On 16th November, 2018, Professor Zheng Xiaoying, Dean of APEC Health Academy and Director of Institute of Population Research at Peking University, gave a talk on Human Capital in China: Health and Education, as a seminar of Green Growth and Sustainable Development Program which is organized by Peking University Public Policy Forum International and the Institute of South-South Cooperation and Development. Professor Fu Jun hosted the seminar and he said the program is in a process of putting different things together, and human capital is one of the critical variables of the equation, the program would install the population, education as well as health as matters of public policy discussions. 

At beginning, the first issue Professor Zheng talked about is the population transition -- China’s demographic change which needs to be taken seriously and with caution. China’s population is ageing at an alarming rate, while the birth rate, mortality, and natural population growth rate are all declining. Then she continued with Health Transition as second issue, comparing urban and rural areas with different scenarios of infection/chronic diseases models, and the environment and lifestyle are essentials factors for the health development. 

Regarding the population, she emphasized that the number is not the issue, but balanced human capital related with education, health, and balanced structure is critical. The world research shows that the GDP, especially the money invested in the healthcare and education are positively related with the life expectancy she said. So the education is important and the government should invest more money to the health service and public health system. The China’s health expenditures increased from 1.5% of total GDP in 1978 to 5.7% of total GDP in 2010, which is a big change, although it is still lower compared with developed countries’ 10%-15% or even higher, Professor Zheng illustrated.

Coincidentally, the declining of life expectancy in developing nations remains a common problem, this is synonymous with the Lucas puzzle in which Economists and policymakers alike tend to assume that capital should flow from rich to poor countries, but in recent years the opposite has happened. Why are developing countries’ life expectancy very low compared to developed nations? 

Professor Zheng then advised that one major factor why developing nations have low expectancy is due to poor economic conditions; the healthy sector is not properly funded. She cited that China has been investing in the health sector to ensure that citizens have access to health facilities, this is the reason China despite being a developing country has high life expectancy.

It is obviously that, investing in the health system not only saves lives, it is also a crucial investment in the wider economy. This is because ill-health impairs productivity, hinders job prospects and adversely affects human capital development. There has been a strong political and historical commitment to treating health as a social goal either through legislation or mandating and prioritizing expenditure on health. The key question is while it is universally accepted that health is a noble and worthwhile investment, how can we demonstrate value for money, especially in areas that compete for government funding?

Some countries in South East Asia spend very little on health: $215 in terms of purchasing power parity per person, which is lower than comparable middle-income countries such as China, Brazil and South Africa. This forces citizens to use their money to pay for the medical services, the use of out of pocket money causes panic to those who cannot manage to pay.
There is need for countries to extend the health funding by looking at a wider picture of investing in human capital. Some of the most successful examples of expanding coverage among middle-income countries in recent years have addressed this challenge by defining a limited set of essential, cost-effective services. For example, Mexico’s Seguro Popular programme provided an explicit package of cost-effective interventions, including pharmaceuticals. Chile identifies about 70 essential services that are fully covered by public and private insurance.
Many developing countries in Africa still have a daunting task in ensuring that their citizens have access to better health services. Many hospitals in Africa and other developing countries run out of basic drugs like painkillers. However, there are so many lessons that countries like in Africa can learn from China such as having proper funding in health sector.

According to Professor Zheng, one of the challenging situation in China is that many young Chinese people move to cities making these rural areas inhabitants of the elderly. However, China is facing some health problems due to polluted environment, some of the diseases that are associated with pollution are: malignat tumours, heart diseases, diseases of respiratory system and TB among others.

How can other developing countries invest in health sector? Incentivizing national regions to expand healthcare to the poor, such policies also offer higher prospective rewards for those states with low health coverage. This provides scope to achieve fiscal equalization between richer and poorer states in the form of appropriate transfer schemes from the centre aimed at reducing interstate disparities in health spending. Indeed, what is crucial is to move away from historical or incremental budgeting (which is linked to supply rather than need), to a more needs-based funding approach.

Governments also need to work closely together so that minimum quality standards are maintained, and specialist resources are used efficiently. However, the implementation of minimum standards requires coordinated political will at both the central and state levels. For this, accountability mechanisms for healthcare outcomes matter more than the degree of decentralization or type of provision. In particular, balancing responsibilities across central and local authorities is important.

Effective policies can ensure that national regions of all angles of the country’s incremental spending goes to health, but also enhances value for money. This is because funding can be linked to cost-effective interventions, such as preventive and primary care activities, rather than less cost-effective (but more visible, and therefore more politically attractive) interventions, such as construction of new hospitals.

It is for the reasons above that developing nations need to look into a bigger picture on the importance of investing in the health of their citizens. A country that has a healthy populations is always productive. With good planning, developing nations can do more and realise their potential in economic stride because they have healthy people who can do more for their nations.

 

(Edit by Donasius Pathera, photo by Ning Ying)