China has officially become the world’s largest economy based on Purchasing Power Parity, according to the International Monetary Fund. For centuries, China has remained relatively isolated from the rest of the world in terms of trade, but now the doors are wide open. China’s middle class is growing quickly as more families and individuals seek out better-paying jobs and access to the latest technology like smartphones and laptops.
As China’s economy continues to grow, the country is looking to revamp its healthcare system without inflating the national debt, so middle-class families can access vital services without going broke. China has unveiled plans to create the best and cheapest healthcare system in the world.
Here in the U.S., policymakers and advocates are trying to reduce the cost of healthcare. As we grapple with many of the same issues as our neighbor across the Pacific, let’s take a look at how China plans on creating world-class, affordable healthcare.
The China – U.S. Divide
China and the U.S. have been duking it out on several fronts, including cybersecurity, military power, human rights, and most recently, trade. The Trump Administration is in the middle of a nasty trade dispute with China as the two argue over intellectual property rights, labor issues, and other economic issues. However, China wasn’t always the goliath it is today.
China opened its doors to the rest of the world in the late 1970s. Since then, the country’s economy has been growing at an exponential rate. The country has a population of 1.2 billion people, which is more than four times that of the U.S. As the Chinese economy continues to modernize and trade with countries all over the world, millions of families and individuals have been lifted out of poverty and are starting to enter the middle class.
The middle class is defined as a family or household that has enough money for everyday expenses with some money left over for trips, entertainment, or additional consumption. These families have plenty of money to spend, and U.S. companies are looking to sell billions of products to this rapidly growing market of consumers, including some of the biggest healthcare companies in the world.
Just five years ago, the wealthiest Chinese would often leave the country for medicine and other healthcare services, while the poor were generally left with sub-quality healthcare and high rates of disease and illness. Now, the government is on a mission to make sure nearly everyone can access affordable, quality healthcare.
Here are just some of the ways China plans on reducing the price of care for its middle-class citizens:
- Investing in Healthcare
China has announced plans to offer first-world healthcare at a fraction of the price other countries pay, including the U.S. Part of this plan includes ramping up public investment. The country has doubled the amount of money it spends on public hospitals over the last five years to $38 billion.
The country hopes to have a healthcare system worth $2.3 trillion by the year 2030. Only time will tell if they have the funds and resources to make that happen.
- Reducing Drug Prices
One of the main ways China plans on reducing the price of care is to lower the price of prescription drugs. The U.S. pays some of the highest drug prices in the world. The FDA grants pharmaceutical companies the exclusive rights to sell and market the drug to the public for around seven years, giving some companies the freedom to jack up the price so they can recoup their investment as quickly as possible.
However, China is looking to avoid this conundrum. China plans on buying pharmaceuticals in bulk from some of the largest drug makers in the world, thus reducing prices for the general population. The country believes these companies will lower their prices in order to access China’s largely untapped middle-class market. Companies like Pfizer and Roche have already agreed to cut prices by as much as 70%. For generic drugs, prices have already dropped an average of 52% through the country’s bulk-buying program.
Reducing the price of drugs ensures that middle-class households will be able to pay for these drugs. It helps establish China as a destination for low-cost healthcare without inflating its medical insurance fund, which helps insure millions of Chinese citizens.
Venture capitalists are paying close attention to what’s happening in China’s growing healthcare market. China is reducing the price of care and easing federal regulations in order to attract some of the brightest minds and biggest investors in the industry. Tech companies have largely had trouble setting up shop in China, considering the country has a long history of stealing intellectual property rights.
However, venture capitalists see an opportunity in China. Digital healthcare companies hope to launch the next generation of medical devices and apps in China in order to get their products and services to market as quickly as possible. In the years to come, China may emerge as the new face of digital care as more companies focus their development strategies around China.
We have some time before China overtakes the U.S. as a leader in healthcare. Both countries are trying to reduce the price of care in their own ways. In the future, it may be easier and cheaper to schedule a surgery in China than it is to have the procedure in the U.S. Keep an eye on these trends as China and the U.S. face off over the future of healthcare.