Please join me tomorrow in Seattle with the National Bureau of Asian Research (NBR) for an interactive roundtable breakfast discussing Myanmar’s health infrastructure. The rise of health on the government priority list is opening up new opportunities for foreign engagement. How is Myanmar’s openness making an impact on the health system? RSVP and comment at the following link.

http://www.nbr.org/research/activity.aspx?id=9d11cac2-7910-4116-82c0-6335d852bcd1

The details from the NBR site are as follows:

Hope to see you there,

//Ben

]]> http://www.asiahealthcareblog.com/2013/05/21/join-me-in-seattle-tomorrow-for-a-discussion-myanmars-health-infrastructure-the-evolving-context-for-foreign-engagement/feed/ 0 http://www.asiahealthcareblog.com/2013/05/21/join-me-in-seattle-tomorrow-for-a-discussion-myanmars-health-infrastructure-the-evolving-context-for-foreign-engagement/ http://feedproxy.google.com/~r/asiahealthcareblog/ADcB/~3/gCldtiGAU1g/ http://www.asiahealthcareblog.com/2013/05/16/chinas-hukou-system-a-passport-to-health-hukous-and-education/#comments Thu, 16 May 2013 17:35:05 +0000 Bradley Hoath http://www.asiahealthcareblog.com/?p=7251 This is Part III of Bradely Hoath’s three part special series, China’s Hukou System: A Passport to Health. The series aims to explore how China’s hukou system impacts the health of China’s migrant labor population. In Part I, Bradley explained how the Hukou system impacts access to care. In Part II, Bradley looked at how the hukou system impacts the ability to get housing, and how that ability, or lack there of, further impacts health outcomes. In this concluding installment, Bradley explores the link between the Hukou system, education and health. How does the link between Hukou’s and educational opportunities affect health outcomes?

For a general introduction to the Hukou system, please refer back to Part I.

Education Access and Health Status

The relationship between education and health has been consistent across different cultures and time periods.  There is a positive correlation between higher education and better health status across a myriad of different health indicators, holding external factors like job, income, and family background constant.  Better educated individuals have lower morbidity rates for common acute and chronic diseases, are less likely to have depression, are less likely to be obese, have fewer sick days, and are less likely to develop heart disease.[1]  This list is by no means exhaustive and only begins to highlight the strong connection between education and health status.  Educated individuals typically have a better understanding of their own personal health and make better health behavioral decisions, such as not smoking.

The Hukou System’s Effect on Education Access

China’s K-12 education system is almost entirely comprised of state-financed public education.  Much like other social services provided by the government, access to education is highly fragmented and localized.  Children who migrate with their parents to urban areas have difficulties accessing public education in urban schools.  In many Chinese cities, children with rural hukous are prohibited from enrolling in local public schools.  A large reason for this is that “public schools rely heavily on financing from local budgets.”[2]  Underfunded public schools often just don’t have enough money to provide education to migrant children.  Migrant children who are permitted by the local government to attend public urban schools must pay exorbitant, extra fees – not paid by local students – to cover the cost of the additional student enrollment.  In addition to financial barriers, multiple “official documents, strict quotas, and a supposed shortage of school places act to exclude migrants from city schools.”[3]  Furthermore, licensed private schools for migrants are not a practical alternative to public schools, as they tend to charge tuition fees higher than most state schools.

Older children of migrants who have migrated to cities must go back to their registered hometown to take high school and college entrance examinations.  These children may be disadvantaged, compared to other students, if there are education gaps between their education in the city and what is being tested back home.  Furthermore, there are regional disparities in admissions for Chinese universities.  Universities typically set fixed admission quotas for each province; usually accepting more students from their home province.  However, educational resources and funding are not evenly distributed and richer, more urban provinces tend to have more universities and higher quality universities.  This uneven distribution across regions disadvantages children of migrants from attaining high quality university education, either by making acceptance to a high quality university outside of their (typically poorer) province more difficult, or by not supplying adequate resources to develop equally high quality universities in their poorer, rural home provinces.

Current Coping Methods to Accessing Education

Children of migrants are left with few options for education – none of which are ideal.  Children may either be left behind in their hometown, pursue education in unlicensed urban schools, or forego education altogether to join the labor market.  Children may be left behind in their hometown exactly to avoid the problem of limited access to urban education.  While left-behind children gain regular access to education, a new series of problems arise that can affect developmental health of the child.  Left-behind children are either raised by single parents, grandparents, or even their siblings, often maintaining, “irregular and limited contact with their parents and feel[ing] lonely, isolated, and deprived of support.”[4]  Children may see their parents just once per year during spring festival.  Alternative caregivers to these left-behind children “are often unable to provide them with adequate care – including emotional support, adequate hygiene and nutrition, and homework supervision.”[5]

Children who migrate with their parents to urban areas are typically enrolled in unlicensed private schools.  These “black schools” are generally operated by migrants themselves and in poor condition.  It is not uncommon for school classrooms to be former factories, shops, markets or even industrial shipping containers.  Additionally, schools may lack electricity, heat,[6] and lavatories, as well as materials conducive to teaching such as blackboards, textbooks, desks, and cabinets.   Curriculum is not standard from school to school and, due to inadequate funding, it is not possible to provide a full curriculum comparable to state schools.  Physical education and health education is rarely promoted in migrant schools, and there are no nurses to provide basic health services to students.[7]

To make matters worse, urban education for migrant children is often interrupted by both local officials and their migrant parents.  Since most of these migrant-run private schools are illegal, many local authorities close down the schools (without offering educational alternatives for migrants).  Due to frequent closings and low tuition fees, there is little incentive for school-owners to invest in the school.  Adding to the interruption of studies are the child’s migrant parents who may choose to move from one city to the next for better employment opportunities.

It is then no surprise that many children of migrants forego education altogether, drop out of school, and join the labor market as child laborers.  Whether children of migrants stay in their hometown or join their parents, neither option provides children with a structured, healthy, or nurturing environment for them to learn and develop.

Discussion: Migrant Education Access Recommendations

Children who follow their parents to the city are faced with a single option for education: unlicensed migrant-run schools.  These schools are frequently shut down.  A big shortcoming of this situation is that these children are then left without a substitute for education in the city.  Local school closures put the local officials at odds with the central government’s mandate of nine years compulsory public education for all children.  The compulsory education law was amended in 2006, stipulating that public education was to be provided by the local government for children whose parents or legal guardian are working in that city, regardless of hukou.  Regretfully, this amendment has been merely de jure and extra fees and public school enrollment restrictions are still predominant.  Migrant enrollment barriers are due to the fact that education must be financed by local government funds.  Increased education funding from the central government will ensure local governments have adequate resources to provide education to child migrants; either through public schools, or helping unlicensed migrant-run schools into the mainstream.

Financial support and a clearer defined framework should be developed in order to license private migrant schools and remove them from the “black market” areas, which promote unhealthy environments for children.  Official migrant schools can help better account for the floating migrant population as well as help standardize curriculum and health education and promotion.  More standardized curriculums will help migrant children transferring back to their hometowns for high school or university.  Additionally, special social work, welfare, and after-school programs should be put in place to help support left-behind children and offer them a more stable environment for learning and development.

Conclusion

Rural-to-urban migrants have played an important role in the economic success and development of China for the last thirty years.  Hukou reform has allowed migration to urban areas and a chance for migrants to increase their own personal earnings.  However, their steps towards higher wages have come at severe restriction to basic welfare that has a huge impact on their health.  Legacy policies from the inception of China’s household registration system have left the rural population as secondary citizens.  Worse, rural migrants who choose to move to urban areas are left without access to healthcare, housing, and education.  With China’s rural-to-urban migrant population accounting for nearly one-fifth of the total population, greater scrutiny needs to be given to this marginalized sub-population and the policies that are impacting their health.  While the hukou policy will not be abolished anytime soon, policies can be adjusted in order to protect the health of rural-to-urban migrants.  It is important to consider the implications of not just health policy, but all policies being developed by the government.  All policies, whether they’re directed at heath access, housing, or education, have socio-structural implications on population health.

For a general introduction to the Hukou system, please refer back to Part I.

Housing Access and Health Status

There has been a longstanding connection between access to adequate housing[1] and population health.  It is well understood that housing quality is strongly associated with morbidity in terms of infectious diseases, chronic illnesses, injuries, poor nutrition, mental disorders, and so on.[2]  Housing can have both direct and indirect effects on a person’s health.  Negative health effects such as respiratory illness and infectious disease transmission can be caused or exacerbated by poor housing.  Damp, cold climates, poor ventilation, and the presence of indoor tobacco and coal smoke all contribute to respiratory illness.  Another characteristic of substandard housing is unclean, unsanitary surfaces and interfaces where infectious diseases can fester and spread to the housed populations.  Less direct effects of poor housing are the constant psychological stresses of being put into such living situations.  In summary, “there is evidence that, in part, poor housing conditions contribute to increasing exposure to biological, chemical and physical hazards, which directly affect physiological and biochemical processes.”[3]  The effects of poor housing are complex and contribute to a wide range of health problems.

Hukou Effect on Housing Access

Prior to the late 1990s, migrants enjoyed relatively fair access to low-rent housing in the cities through a system of welfare by the municipal government.  However, the privatization of housing in urban areas has left migrants today “largely excluded from the mainstream housing distribution system as the linkage between household registration and urban housing is largely intact.”[4]  Urban housing has historically been distributed to individuals either through their work unit[5] or municipal governments.  By the end of 1999, China reformed their housing distribution towards a market-oriented private system.  State-owned apartments were sold off to private citizens – opportunity for purchase was primarily given to local, urban hukou residents.[6]  As result, urban residents essentially controlled the secondary commodity housing market.  Due to China’s weak financial markets, property investment has become one of the few reliable investments for a family to pursue.  Home prices in major cities of China have grown at astonishing rates since marketization.  While it is possible now for any individual, including rural hukou holders, to purchase a home, bank mortgages are only available for local, urban hukou holders.  Commodity housing is not a viable option for migrants.  Paying for a home upfront is essentially out of the question for migrants as are alternative methods of financing, such as a mortgage.

Beyond commodity housing, there are two other major types of housing in urban areas existing since 1999: economically affordable housing and rental housing.  Economically affordable housing is a legacy leftover from pre-marketization in which the municipality government supplies below-market rent housing to low-income families.  This type of housing however is only available to urban hukou residents.  The last major type of housing in urban areas is standard rental housing, which, as will be discussed below, is often not ideal.

Current Coping Methods to Accessing Housing

The continued relationship between urban hukou and access to formal housing options has excluded and marginalized urban-to-rural labor migrants.  With no better options, employer-provided housing and rental housing, specifically urban housing villages, have become the de facto homes for migrants in the city.

Rental housing provides the most formal and popular option for migrants.  As was expressed before, housing prices, along with rental prices, have been skyrocketing since 1999.  Much like purchasing a home in the city, rental housing in the city center is too expensive for migrants.  Additionally, real estate in most Chinese cities is sparse and coveted.  It is difficult for anyone to find available housing to rent from in many Chinese cities.  As a result, migrants have found financially affordable shelter in urban housing villages, located in the suburban outskirts of cities.  This rental housing is predominantly private housing in areas outside of the city that was formally being used for agriculture.[7]  Rural hukou city residents[8] own these private housing structures that are rented out to migrants.  Loyalka’s novel Eating Bitterness documents the situation of Gan Jia Zhai (甘家寨村), an urban village on the outskirts of the city Xi’an (西安):

Nowadays there’s only one thing the financially stable villagers of Gan Jia Zhai are still willing to do: collect rent payments.  That’s possible because like most other Chinese villages, Gan Jia Zhai was designed with the farmhouses clustered together, away from the fields.  So while the High-Tech Zone gobbled up Gan Jia Zhai’s farmland and turned out a steady stream of new buildings where crops had once been, the farmers’ homes were left untouched.  When migrants started pouring in to find work building up the new area, Gan Jia Zhai’s villagers, quick to spot an opportunity, began leasing out spare rooms to those looking for a cheap place to stay.  As demand continued to rise, they began adding on to their homes to make room for more renters.[9]

As municipal governments become new land owners and aim to develop the area, they do not necessarily own the building properties on top of the land.  This has caused a gray area in property rights as well as a neglect of housing and health regulations in this fringe rental market.[10]  Due to these lack of regulations, environmental safety has become a chief concern for inhabitants.  Being located on the city outskirts often means being located near harmful pollutants and contaminant waste dumps.  These areas of high migrant concentration also result in overcrowding, “with each person using only about a third of the space occupied by a typical urban resident.”[11]  Shared and close quarters help spread infectious disease.  Additionally, due to the low-levels of rent, landlords have little ability to improve the housing standards, which can often lack water, electricity, gas, and human waste disposal systems.

Another housing option for rural-to-urban migrants is employer-provided housing.  These housing projects usually come in the form of cramped dormitory rooms.  Since urban housing villages are located outside of the city, migrant workers have long commutes if their work is located closer to the city center.  Employers may have an incentive to offer housing to cut down on employee travel time, especially if laborers are expected to work long hours.  Dormitories can also internalize labor costs for the employer and reduce wages paid to employees.  Migrants may choose to live in employer-provided housing not only to reduce travel time, but to also cut down on travel costs.  While urban village landlords may not have the capital to improve housing quality, employers usually don’t have the incentive to improve quality.  In line with business interests, employers want to minimize housing costs to maximize their profits.  Migrants living in employer-provided housing encounter similar problems detrimental to their health as happens in urban housing villages.  Overcrowding is also a problem in employer dorms, if not worse than urban housing villages, as inhabitants often have no choice over room selection or relocation.  Overcrowding also makes a shortage of basic facilities a severe problem.  Another effect of poor housing that can affect a worker’s health is noise pollution, which is a common complaint among workers in employer-provided housing.  Workers in the industrial, service, and construction sectors often have employer-provided housing located near their worksite, which can be active and noisy at night.  Inability to sleep due to noise can cause severe and chronic physical and mental problems.

The current coping methods for rural-to-urban migrants seeking adequate housing are not many.  Urban village and employer-provided housing offer two options, but neither is systematically equipped to provide healthy living conditions.  What’s more, some migrants who cannot access these options may resort to “other housing choices includ[ing] self-built sheds, boats, hotels/inns, living on the street or in a hallway, and staying in hospital rooms.”[12]  Overall, rural hukou-holding migrants in urban areas suffer such a big decline in terms of housing quality that “more than three-quarters of temporary migrants … feel that their housing conditions … are worse than those at home.”[13]  Whether they are aware of it or not, these migrants face forced exposure to adverse health factors because of the kind of housing they are forced to live in.

Migrant Housing Access Recommendations

Given the financial limitations for migrants, options for both healthy and low-rent housing is limited.  Improving living standards in the existing housing options does not seem feasible.  Urban housing villages do not have the capital and employer-provided housing do not have the incentive.  High rent has become a disincentive for individuals contemplating migration to the city.  The central government has taken notice of this housing affordability problem and has initiated a series of new policies dedicated to creating a new generation of public housing units.  China’s 11^th Five Year Plan (2006-2010) specified the construction of 11 million new low-rent public housing units and China’s 12^th Five Year Plan (2011-2015) specified the construction of 36 million new public housing units nationwide.[14]  These housing units will hopefully increase capacity and help decrease housing prices in urban areas.  New housing units should be equipped with reasonable living amenities such as proper waste disposal systems and running water.

Additionally, urban housing village property should, and most likely will, be better defined and administrated.  The fragmentation of property and land rights between the rural hukou city residents and the local government produces a gray area, which lacks public health oversight.  Firmer regulations and enforcement of building and health codes in registered housing units will help improve public health and reduce environmental hazards related to housing.

Lastly, while employers and employees may both agree on low-quality employer-provided housing, the result yields unhealthy living conditions.  This socially undesirable consequence leads to an opportunity in which the government can intervene.  Improving housing affordability across the board may not necessarily work because employer-provided housing offers intangible benefits (e.g., reduced commutation time) that rental housing doesn’t.  An effective method to improve the poorest quality housing in the urban areas would be an implementation of “supply-side policies to encourage/require employers to provide better quality housing.”[15]  Regulations for spacing, basic facilities, and noise levels can help to improve the physical and psychological health of migrants.  Hukou policies have forced migrants to choose between a very limited set of alternatives, none of which promote healthy living.  Unintended health consequences of poor housing can disincentivize rural individuals from pursuing employment in urban areas.  Similarly, it is in the interest of local urban officials to improve the quality of migrant housing in order to continue attracting a low-wage working population.  For the past 30 years, migrant workers have played a significant role in China’s economic boom.  As China’s labor pool begins to shrink, workers, especially lower-wage earners, are becoming more valuable.  Regions across China, particularly inland and coastal areas, are already competing with each other to attract workers.

Housing for seniors is not simply a real estate challenge

The numbers are staggering: by 2050 more than one-third of China’s population will be over 60. Beijing already has more than 1.7 million people over 65, and Shanghai more than 2.3 million. With the incidence of dementia in China projected to more than quadruple by 2040, the country is in desperate need for new senior care models that are financially sustainable and that efficiently pull together the efforts of government and the private sector.

If demographic and economic growth trends hold true, no country in the history of mankind will get as old, or as rich, as fast as China will. The combination of wealth creation and massive societal aging poses many profound challenges to the Chinese government that need to be dealt with. One of the most important issues that needs to be identified and planned for properly now, before problems present themselves, is making sure the senior housing capacity built by the private sector is financially sustainable.

In the late 1980s, US real estate developers were struggling. The recession and stagflation of the 1970s had left many holding under-performing commercial, residential and hotel space. As they looked for new purposes for these developments, many turned to senior housing as a way of changing under-used sites into financially attractive properties. Unfortunately, the results were poor. Many of the redevelopments proved to be financially unsustainable and went bankrupt, leaving seniors stranded in developments that could not afford to keep their doors open.

Others that managed to stay in business were unable to offer the level of healthcare services that seniors who were in search of specialized housing required. By the late 1980s it was obvious that while the demographic need in the US clearly indicated a need for senior housing, the industry needed more than just housing capacity; it needed all-encompassing solutions that addressed the unique personal, familial and financial needs of an aging population. The question was what more would be required for a viable senior care business to emerge in the US.

As often happens in the US, the government was slow to involve itself in the senior living industry. The many failures that occurred in the 1980s indicated that local governments would need to mandate senior living facilities, conduct basic market analysis and prove their particular financing model was sustainable in order to protect vulnerable seniors who did not have the ability to absorb a major setback late in life. Watching the amazing number of senior living facilities springing up around China, now is the time for the central government to ask whether the right safeguards are in place to protect seniors from unsustainable developments as happened in the US in the 1980s.

What would this mean in China? First, municipalities would slow down on approving new senior housing developments until basic due diligence is completed. In the US, new senior housing must prove that a viable local market exists near the planned development and that this group can pay, or authorities will not approve the development. Second, new developments in the US must present a financing model that illustrates how the planned business will continue to be financially profitable even as the healthcare requirements of the elderly moving into the facility become more involved and expensive.

This latter point is extremely important: simply building senior housing with adjustments that take into account the social interests and communal requirements of an older group is straight forward enough. But senior housing is never just housing. Inevitably, and in China’s case very quickly, it becomes a healthcare product. If developers are not required by government to take these factors into account, a lot of housing will be built that does not reflect the likely needs related to dementia care, stroke rehabilitation or palliative and hospice care that have been proven worldwide to be necessary components of integrated senior care solutions.

The role of real estate in China’s amazing growth story is well understood. But if senior housing is viewed primarily as a real estate transaction, China’s aging population could be one of the many impediments that prevent the country from becoming a global powerhouse many expect it to be.

The simplest of steps, forcing developers to embrace more comprehensive market analysis and due diligence, would go a long way toward ensuring China’s approach to senior care reflects the hard lessons learned in the US when real estate developers moved too quickly into senior care without a full grasp of the sort of long-term commitment it represented.

Some of this was perfectly understandable:  as an industry, we still aren’t really sure what to make of the China opportunity.  Demographic arguments are tired; we don’t need to be convinced of the need.  What we all want to see and understand is whether a compelling commercial opportunity can be created in China.  The recent China Daily article on Cherish Yearn noted they only became profitable this year.  What it took to become profitable and how “profit” was defined are two questions worth asking, but the point remains:  we are all still wondering how exactly to make a senior care model work in China.  There will obviously be room for divergent models to work given the sheer size of the market in China, but regardless of your particular model, basic questions about pricing, regulations, marketing and HR concerns need to be answered.  Hats off to those of you reading this who are in the fight, actually doing this.  For those at the periphery watching companies like Cascade, the question is what to make of their most recent announcement.

The relevant details from the Columbia Pacific press release follow:

“Cascade Healthcare, a China-based affiliate of Columbia Pacific, and Sino-Ocean Land, the Chinese developer, have formed a Sino-Foreign Joint Venture to develop and operate their first project together: a senior care facility in southeast Beijing.  The 60,000-square-foot facility, Senior Living L’Amore – Kaijian, is being constructed in Sino-Ocean’s Ocean Palace luxury residential housing community in the Yizhuang area of Beijing. When it opens this summer, the 110-bed facility will provide residential senior care services to Chinese seniors, adapting the best international standards of management and care to local Chinese cultural norms. Sino-Ocean Land and Cascade Healthcare will each put up 50 percent of the registered capital of the new facility and jointly oversee project operations.”

A couple of things to point out.  First, this is a clear bullish signal from Cascade.  You might go so far as saying this represents an early entrant doubling down on their initial investment.  Has the expansion in Shanghai gone according to plan?  No.  But that is the cost of being first, and it isn’t for everyone.  Being first means spending capital, taking some lumps, learning some lessons that others who follow benefit from.  It is an inherently entrepreneurial and perhaps even inefficient process.  If you don’t have the stomach for that sort of risk, then the China senior care market probably isn’t for you … yet.

The second point that jumps out to me is that this is a joint venture (JV).  That may seem a small detail, but I submit to you that it is quite important.  Why?  Well, if one of the largest and most well connected American senior living operators and investors determined they needed a Chinese partner to be successful, that is probably a major signal that you can’t go it alone in China.  Nate McLemore, a Managing Director with Columbia Pacific who oversees their China investment shared with me, “Sino-Ocean brings substantial real-estate, regulatory, and marketing expertise.  Kaijing / Cascade Healthcare and Columbia Pacific bring senior housing and senior care expertise.  The experience and skills of the two organizations are very complementary and we had a shared vision.”

Third, the next facility in Beijing reflects the level of care offered by Cascade in Shanghai.  The two facilities are similar in size (Shanghai has 100 beds built in a 50,000 square foot site; Beijing will have 110 beds in 60,000 square feet).  They are both focused on assisted living.  Beijing will offer the following:  nursing (skilled and assisted living), medical clinic (western, TCM, rehabilitation, psychotherapy), nutrition dining, and the more typical residential and hospitality services alongside planned social activities.  Where I see the big difference is that the Shanghai facility is a repurposed site versus the planned Beijing facility that, if I understand this correctly, will be co-located within the under-construction Sino-Ocean Ocean Palace luxury residential housing community in Yizhuang.  As we’ve written about before, getting greenfield sites in Beijing for any purpose is tricky; senior housing is no different in this regard.  JVs are likely and necessary in situations where you need land but can’t get the right parcel where you most need it.  Given Sino-Ocean’s existing investment in the area, dovetailing with their efforts makes a lot of sense.  Add to that the general and persistent ambiguities that persist in China’s senior care space, and having a local partner starts to sound pretty important.  In addition, it is worth point out that plugging into an existing development and running the senior care component has been tried before, most notably at General’s Garden (with the caveat that the latter was driven by developers entirely new to senior care with none of the partner expertise that Cascade and Emeritus bring to the table – important differences to keep in mind).

No doubt Cascade will have to learn a lot of new lessons:  Beijing and Shanghai are two very different markets.  Success in one is not going to make success in the other certain.  But, it would be a mistake to look at this recent piece of news as an overall bullish sign that one of the earliest entrants to China’s senior housing sector has decided to double down.  As an industry, we all stand to benefit from the lessons created and the infrastructure built as Cascade expands in Beijing.

Despite reforms to the hukou system in the last 30 years, however, discriminatory policies towards China’s rural population still exist.  Current hukou policies are having unintended consequences on the health and well-being of over 260 million rural-to-urban labor migrants;[1] nearly 20% of China’s population.[2]  This special three part series attempts to describes the current hukou system’s effect on  social determinants of health by exploring three separate phenomenons affecting rural-to-urban labor migrants: (1) access to health services, (2) access to housing, and (3) access to child education.  In the first section, the relationship between each social determinant and its effect on population health will be clarified. In the second, an analysis will be given as to how the current hukou system actually affects the determinant.  Lastly, current coping mechanisms of rural labor migrants will be explored.

Through this three-part analysis, it will be made clear that the hukou policies affecting healthcare, housing, and child education inevitably determine and disadvantage the rural-to-urban migrant population’s health status. Current coping mechanisms used by rural-to-urban migrants and the implications of these access issues on population health will be described and evaluated.

History of the Hukou System

The foundation of the hukou system in the 1950s and subsequent reforms have left significant effects on the present social hierarchy of China.  Before analyzing such implications of the current system, it is important to understand the history of hukou in the People’s Republic of China.

As the Chinese Communist Party came to power in 1949 and began structuring state-sponsored developmental priorities, a household registration system was developed to restrict internal population movement.  The main goal was to limit mass migration in hopes of establishing structural stability and a steady supply of low-cost laborers for state-owned enterprises.  After years of foreign invasion and civil war, Party officials were focused on two specific developmental priorities: Urban unemployment and national productivity.[3]  Presumably adopted from the USSR, policy-makers assumed the responsibility of providing general welfare[4] for urban residents, leaving rural localities to care for their own rural population.  In doing so, the administration and welfare provided by the state was solely confined to the minority urban population.

At first, migration of non-urban residents out of cities, like Beijing and Shanghai, was voluntary.  Refugees and the unemployed were encouraged to migrate to the countryside through land distribution and state subsidies.  From 1953 to 1956, however, essentially all private industries in China were converted into state-owned collective enterprises.  During this developmental time of a state-sponsored planned economy, strict population control methods were put in place and non-state-sanctioned recruiting of rural migrants was strictly prohibited.  Top-down employment quotas were given to urban state-owned enterprises and it was understood that when rural migrants were no longer needed for city labor they would be repatriated back to their rural homeland.  By 1960, the hukou system was fully in place and all citizens were fixed to their birthplace, or husband’s birthplace.  Nearly all requirements for living, such as food and housing, were controlled and rationed by local government; it was not realistically possible to venture away from the location listed in one’s hukou.  Furthermore, type of residence was associated with socio-economic benefits, separating the welfare of urban and rural populations.  Resources were disproportionately distributed to urban hukou holders, who received distinctly superior rations.  For example, even the percentage of grain allotment in one’s diet was higher for urban residents.

After the death of Mao Zedong, the Party began initiatives, led by Deng Xiaoping in the late 1970’s, to reform the rural economy through “Contracting Output to the Household” (bao chan dao hu 包产到户), and in 1981, “Contracting Work to the Household” (bao gan dao hu 包干到户).[5]  By 1983, all but 2% of rural households had decollectivized.  This created market-oriented agricultural grain markets.  Rural peasants no longer needed to rely on the State for grain distribution; they were now able to travel away from their place of residence and migrate to urban areas, without fearing lack of access to food.

At this point, rural migrants were already looked down upon and discriminated against by urban residents and officials.  The derogatory term mángliú 盲流 (blind migrant) was widely used to describe rural migrants”[6] and is still used frequently today.  Urban residents were mostly ignorant to the hardships of being a rural-to-urban migrant and were quick to blame migrants for any negative developments in their city, such as overcrowding, uncleanliness, theft, or violence.  In Zhang Mingyuan’s 1989 modern play, A Rainy Summer [多雨的夏天], the main character, a male rural-to-urban construction worker, says:

In a city as big as this, there’s nowhere we could get a footing.  Other people would curse us as migrant rovers, darkies, or third-class citizens.  We’d work so long and hard we nearly keeled over, but we couldn’t get so much as a word of thanks for our labors.  When we’d go into a store or stroll through an open market, other people would give us a wide berth.  If we wanted to establish our position in the city, we had to work; if there was no work to do, we’d just have to starve to death!  We had no backer to help us; if we got too poor to pay the rent, the only thing we could count on would be a swift kick out of the place![7]

Since its formation, the hukou system has divided China’s population into a two-tiered hierarchy, which has created and controlled an unequal distribution of income, housing, food, education, medical services, education, employment, and retirement benefits.[8]  While some provisions of welfare, such as grain access, have been renounced, the disadvantaging policies of the hukou in many other socio-economic areas, such as healthcare, housing, and education are still fully present in contemporary China.

Motivations for Migration

As China’s economy has grown in the last 30 years, so too has the amount of rural residents migrating to urban areas.  While there is little doubt that their participation in urban industry has helped grow the national GDP, there is no single factor driving today’s rural-to-urban migration.  However, most motivating factors for migrants concern finding new economic opportunities and making higher annual salaries.  Relative to urban areas, wages in rural areas can be extremely low.  Michelle Dammon Loyalka’s novel, Eating Bitterness (2012), documents contemporary migrant experiences of “eating bitterness” – enduring hardships and overcoming difficulties.  A constant theme throughout migrant stories in the novel is the importance placed on financial stability and economic opportunity.  The main character, Zhang Liping, laments about her rural life:

“‘Economics is the foundation of everything,’ Liping says. ‘even if you want to make friends, economics is still the foundation.  Friends come over, they eat fruits and seeds, watch TV, and listen to music.  All that takes money.’”[9]

For rural citizens, migrating to the city is one of the only opportunities to improve life.  Due to state and foreign investment in China’s urban areas, particularly along the coastal region, income levels between rural and urban areas in China has grown to be one the most disparate in the world.  Migrants typically migrate to higher paying urban jobs to substitute or supplement low wages in the countryside, often sending remittances back home.

Additionally, as agricultural productivity has increased, there has become a labor surplus of rural workers that once worked in the agriculture sector.[10]  Many of these workers look for new employment in either non-agriculture rural industries, such as working for township and village enterprises, or in urban areas.  As China reforms towards a market-oriented economy, state-owned enterprises continue to be dismantled and more and more private enterprises are established.  With a market economy comes freer mobility of labor.  It is easier for rural Chinese to “match” with employers (i.e., migrate to urban areas that need labor).

Lastly, in some rural areas, local governments openly encourage rural-to-urban migration away from their locality.  These provinces tend to be poorer than others in China.  Out-migration reduces some of the financial burden on local and provincial governments.  These provinces or towns often make deals with specific urban areas to encourage their labor population to move there.  Often times, there are communities of rural migrants from the same hometown already in place in the urban area.  This offers a support network for migrants in a new area that is unlike their hometowns.  They can speak their mother dialect/language, eat their hometown dishes, and live with people already in their social network.  Many migrants tend to migrate only to cities where they already have migrant friends and families working.

Access to Care

Healthcare Access and Health Status

Access to healthcare services has direct effects on short- and long-term statuses for all people.  There are two main aspects to accessing healthcare: physical barriers to healthcare service providers[11] and financial barriers to healthcare services.  Examining financial barriers to accessing healthcare, high healthcare costs and lack of significant financing mechanisms are significant problems.  In many countries, including China, healthcare services must be paid upfront.  If a patient needing care does not have either private (i.e., personal) financing to pay for the services, or some sort of cost-sharing mechanism (e.g., health insurance) to subsidize the full price, they will not be given the healthcare they need.  Inability to access needed health services puts patients in danger in the short-term for acute and emergency episodes, and in the long-term in preventing, diagnosing, and treating chronic disease.

Hukou Effect on Healthcare Access

Currently, China does not have a well-developed health insurance system.  Coverage is fragmented and largely dependent on an individual’s hukou or work unit.[12] There are three main health insurance programs in China: the Urban Resident-Basic Medical Insurance (URBMI), the Urban Employee-Basic Medical Insurance (UEBMI), and the New Rural Cooperative Medical Scheme (NCMS).[13]  URBMI covers children, students, elderly, disabled, and other non-working urban residents who hold an urban hukou.  This is a voluntary health insurance program, which covers approximately 200 million people and is not available to rural hukou holders. The second basic health insurance program, the UEBMI, is based on contributions from an individual’s urban work-unit.  Both the employer and the employee make contributions; however, employer contributions are rather meager.  This program is mandatory for all urban hukou residents, but entirely optional for rural hukou migrants, leaving the individual migrant the choice of whether or not to obtain health insurance.[14]

There are three problems with this scenario for urban employed rural migrants in gaining coverage through the UEBMI.  First, migrants may not fully understand the health insurance being offered.  Many rural-to-urban migrants are low-educated, unskilled laborers; these individuals may not understand how a basic insurance scheme works.  Additionally, even if a migrant understands how the system functions, they may not actually know what their prospective benefit package includes.[15]  In this case, migrants are disenfranchised with asymmetrical information.  It would not be surprising if employers deliberately withheld benefit information or obstructed insurance registration in order to avoid employer contributions.  Lastly, not all urban workers qualify for the UEBMI.  Many labor migrants working in urban areas are undocumented and working illegally.  They would not even have the option for UEBMI uptake.

Healthcare is already very costly for the average migrant worker.  “Low income (<700 RMB/month) is the strongest independent predictor of inability to access healthcare after controlling for residence, education, and age.”[16]  To put the relative costs in perspective, “average inpatient care cost per person-time was 4745.5 RMB in 2006.”[17]  Migrant workers literally cannot afford to become sick.  To make matters worse for rural-to-urban migrants wishing to access health services, healthcare costs in China, especially urban areas, have been dramatically rising.  High cost of care is a barrier to access felt by both urban and rural hukou holders; however, it is the least covered population accessing healthcare, rural workers, that is left most vulnerable to these rising costs.

Current Coping Methods to Accessing Healthcare

The third and final basic health insurance program is the New Rural Cooperative Medical Scheme (NCMS), specifically designed to make healthcare affordable to the rural poor.  This program aims to cover all rural residents with health insurance and is based on voluntary participation; covering 94.2% or approximately 840 million rural hukou holders as of 2009.[18]  Financing contributions come from the individual, their local county government, and the central government.  While the NCMS appears like it would be the scheme for extending access to rural migrants, this insurance scheme only works for receiving services in your home province.  Insurance coverage is based on a tiered system, progressively reimbursing less as a rural patient moves up the specialty pyramid.  For example, a rural patient seeking healthcare covered through the NCMS will receive less reimbursement for services rendered as they move from local town clinic to county level hospital to a highly-specialized urban hospital.  While benefit design differs by county government, rural migrants living in urban areas rarely receive any reimbursement and are forced to pay for their healthcare costs out-of-pocket.

From a local government perspective, this tiered reimbursement policy is sensible.  Local governments bear at least 40% of the insurance contributions and “there is a massive disparity between cost of care in rural and urban areas for equivalent treatments.”[19]  As budgets across the entire country continue to be squeezed, local governments absolutely do not want to pay higher margins for services that can be more cheaply provided in their own locality.  Prejudice towards migrants, as was briefly mentioned earlier, by the urban-focused central government, may also be manifesting itself at the other end from local governments.  There may be a cognitive shift in local officials’ attitudes towards rural-to-urban migrants.  In a political system that is so focused on economic progress, local officials may be prejudiced towards able-bodied laborers who choose to leave the area.  Not only is it more expensive to pay for services to migrants in the urban areas afar, but local officials may look down on this sub-population who choose to abandon their hometown.

Regardless of intent, rural-to-urban migrants face limited to no health insurance coverage as well as high healthcare prices in cities.  Faced with few alternatives, migrants are often forced to return to their hometowns for treatment[20] as this is really the only realistic option for migrants to access healthcare.  Additional problems arise from this scenario of forced repatriation.  Many migrants’ hometowns are thousands of miles from the area in which they work.  First, cost of transportation essentially attaches an additional tax onto the overall healthcare expenditures to an individual.  Second, a migrant may underestimate the severity of their health problem.  Long travel times or delayed travel at the expense of continued work, savings, and so on, can have unintended and adverse consequences for the migrant’s health.

China’s three basic health insurance programs offer coverage to the majority of the country’s population; however, as we will see is also the case with access to housing and education, it is precisely this sub-population of rural-to-urban labor migrants who fall between the cracks.  The hukou system immediately disadvantages them in the urban areas in which they reside.  Similarly, the health insurance scheme meant to cover rural hukou holders does not actually extend to these people.  As a result, rural-to-urban migrants are forced to return back to their hometown, disrupting their livelihood and very likely exacerbating disease and illness.

Migrant Healthcare Access Recommendations

While China’s three basic health insurance schemes cover a majority of the country’s population, none adequately cover migrants in the city.  A likely place for improvement in coverage is the New Rural Cooperative Medical Scheme (NCMS), which already covers 94% of the rural population.  As local governments are facing tighter budgets, the central government can be the major contributor for extending basic reimbursable benefits to rural hukou holders seeking healthcare services in urban areas.  This falls into the purview of the central government in making the health insurance system less fragmented and more portable nationally.  The central government can begin extending benefits by financing preventative and primary care services in urban areas.  This is a low hanging fruit that has an extremely high benefit-cost ratio.

Two alternatives to extending the NCMS are already being piloted in Shanghai and Beijing.[21]  The Beijing model extends the Urban Employee-Basic Medical Insurance (UEBMI) by requiring companies to contribute 2% (45rmb) of average monthly wage to an insurance fund for migrants.  The global fund, not tied to individuals, is administered by the Beijing Human Resources and Social Security Bureau and essentially covers catastrophic care for migrants needing inpatient or ER services.  This model allows for cities to quickly set up coverage to migrants and can be scaled to offer additional benefits.  Migrants do not directly pay to access benefits, but, once admitted enjoy the same catastrophic benefits as Beijing residents.  On the other hand, eligibility covers only migrants in Beijing’s formal labor market – about half of the total migrants in Beijing.  Many migrants are healthy to begin with and do not necessarily need catastrophic coverage, but rather preventive and primary care services.

The Shanghai model, by contrast, has created a separate social insurance scheme for its migrant population.  Contributions are required for all migrant employees by employers and are managed by private insurance companies.  Contributions (5.5% for contruction companies 12.5% for all others) cover pensions, occupational injuries, and medical insurance for migrant workers.  Participation is available for any migrant, formal or informal, in Shanghai, with migrants without work-units contributing independently.  Similar to Beijing, medical insurance primarily covers catastrophic services, but also covers a small subsidy on pharmaceuticals and limited, free health examinations.  Pension contributions can be redeemed upon returning to the residence of one’s hukou.  Since this insurance model is not tied to UEBMI, URBMI, nor NCMS, there is added administrative burden on hospitals and clinics dealing with claims.

Tomorrow, we will run Part II – Access to Housing

The article is reprinted below. But we urge you to click over to the original China Daily story, which includes great graphics and photos.

Today we are very lucky to have a contribution from Melinda Moore,  Associate Director for Global Public Health at the nonprofit, nonpartisan RAND Corporation.

Chinese health officials announced recently that a new bird flu virus is bringing sickness and death to dozens of seemingly random victims in the eastern part of the country. Scientists have classified this new flu as subtype H7N9.

Like its cousin H5N1, this latest version of the avian flu virus successfully made the jump from birds to people. And like its predecessor it is especially deadly, according to the leader of an international investigation team from the World Health Organization (WHO). Authorities aren’t certain how all its victims have been infected, but they have found no evidence, for now at least, that ongoing spread from person to person is occurring.

[Editor's note: If you are accessing this article via email or an RSS reader click here to see a press conference with a recently recovered patient. Otherwise play the movie below. Even if you can't understand Chinese, Mr. Cao's condition post-recovery is very telling of what the H7N9 virus can do to an affected individual.]

This is a courtesy post to let you all know that Damjan and Benjamin are doing well. We’ve not been writing as much (ahem…Damjan has not been writing as much) because (1) Damjan had graduate school finals, (2) Ben is on vacation this week, and (3) Damjan had a baby this week and is on a necessary paternity leave. Damjan’s lovely girl was born with all fingers and toes in the right place and he couldn’t be more happy than he is.

That being said, if you want to keep up with us, this is a good time to get familiar with our twitter accounts.

Benjamin tweets under @Rubiconstrategygroup.

Damjan tweets under @Damjan_Denoble.

For the most part we try to retweet important developments in China health, and we are very willing to engage in conversation.

Bottom line, connect with us by email or twitter, and we are more than happy to exchange quick emails even if the posts here are sparse for another week or so.

Best,

Asia Healthcare Blog team.

Implementing meaningful hospice care programs in China is not going to be easy.  From a 2011 article by the China Daily is a surprisingly candid capture of how inadequate the country’s hospice and palliative care is currently:  “According to a study last year by the Chinese Association for Life Care (CALC), Beijing has more than 15,300 people dying of cancer every year. The study said that nine out of 10 patients with late-stage cancer are not receiving help to relieve their suffering. The organization also found there are only two individual sites that specialize in palliative care in Beijing.  Throughout China, there are just 30 hospices and 120 palliative care facilities in both private and public hospitals, according to the association … The numbers are especially disturbing in light of 2009 statistics from the Ministry of Civil Affairs, which said the population of people over 60 has reached 149 million in China. More than 30 million are in need of nursing care. Among them, 9.4 million are unable to take care of themselves.”  When you add to the number of cancer patients those with end of life care from other diseases, you can see how severe the need is for China to develop the hospice and palliative care capability.

In 2010, the Economist Intelligence Unit (EIU) in conjunction with the Lien Foundation, published a research report profiling the global end of life care challenges.  In almost every way China was investigated in relation to other industrialized and developing nations, the country’s end of life capabilities and approaches were ranked very low.  The EIU report, “The Quality of Death:  Ranking End of Life Care Across the World” is worth reading, if only to get a sense of the global and country-specific challenges China faces.

What explains the resistance to building an effective palliative and hospice care system in China?  The first point that has to be emphasized is how the Chinese culture approaches death.  I would be eager to hear from readers about their own experiences on this matter.  The EIU report notes that with respect to even being able to talk about end of life matters, China ranks dead last in the countries the report covers.  From the EIU, “In China, there is little knowledge of the existence of hospice care or understanding of what it provides, says Dr. Ma Ke, director of the Third People’s Hospital of Kunming Hospice Department. ‘Most family members of the patients can’t fully understand it,’ he says, adding that even in medical circles, many doctors and other healthcare providers remain unaware of what palliative care entails.”  The Stanford School of Medicine has also analyzed the question of how the Chinese culture approaches end of life matters, and noted “One study showed that Chinese older adults feel that their children may advocate for aggressive treatment out of a sense of filial duty. If children do not advocate for aggressive treatment, they can be negatively viewed as not looking out for their parents’ best interests.”

Another news story on the question of why it is so difficult for the Chinese to develop a hospice care system added the following:  “One problem is that there has been a social bias against hospice facilities. Song Tang hospice has had to move seven times in the past 24 years. According to hospice director Li Wei, ‘We were driven away each time as people living near the hospice said we are a hospital for the dead, and the last stop before the cemetery. They said that it’s unlucky to be surrounded by dead people, and that they’d never be prosperous.’”  The intangible cultural factors surrounding the need to talk about, and build service models designed to address hospice care needs, remain enormous challenges for American and European companies.

There are hopeful signs the Chinese culture is slowly adapting itself to the need to talk more openly about end of life matters.  In 2010, a Global Post column found reasons to be encouraged about China’s approach to these matters:  ““Modern education influenced by the West has been eradicating China’s blind faith in death taboo,” said Jin Fenglin, author of ‘Observing the Line Between Death and Life,’ a book on the subject of death in Chinese culture. ‘Hospice clinics have provided another great way to educate Chinese [in terms of their attitudes on death],’ he added.  According to Li, who founded Songtang Hospice, the country’s first hospice clinic, in 1987, it was as simple as letting patients and their families experience the service and having the results speak for themselves.”

I am sure many of those reading this will have their own opinions about end of life discussions in China, and it would be great to hear from those who can offer their own insights.  What can be offered is that we know from discussions with several large Chinese operators who have initially tried to address hospice care either in an assisted living facility or as part of their home healthcare business, the issues remain problematic.  The problems several have related to me have been simply identified, yet troubling to resolve:  families do not want to talk about end of life care options.  In this way, the challenge in China is simply a more involved version of the same problem the US and UK in particular are facing.  In the US, honest discussions about end of life care have been largely sacrificed at the alter of political expediency, precisely at a moment in America’s healthcare policymaking when the country desperately needs mature and clear thinking about a very complex and intimate matter.

The second challenge is regulatory:  can Chinese hospitals or home healthcare operators even practice palliative and hospice care in ways informed by western best practices?   Interestingly enough, in some small ways the Chinese government is moving to make end of life matters more addressable in terms of what pharmaceuticals are available to doctors.  The EIU report notes, “Some countries are starting to address the problem, at least on the legislative side. In 1992, for example, China—which ranks relatively highly in the indicator on this measure—adopted a national cancer pain relief policy, easing restrictions on morphine and other opioids, increasing
the manufacture, sale and distribution of new opioid analgesics and making it easier for hospitals to obtain the painkillers.”  Unfortunately, this positive step is small compared to the more general issues related to what the Chinese government allows to be done in the home, or its efforts to encourage end of life directives that protect physicians, hospitals and caregivers.

There are many other factors that will drive the evolution of China’s palliative and hospice care sector.  Inevitably, many of the biggest pressures will be financial; however, if China shows adequate pro-active thinking on this front it can deal with one of the major cost drivers for any nation’s healthcare in a way more mindful and sensitive than what has been experienced in western countries.  The fact that China will face these issues much sooner and in much larger numbers than any western country should help move the conversation and policy environment forward.