - and for the task of controlling communicable disease. Major campaigns were mounted shortly after 1949 to improve environmental sanitation, to eliminate the "four pests" -- rats, flies, mosquitoes, and bedbugs; to vaccinate against and cure infectious diseases, and to control the vectors of major endemic disorders such as malaria and schistosomiasis. Mass mobilization played a key role in the success of these campaigns. The allocation of health resources to preventive activities (and to whatever curative services were provided in urban areas) generated a demand for at least minimal curative services and pharmaceutical availability in the rural areas, and health policies of the Great Leap Forward and Cultural Revolution periods responded to that concern. These vigorous preventive efforts have undoubtedly been enormously successful in reducing morbidity and mortality. Curative care is now receiving increased emphasis, however, and the preventive approach to disease control so far seems to be playing only a marginal role in dealing with today's problems of chronic disease. 13. China's concern with prevention has also led to pursuit of a health strategy that reaches well beyond the health system per se. In particular, improved nutrition, provision of safe water supplies and sanitary and convenient means of waste disposal, fertility reduction and widespread educational improvements have been major policy objectives. The administrative capacity and political will of the Chinese Government have, despite occasional setbacks, been essential to the success of such a multifaceted strategy. 14. Impact of health resource availability. Accompanying the implementation of health policy has been a rapid growth in availability of hospital facilities and health personnel. Nonetheless, China's successes in the health sector have generally been attributed to the manner in which resources were deployed more than to the availability of doctors and hospitals. Analysis of the factors influencing morbidity and mortality tends to support this view. Further, as the disease profile moves more toward chronic and away from communicable disease, increases in income are unlikely to continue to lead to improved life expectancy, rather, available data suggest that income increases are now leading to life style changes that put individuals more at risk of chronic diseases. This suggests the priority for seeking affordable public policies for postponing the onset and managing the consequences of chronic disease, with the required qualitative change in the education and functions of health personnel. To avoid inevitable tendencies simply to increase the numbers of doctors and other personnel available, careful health manpower development planning will be required, essential to that planning will be concern for how to provide service in rural areas, how to train physicians appropriately when major investments in equipment are not feasible, and how to ensure appropriate concern for community and preventive medicine. 15. Health sector financing and expenditures. Total health expenditure in 1981 is estimated at approximately Y15.0 per capita, of which Y14.3 is for recurrent expenditure and YO.6 for capital construction. This represents 3.3 percent of GDP per capita in 1981. The allocation of expenditure can be analyzed according to sources of finance, delivery systems and expenditure on  - xii - resource inputs. Financing comes in about equal amounts from three main sources -- private outlays (32 percent), labor insurance (31 percent) and state budget expenditures (30 percent). Production brigades finance the residual seven percent. Likewise, the structure of health services delivery is essentially tripartite. The rural collective system, principally brigade and commune health facilities, delivers the largest share of health services, valued at approximately 40 percent of the total, the government system delivers about 32 percent, and the enterprise system, which serves enterprise employees and dependents exclusively, delivers 25 percent of total services. Private medical practice has recently been authorized but is as yet of little significance. Pharmaceuticals are by far the most important resource input into the health sector, accounting for 58 percent of total expenditure, Western drugs alone consume 49 percent of total health expenditure. Personnel costs (at wages prevailing in China) account for less than a quarter of total expenses. (However, this figure excludes the cost of unpaid labor, either voluntarily or otherwise mobilized, for which virtually no relevant data exist, but whose contribution to the success of many preventive efforts, particularly those associated with environmental sanitation, must have been substantial.) 16. A high proportion of total expenditure is mediated through insurance schemes. This reflects the high degree of health insurance coverage, one of the major achievements of the Chinese health system. Only about 30 percent of the population are completely uninsured, virtually all of them residing in rural areas. 17. Considerable urban-rural differentials in health expenditure exist in China. Urban expenditure is estimated at Y33 per capita, more than triple the estimated rural expenditure of Y9 per capita. State subsidies for health care for urban dwellers are at almost ten times those for rural dwellers -- approximately Y26 per capita compared to less than Y3 per capita. Private expenditures per capita amount to less than Y3 in urban areas but over Y5 in rural areas. 18. Given the emphasis in China on preventive medicine, it is surprising that less than 5 percent of total health care resources are directed to prevention and over 95 percent to provision of curative services. Traditional medical practice receives about 14 percent of the total allocation. Problems and Challenges 19. China's efforts to reduce the incidence of communicable disease and the prevalence of malnutrition, thereby greatly reducing mortality rates, have led to a dramatic increase in life expectancy. This success might well be labelled the first Chinese heaLth care revolution. But this revolution has left in its wake two distinct problem areas. First, success to date has been uneven. health conditions in cities are very good indeed, and many rural areas lag the cities by only 5 or 10 years in life expectancy. But the health conditions of perhaps 100-200 million rural Chinese remain similar to those prevailing in typical developing countries. These people live in poor and remote parts of China; economic and administrative infrastructure is lacking,  - xiii - education levels are probably low. There are no easy or inexpensive ways to improve health conditions in these areas. Second, the emerging prevalence of chronic disease is becoming a major concern. The current pattern of causes of death in China is very much like that of the industrialized world -- heart disease, cancer and stroke head the list. Treatments for these diseases used in the West tend to be extremely costly and only moderately effective. But patients' demands for treatment and efforts by physicians to effect a cure often involve significant expenditures with relatively little health impact. 20. In light of these problems, two priority challenges now face the health sector in China. (a) The first challenge is that of completing the first Chinese health care revolution by extending the methods that have been successful in most of China to areas where mortality rates and deaths due to infectious diseases remain high; and (b) The other challenge is that of forging a second Chinese health care revolution, which would develop and implement approaches to management of chronic disease that combine prevention, low-cost treatment, rehabilitation and humane care. The problems to be overcome in forging this second revolution are massive, but even partial success would be of immense value not only co China, but also to the international community. 21. Completing the first revolution. Major disparities continue to exist among and within provinces and between rural and urban areas in availability of health services and in health status. Effective health care delivery has been consolidated in urban areas. The next priority, which is recognized by the Ministry of Public Health, is to consolidate gains made in some rural areas and extend a similar level of service to poorer areas. An important next step is the development of detailed plans for reducing mortality rates and morbidity due to specific diseases in poor counties, those plans must include epidemiological considerations, financial analysis, and assessment of manpower needs, training and deployment. Given the poverty of most locales where the first health revolution needs to be completed, it will inevitably require outside finance (from the provincial or central government) to implement effective policies for closing the gap in health conditions. While the amounts involved are not large compared to current levels of state subsidy for urban dwellers, the problem of generating the requisite resources is nonetheless real. 22. A particularly important development for rural health care in China is the decline of rural cooperative health insurance systems after the introduction of production responsibility systems. In 1975, 85 percent of production brigades had cooperative insurance, but this figure had declined to 58 percent by 1981. In consequence, nearly half of the rural population must pay the full price for medical services, this proportion will very likely continue to increase. This trend has two highly undesirable consequences. First, the major gains in welfare that can be achieved by risk sharing are lost without health insurance schemes. While the rural cooperative systems  - xiv - had many defects, including incapacity to share risks over large numbers of individuals, they nonetheless provided an important basic service. Second, fee-for-service approaches to provision of health care inevitably neglect public preventive measures, though these have played a vital role in China's success. Moreover, those preventive activities that involve mobilization of labor on an unpaid basis may particularly suffer from the responsibility system and lead to a resurgence of parasitic and infectious diseases, unless alternative financing mechanisms are in place. 23. Tasks for a second Chinese health care revolution. Success in the control of communicable disease has transferred the burden of China's health problems to the older age groups, who are particularly vulnerable to chronic disorders. Prevention is relatively difficult for most chronic diseases, and development of effective, yet low-cost, strategies for dealing with these disorders is a priority. The major pitfall is the temptation to emulate high- cost curative approaches that have proved relatively inefficacious and that, even in high-income countries, have resulted in a massive drain on national economic resources. Neither preventive nor curative measures to deal with chronic diseases can be expected to have the same dramatic impact on life expectancy as the control of communicable and infectious diseases. The latter raised life expectancy principally by reducing mortality among infants and children; tragic as these early deaths may be, the emotional and economic cost, to family and society, of premature death of productive adults is far greater. Programs to deal with chronic disease will thus result in welfare gains that are more than proportionate to their limited effect on life expectancy. 24. Some measures for prevention of chronic diseases can be taken right now, particularly control of salt intake and tobacco consumption. Levels of salt consumption in China exceed those in most other countries and, in consequence, China has a high (and rising) incidence of hypertension (high blood pressure). Excess salt consumption leads to preventable heart disease and stroke, which are a major public health problem in China today. Tobacco consumption in China has been exceptionally high for a country at its income level, but despite a policy to discourage smoking begun two years ago, tobacco consumption has increased dramatically. (Indeed, the Sixth Five-Year Plan calls for an 81 percent increase in tobacco production between 1980 and 1985.) The resulting increases in lung cancer and chronic respiratory diseases will entail much human suffering, lost productivity and unnecessary medical expenses. Other preventive measures may be less obvious: Prevention of chronic disease is inherently more difficult than prevention of communicable disease. Thus it is essential to recognize this and to commit substantial resources to develop strategies for prevention of chronic diseases. 25. Also important is the development and widespread implementation of strategies for dealing with patients that have chronic diseases. These strategies must include capacity to provide treatment that may be successful and that is affordable; rehabilitation of individuals partially or wholly incapacitated by non-communicable disease; and humane care for the terminally  - xv - ill (an area where major and quite affordable advances have been made in Western medical practice). Essential to the success of these strategies will be appropriately trained manpower including physicians who can provide real care without relying on imported methods that use highly expensive equipment and procedures. 26. A final factor in achieving the second health care revolution will be the designing of an insurance and financing structure that encourages prevention and discourages the current tendency to overuse facilities. The insurance structure should provide strong disincentives for introduction of high-cost procedures that could be afforded only by a few. By using high deductibles and only partial contributions to subsequent costs the insurance structure should also create incentives for both patient and doctor to utilize health resources prudently. Strategy Issues 27. The problems just discussed challenge the Chinese health care system to major innovation. Innovation is essential both because the resources available for health care in China are small compared to those available in the West, and because China has far more ambitious plans than most low-income countries for meeting the health needs of its population. Even with the most rapid conceivable growth in spending on health -- which would come at the cost of much-needed investment in other sectors -- China could provide the highly capital-intensive curative medicine of the West for only a few. Resource constraints thus necessitate hard choices: imported approaches to care for a tiny elite and little or no improvement for the vast majority, or careful analysis and innovation to extend the reach of limited resources. Faced with these constraints, China's past strategy with its emphasis on labor-intensive practices still makes economic sense. Moreover, an innovative approach, though it entails higher risks, is required precisely because no comprehensive strategy exists for extending the first health care revolution and forging the second. Development of the essence of such a strategy - with its financial, political and manpower implications - is a high priority. 28. Central to the implementation of strategies for addressing China's health problems is the development of institutions capable of innovation, experimentation and analysis of public health problems. Upgrading the medical colleges, particularly the 13 core medical colleges, can play a key role here, provided their professors develop research and teaching interests that go beyond technical developments in biological science and clinical medicine. The MOPH's initiative in establishing a National Center for Preventive Medicine and a Research Center for Health Planning and Statistics should improve China's capacity to develop economically viable solutions to major health problems. Likewise the MOPH's emphasis on improving resource allocation and management skills -- throughout the health system and at individual institutions -- should improve efficiency. Beyond these general efforts to develop institutional capacity for innovation and efficiency, a number of specific issues (discussed in Chapter 5 of the report) should be considered. A few of the key points are raised below.  - xvi - 29. Financing health care in poor areas. While the state shoulders the burden of financing health care in urban areas, a policy of 'self-reliance' (i.e. local and individual finance) is implemented in rural areas. This has been satisfactory for well-off rural areas; in poor parts of rural China, however, even minimal services are often unavailable. An important policy question for the government is whether to postpone efforts to improve health care in poor areas until further gains have been made in cities and well-off rural areas. Actively assisting poor areas would require central government finance, but the impact of health investments in these areas would likely exceed those elsewhere; thus concern for efficiency would reinforce equity considerations in favor of such a policy. 30. Major commune clinics. The Government's policy is to encourage creation of major commune clinics, with better equipment and well qualified medical personnel, so that they can meet many demands that might otherwise be placed on county hospitals. Creation of these clinics -- which might be small (50 to 150 bed) hospitals with 3 to 8 doctors -- is perhaps the highest priority for improving access to curative care in rural areas, many of which are remote from county hospitals. Further, they would relieve the mounting pressures the referral system is placing on county hospitals. Securing appropriately qualified personnel for these major clinics will be a delicate task, particularly in light of the Cultural Revolution experience with forced rustication of doctors, and will require adequate incentives for staff, including satisfactory equipment and working conditions. 31. Scientific evaluation capability and health systems research. The evaluation of the effectiveness of new and traditional techniques of diagnosis, treatment and prevention is assuming much greater importance because of the high cost of modern medical technology. Key medical colleges are often pioneers in introducing new medical techniques and should develop the capability for such evaluation. Epidemiological principles need to be applied not only to non-infectious diseases, but also to the evaluation of disease control measures, and the quality of care and resource allocation in the health system, i.e. health systems research. This is as important in clinical medicine, both Western and traditional, as it is in public health. 32. Prevention of chronic disease. Despite the importance attached to 'putting prevention first', relatively little attention has been paid to prevention of ailments such as cardiovascular disease, cancer and chronic respiratory disease. Even in many rural areas, these disorders account for most deaths. A clear priority is to establish (or designate) institutions with responsibility for surveillance and prevention of chronic disease.   1. INTRODUCTION 1.01 Chinese development efforts from 1949 to about 1979 emphasized two main objectives -- development a heavy industrial base and elimination of the worst aspects of poverty. - The population of China in 1949 suffered a crippling burden of disease and premature death; perhaps the most striking success of China's subsequent anti-poverty struggle has been to increase dramatically the level of life expectancy with a concomitant reduction in the burden of illness in the society. Public health measures -- combined with reductions in malnutrition, improved water supplies and close attention to hygiene and sanitation -- have reduced the infant mortality rate from perhaps 250 deaths per 1,000 live births in 1950 to fewer than 50 now; Y they have virtually rid the country of previously hyperendemic diseases such as smallpox, cholera and venereal disease; and they have greatly reduced the burden of illness and lost labor productivity associated with parasitic infections such as malaria and schistosomiasis. The best single indicator of the health status of a developing country's population is life expectancy from birth, and by this measure China's success has been dramatic: between 1950 and 1982 life expectancy increased from 32 to 69 years, a level that is now only about six years lower than that found in the industrialized market economies. Progress in elimination of the adverse consequences of poverty has, then, been rapid -- at least insofar as high levels of morbidity and mortality figure prominently among poverty's consequences. Nonetheless, it is important to bear in mind from the outset that progress in improving health conditions has been far from uniform, and that major rural-urban differences (and differences among rural areas) exist. Maps 1 and 2 illustrate very clearly the inter-provincial variations that rmain in death rate, birth rate, life expectancy and per capita output levels. 1/ For an overview of the Chinese economic system and its recent performance, see China: Socialist Economic Development (Washington, D.C.: The World Bank, 1983). 2/ The figures used in this report for infant mortality rates, population totals, life expectancy, total fertility rates and other demographic indicators result from a demographic analysis prepared by the World Bank to model officially available data. This analysis appears in Supplementary Paper No. 1 to this report. (Titles and authors of supplementary papers are listed after the table of contents.) Principal results of the demographic model appear in Annex Table A.2; official demographic data appear in Annex Table A.1. 3/ Maps vividly communicate the regional variations that tend to be obscured in reports, such as this one, that deal principally with general trends and issues. To help maintain the perspective of major inter-provincial variation, this report includes a variety of maps, which appear at the end of the volume.  - 2 - 1.02 Although China's overall living standards have substantially improved during the period since 1949 -- indeed, they have improved somewhat more rapidly than have living standards in developing countries generally -- it is important to emphasize that general improvements in living standards alone can account for only a fraction of China's achievements in health. Table 1.1 presents selected development indicators for China and a number of other countries and groups of countries. Columns (1) and (5) indicate that, although per capita GNP is low in China, life expectancy is nonetheless high by comparison even with countries having substantially higher income levels. Income growth in China has been moderately rapid, but columns (1), (2) and (6) of Table 1.1 suggest that neither the level nor growth rate of income explain China's improvement in life expectancy: the 27-year increase in life expectancy between 1960 and 1980 exceeds that of other countries sufficiently to indicate the importance of other factors. Potential other factors, beyond the activities of public health agencies, are education levels (column (8) of Table 1.1), reductions in population growth rate (columns (3) and (4)), availability of food (column (7)), distribution of available food and improvements in water supply and sanitation. China's achievements in each of these areas, relative to its income level, has undoubtedly complemented the efforts of public health authorities in effecting the mortality and morbidity reductions of the past 30 years. Symmetrically, investment in improving health conditions has very likely been an important contributor to income growth, fertility reduction and improved nutritional status. Although these linkages remain to be established for China, evidence from other countries -- reviewed in the World Bank's World Development Report, 1980 -- suggests the probable impact on these areas of health improvements. 1.03 This report begins by reviewing China's achievements to date in improving health and its related achievements in reducing fertility and malnutrition. It further describes the structure, operations and finance of the health care system and attempts to delineate (albeit qualitatively) the role of these and other factors underlying China's success. The report then attempts to delineate the key problems now facing the health care system in China and, in light of these problems, to raise two sets of issues -- those in rural health care and in medical education. This report's treatment of issues is selective in emphasizing only these two aspects of the health care system. These are obviously important areas, though, and ones that the Chinese Government has requested World Bank assistance in developing. In addition to dealing with only a selection of issues, this report should be viewed as preliminary, as an initial effort of the World Bank to understand better a system whose complexity (and past successes) certainly defy easy understanding or description. The report should be read with that caveat very much in mind.  Table 1.1 SELECTED DEVELOPMENT INDICATORS, CHINA AND OTHER COUNTRIES Per Capita Growth Rate of Population Total Life Expectancy (Years) Daily Per GNP, 1980 Per Capita GNP, Growth Rate Fertility Gain between Capita Energy Adult Literacy (1980 U.S.$) 1960-80 (% p.a.) 1960-80 (% p.a.) Rate, 1980 1980 1960 and 1980 Supply, 1977 (kcal) Rate, 1977 (%) (1) (2) (3) (4) (5) (6) (7) (8) Low-income economies (excluding India and China) 230 1.0 2.5 6.1 57 15 2,113 34 India 240 1.4 2.2 4.9 52 9 2,021 36 Sri Lanka 270 2.4 2.0 3.6 66 4 2,126 85 China 290 3.6 a/ 1.8 2.5 67 27 b/ 2,237 66 Pakistan 300 2.8 3.0 6.1 50 7 2,281 24 Indonesia 430 4.0 2.2 4.5 53 12 2.272 62 Thailand 670 4.7 2.7 4.0 63 11 1,929 84 Middle-income economies 1,400 3.8 2.4 4.8 60 9 2,561 65 Hong Kong 4,240 6.8 2.5 2.2 74 7 2,883 90 Non-market irndustrial economies 4,640 4.2 0.9 2.3 71 3 3,489 100 Industrial market economies 10,320 3.6 0.9 1.9 74 4 3,377 99 Sources: For countries other than China and for country groupings, WDR82-World Development Report 1982 (Washington, D.C.: The World Bank, 1982). For Chins, WDR82 and this report. WDR82 defines 'low-income economies' as those having a per capita income of $410 or less in 1980; 33 such economies are included in WDR82 tables. The 'middle-income economies' are those of developing countries that have per capita incomes between $410 and $4510; this group include, 62 countries. The non-market induistrial economies have incomes ranging from $3,900 to $7,180 and the industrial market economies have incomes ranging from $4,880 to $16,440. a/ This figure for China is the growth rate of gross domestic product (GDP) minus the populationi growth rate. For the period 1960-80, GNP and GDP in China grew at approximately the same rate. b/ 1960 and the adjacent years were periods of acute famine and tuirnmoil in China, which resulted in suibstantially elevated mortality rates. The 27-year gain in life expectancy reported here is, therefore, based on an imputed 1960 life expectancy that is the average of the 1957 and 1963 life expectancies.  - 4 - 2. THE POPULATION, HEALTH AND NUTRITIONAL STATUS OF THE CHINESE PEOPLE: TRENDS AND CURRENT SITUATION 2.01 Since 1949, China has achieved an important reduction in mortality and concomitant increase in life expectancy, which result from a major overall improvement in health status. About 15 years ago fertility rates began to decline, and they have now reached levels that are among the lowest in the developing world. Incidence and prevalence of infectious diseases and malnutrition that were principally responsible for high levels of mortality in 1949 have been strikingly reduced, although progress has not been uniformly successful, and these diseases continue to impose a heavy burden, particularly in urban areas, on an important fraction of the rural population. Chronic diseases, meanwhile, have become an increasing burden, particularly in urban areas, as the age profile of the population changes to include higher proportions of middle-aged and older persons. This chapter reviews trends in fertility and mortality in the Chinese population and accompanying changes in patterns of morbidity and malnutrition; it concludes with a section summarizing the current situation. 2.1 Trends in Population Size and Fertility Levels 2.02 The census of June 30, 1982, recorded a population of 1008 million Chinese. This exceeds by 73 percent the total recorded in the PRC's first census, which was conducted in 1953; the population growth rate in the intervening 29 years was 1.9 percent per annum. Trends in fertility and mortality during this period have been far from steady, however, and even at present demographic conditions vary markedly from one part of China to another. Map 1 illustrates this variation by depicting provincial levels of crude death and birth rates for 1981 (obtained from the 1982 census). The discussion of general trends in this chapter should be read with this underlying variation in experience very much in mind. 2.03 For many years data concerning population was only sparsely available to foreigners. In recent years, however, a great deal more information on China's demographic experience since 1949 has become available. In particular, in late March, 1983, the State Statistical Bureau released a substantial amount of new data from which a demographic model of China in the post-1949 period could be constructed. These data included single-year age and sex distributions of the population from the 1953 and 1964 censuses (only 5-year groupings had previously been available) as well as single-year age distributions from the 1982 census for three populous and typical pro- vinces. These data have allowed construction of a much improved account of population growth in China, of trends in mortality and fertility, and of the underlying assumptions required for population projections. Not all of the available data are consistent with one single interpretation, however, and it is therefore possible to reconstruct China's recent demographic history in a 1/ See "Major Figures of the Third Chinese Population Census", (Beijing: Population Census Office of the State Council, 1983).  - 5 - number of different ways. Supplementary Paper No. 1 presents one such reconstruction, the principal results of which are summarized in Table 2.1 and, in more detail, in Annex Table A.2. Table 2.1: SUMMARY MEASURES OF ESTIMATED FERTILITY AND MORTALITY FOR FIVE YEAR PERIODS, 1940-1980 Crude Crude Rate of Expectation Birth Death Natural Total Infant of Life Period Rate Rate Increase Fertility Mortality at Birth -- per thousand per year - Rate Rate (years) 1940-1945 38.0 38.6 -0.6 5.3 290 27.7 1945-1950 41.7 35.7 6.0 5.9 265 30.5 1950-1955 44.7 30.9 13.8 6.5 236 34.1 1955-1960 39.8 27.3 12.5 5.8 229 34.8 1960-1965 38.3 21.9 18.4 5.9 208 37.7 1965-1970 38.2 13.3 24.9 5.5 137 49.0 1970-1975 28.6 9.5 19.1 4.1 96 57.3 1975-1980 19.5 8.5 11.0 2.7 65 64.2 Source: World Bank estimates developed in Supplementary Paper No. 1. 2.04 Table 2.1 shows substantially higher fertility and mortality rates in the 1950s than the official series (Annex Table A.1) of birth and death rates (which are themselves inconsistent with the official series of end-year population totals). Birth rates were around 45 per 1000 in the mid-1950s, implying a total fertility rate of about 6.5. Death rates fell from about 30 per 1000 at the beginning of the 1950s to about 23 in 1957, suggesting a life expectancy of about 38 years. These gains prior to the Great Leap Forward of 1958 were, however, followed by a period of famine and disorder; mortality rose sharply around 1960, and the birth rate plunged. Following the 1959-62 famine, the birth rate rose to at least the level of the 1950s and then declined slowly until the end of the decade. The drop in fertility since 1970 has been very remarkable indeed. Figure 2.1 graphs the estimated total fertility rate for China from 1950 to 1981; it shows very clearly the early variations, the subsequent remarkable decline, and a recent increase. Policies responsible for this fertility decline are discussed in Chapter 4.  - 6 - Figure 2.1 The Total Fertility Rate in China, 1950-81 7.5- 6.5 5.5. TFR 4.5- 3.5- 2.5 t- _s 1950 1955 1960 1965 1970 1975 1981 Year Word Bank-25322  2.05 Fertility declines have been much more rapid in urban than in rural areas, and, as Map 1 illustrated, levels vary substantially from one part of the country to another. It is possible, using census data at the provincial level, to construct indierect quantitative estimates of rural-urban and other fertility differences - ; the results suggest that rural crude birth rates (CBR) are almost twice as high as urban ones (22.5 per thousand versus 12.4) and that CBR is about 7.2 higher in Autonomous Regions than elsewhere. These findings are roughly consistent with estimates released by the State Family Planning Commission in late 1983 suggesting a 1982 total fertility rate in rural areas of 2.9 and in urban areas of 1.5. 2.2 Achievements in Reducing Mortality -- Levels, Trends and Regional Differences in Life Expectancy and Infant Mortality 2.06 Chinese statistics include several types of data that allow estimates to be made of life expectancy and other mortality indicators, such as the rate of infant mortality per thousand live births. In addition, the government from time-to-time provides its own estimate of life expectancy or infant mortality for the nation as a whole or for particular locales. 2 The MOPH provided the World Bank, for example, with the estimates in Table 2.2. Other relevant statistics that have been made publicly available include end-of-year estimates from the vital registration system of total population, birth rates and death rates for most years since 1949, limited information from the Table 2.2: OFFICIAL ESTIMATES OF LIFE EXPECTANCY AND INFANT MORTALITY, 1949 AND 1980 Mortality Indicator 1949 1980 Infant Mortality Rate (per thousand live births) (a) National 200 n.a. (b) Urban 120 13 (c) Rural n.a. 23.9 Life Expectancy (years) 35 69 Source: Data provided by MOPH to Rural Health and Medical Education mission. The 1980 figures were calculated using the definition of 'rural' that includes the population of county towns. 1/ Supplementary Paper No. 3 describes this analysis and its results. 24 Most recently the China Daily (March 27, 1984) reported results from Chinese analysis of the 1982 census indicating a life expectancy in 1981 of 67.9 years and an infant mortality rate of 34.7.  - 8 - population censuses of 1953 and 1964, and preliminary information from the census of 1982. Annex Tables A-1, A-4 and A-5 provide compilations of much of the available data. 1, 2.07 An additional important source of information was China's national cancer survey of 1973-75, which carefully collected data on all types of mortality and, in order to allow calculation of age-specific death rates, obtained an age distribution of the population as a whole from a sample survey. Chinese analysts used the cancer survey data to estimate a life expectancy in 1973-75 of 64.9 years; foreign analysts, attempting to correct for probable under- reporting, provided a range of estimates from 6j.7 to 64.4 years.-!/ The World Bank's initial economic report on China 3/ relied heavily on these latter estimates in its analysis. As indicated in section 2.1, however, far more data are now available upon which to base demographic analysis, and Supplementary Paper No. 1 utilizes these data in its construction of demographic trends and projections for China. Trends in Life Expectancy and Infant Mortality 2.08 Table 2.1 presented the Bank's estimates of post-1940 trends in life expectancy and infant mortali y, and Figure 2.2 illustrates the results concerning life expectancy. 4/ Three points concerning the results in Table 2.1 bear particular comment: (i) The data it presents confirm the official estimates of dramatic improvements in life expectancy and reductions in infant mortality. Continuing improvements that had begun five or ten years earlier, life expectancy rose from less than 35 years in the immediate post-1949 period to almost 70 years in the early 1980s; the estimated infant mortality rate declined from 250 in 1950 to less than 50 in 1981. 1/ China's Pattern of Population Growth, by J. Banister, (Stanford University Press, forthcoming) provides an extensive review of official and other available data on mortality in China through about 1981. For more recent discussions of demographic data from China, see Supplementary Papers Nos. I and 2 to this report. _/ See "Analysis of Life Expectancy in China, 1973-75," by Yung Shou-de, et al, Journal of Population and Economics (Beijing), 1981-1, Tables 3 and 4. Annex Table B-13 presents their estimates of life expectancy by province. For the results of foreign analysis, see "Mortality in China," by J. Banister and S. Preston, Population and Development Review, March 1981. 3/ See Annex H of China: Socialist Economic Development (Washington, D.C.: The World Bank, 1983). 4/ Estimates of life expectancy for individual years, as shown in Figure 2.2, may be somewhat unreliable; averages over 5-year periods and general trends, such as presented in Table 2.1, can be accepted with more confidence.  Figure 2.2 Expectation of Life at Birth, 1950-1982 70 - 60 50 t: