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Cablegate: Expectations High for Rural Health Care in Southern Sichuan

VZCZCXRO5230
RR RUEHGH RUEHHM RUEHLN RUEHMA RUEHPB RUEHPOD RUEHVC
DE RUEHCN #0108/01 1240656
ZNR UUUUU ZZH
R 040656Z MAY 07
FM AMCONSUL CHENGDU
TO RUEHC/SECSTATE WASHDC 2455
INFO RUEHOO/CHINA POSTS COLLECTIVE
RUEAUSA/DEPT OF HHS WASHINGTON DC
RUEHPH/CDC CDC ATLANTA GA
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEHC/DEPT OF LABOR WASHINGTON DC
RUEATRS/DEPT OF TREASURY WASHINGTON DC
RUEHZN/ENVIRONMENT SCIENCE AND TECHNOLOGY COLLECTIVE
RUEHCN/AMCONSUL CHENGDU 2977

UNCLAS SECTION 01 OF 02 CHENGDU 000108

SIPDIS

SENSITIVE
SIPDIS

STATE FOR EAP/CM
HHS FOR OGHA - STEIGER, BHAT
CDC ATLANTA FOR CCID AND COGH
USDOL FOR ILAB
TREASURY FOR ISA-DOHNER AND KOEPE

E.O. 12958: N/A
TAGS: TBIO EAGR CASC CH
SUBJECT: EXPECTATIONS HIGH FOR RURAL HEALTH CARE IN SOUTHERN SICHUAN

REF: A. A. BEIJING 02140

B. B. BEIJING 02675
C. C. 06 BEIJING 005874
D. D. 06 BEIJING 24669

CHENGDU 00000108 001.2 OF 002


1. (U) SUMMARY: China's voluntary health insurance scheme, the
Rural Cooperative Medical System (RCMS) was designed to make
healthcare more accessible and affordable for the poor,
particularly in the event of catastrophic illness. However, as
the RCMS expands to reach the poorest areas, many communities do
not have sufficient medical and administrative personnel to meet
an increased demand for healthcare services or to manage costs
and design reimbursement strategies. As a result, areas such as
Sichuan Province's impoverished rural Nanxi county, may face
difficulties fulfilling its public pledges of free annual health
screenings, immediate partial reimbursement of fees, and
additional compensation for large medical bills. These promises
were essential to attract initial high participation rates from
farmers, but if the scheme fails to deliver, there will be
rising resentment and reduced future enrollments as people grow
disillusioned and withdraw from a scheme that is not addressing
their needs. This is the third and last in a series of cables
examining local healthcare in China. End Summary.

----------------------------------
DON'T MAKE PROMISES YOU CAN'T KEEP
----------------------------------

2. (U) During a recent reporting trip to rural Nanxi County in
southern Sichuan, Emboffs and Congenoff visited township
hospitals and rural clinics. Four years after the RCMS was
launched with much fanfare, promising to address the twin
problems of "seeing a doctor is difficult, seeing a doctor is
expensive" (kan bing nan, kan bing gui) in rural areas, local
officials are under pressure to show high RCMS participation
rates, a principal yardstick which the central government uses
to measure local government success. To boost participation,
some impoverished local governments may over-promise RCMS
benefits to attract participants and prove that their program is
a success. However, inadequate government funding along with
insufficient numbers of skilled personnel means these areas may
not be able to deliver on their promises.

3. (U) Rural Nanxi county, a six hour drive from Sichuan's
provincial capital Chengdu, has a per capita annual income of
3,000 RMB (388 USD) and boasts a RCMS enrollment rate of 90
percent among the 420,000 county residents, up from 65 percent
in 2005. Each participant in Nanxi's RCMS must contribute 10 RMB
(1.3 USD) annually which is matched by 10 RMB (1.3 USD) from the
central government, the province, the county, and district,
amounting to a total contribution of 50 RMB (6.5 USD) for each
enrollee. Local officials attribute the high participation rate
to innovative offerings that include free participation in RCMS
for the poor, free annual health inspections, quick
reimbursements, and supplementary coverage of between 30 and 50
percent for participants who incur medical bills of over 10,000
RMB (1,280 USD). During a carefully scripted presentation
outside a township hospital in Nanxi that serves 51,000
residents, officials showed us slick billboards demonstrating
how usage of inpatient facilities tripled between 2004 and 2006
because RCMS has made inpatient care more affordable.

4. (SBU) In a departure from an otherwise stage-managed event,
while officials were touting their achievements, an elderly man
amidst the crowd of onlookers started protesting loudly before
he was dragged away by local public security officials. He
complained that the officials were liars, that the RCMS was a
hoax, and that he had not received any reimbursement promised to
him after waiting more than seven months. Other residents later
privately commented that they were skeptical of official
promises to address their healthcare needs and noted that they
had never seen the billboards publicizing the benefits the
public was supposed to enjoy until our visit.

------------------------------
A SHORTAGE OF TALENT AND MONEY
------------------------------

5. (U) Because Nanxi claims a high RCMS enrollment rate and says
demand for inpatient care has rapidly risen, the central
government spent more than 300,000 RMB (39,000 USD) in 2007 to

CHENGDU 00000108 002.2 OF 002


construct a new wing for the township hospital. Nanxi, however,
has not hired any additional medical staff to meet the rising
demand for inpatient care. Nanxi also has a network of 309
public health institutions to serve its 420,000 residents but
most of these facilities have one or two rudimentarily trained
staff that only handles simple tasks such as diagnosing colds,
administering vaccinations and dispensing drugs.

6. (U) An acute shortage in the countryside of accountants and
administrators to conduct actuarial forecasts, determine
reimbursement strategies, and ensure cost containment also
threatens the long-term viability of this program. Local
communities such as Nanxi do not have the skilled staff
necessary to perform complex calculations for the level of
contributions the RCMS needs to be financially solvent, nor have
they determined the current and future costs for the benefits
they are now offering. Yanfeng Ge, a Deputy Director General of
the State Council's Development Research Center separately told
us that the 50 RMB (6.5 USD) collected in places like Nanxi are
only sufficient to cover an estimated 20 percent of healthcare
costs, making it critical that these places conduct actuarial
estimates and implement rigorous cost controls before extending
benefits. However, it is unclear if rural communities can
compete with wealthier cities and towns to attract the skilled
technical staff in a country that already has a shortage of such
talent.

------------------------------
IS THE RCMS ROLLOUT TOO RAPID?
------------------------------

7. (U) As China rapidly extends RCMS from 50 percent of counties
at the end of 2006 to 80 percent of counties by the end of 2007,
the fact that many rural areas do not have the healthcare
workers or administrators to address healthcare needs or manage
the RCMS could leave farmers dissatisfied with the level of
care, or find the program teetering into bankruptcy. During our
meeting with Sichuan Academy of Social Science (SASS) scholars,
they stated the focus on increasing coverage areas was misguided
because many of the communities that are now supposed to
implement RCMS are among the poorest and have the least capacity
to manage or implement such a program.

8. (U) While it may be politically expedient to embark on an
ambitious rollout so that one can boast of high national
coverage rates, if the Central Government is sincere about
addressing the population's healthcare needs, it may need to
slow the expansion to give local communities time to find and
train the staff needed to provide a sustainable, improved
quality of service.

9. (U) This is a joint Embassy Beijing-ESTH and ConGen Chengdu
reporting cable.
BOUGHNER

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