Wednesday, August 12, 2009

More China

New York Times article about American college graduates getting jobs in China. I just spent 10 days in China teaching at Peking University. And had dinner with a 2007 Duke graduate, Damjan Denoble, who also attended and blogged the classes. He has also started a business in China.

He has several recent posts that are interesting, one responding to a comment on freeforall from another Duke student, Danny Mammo, about how doctors are paid in China and the incentives involved.

Here is Damjan's blog of the last lecture I gave at Peking University. Interestingly, they asked me to talk about the current US reform which wasn't the plan at the start of the week. So, I tried to give them more a 'what not to do' as opposed to telling them 'what to do' in large part because I am not sure what they should do. Of particular worry was two things I heard. (1) many students saying to me they could incentivize the uptake of private insurance via making employer paid premiums tax free...good way to boost it in the short run, but later.....(2) And one student said payroll taxes would be a good way to fund insurance for elderly Chinese because China has ended its one child policy, and now couples can have two, so there will be lots of payroll tax payers over the next 30 years or so (they have set goal to cover all persons within 20-30 years)! I almost fell on the ground and had a seizure and muttered to him "but if the next generation is smaller there will be a financing problem" and he said "we will worry about that then!"

Damjan also has an interesting post of Traditional Chinese Medicine, and prescribing generally in Chinese health reform. This post notes that nearly half of chinese expenditures are for medicines which is much higher than high income nations (US and most of the usual suspects are between 10-15% of total system spending). Now physicians, whether TCM or western trained both prescribe and dispense and the dispensing is a large source of income. Damjan and others think this needs to be separated, but the cultural context is important.

The last day I was in China I was just loitering around and went into a very large drugstore. It was fascinating. They had raw ingredients for traditional chinese medicine (like herbs, roots, animal parts, etc.) and they would compound a medicine for you. They also had packaged TCM, much of it with English labels because lots is exported apparently. This was more likely to be things I had heard of like Gingko Biloba, or ginger or ginseng, etc. but lots of other stuff too. And they also had western medicine, including pharmaceuticals for sale. A quick look showed several anti-biotics (Cipro, Amocicillin), blood pressure medicine (nifedipine), and Selexa, which I think is an anti-depressant. I think for lots of folks, especially those with little money, the pharmacy and the pharmacist serves as a type of primary care doctor.

Bottom line from my visit to China:
(1) I think I am going to try and learn some chinese. Both so I can speak a bit if I go back and teach, but also just a nagging in my gut that told me it will increasingly be important to communicate in Chinese.
(2) Paradox. If you like markets, you will love China. There is a market for everything. It is essentially the Wild Wild West, but with 1.4 Billion people and the biggest army in the world. And getting ready to celebrate 60 years (on Oct. 1) since the founding of the people's republic of China where Hu Jintao will review the People's Liberation Army marching past in front of the picture of Mao Zedong in Tianamen Square and then saying that unfettered capitalism is just the next step in Chinese socialism.... I am sure we Americans are paradoxical from afar (heck from up close).

All in all, a great trip.


  1. I read your article in the 8/14/09 N&O and I agree with many points regarding the need to curb Medicare spending. In my experience, I have seen Medicare pay for illogical and expensive procedures only because Medicare offers carte blanc to doctors and hospitals. However, rather than a commission that sets hard, fast guidelines for patient care and services, I think we should respect the judgement of the medical community but give Medicare the power to withholding payments for clearly frivilous treatments and take punative actions against fraud.

    Paring back the fee schedules to doctors and hospitals is horribly conterproductive and a grave disservice to Medicare patients. There are still competent and compassionate doctors willing to take Medicare patients but they are declining in numbers. Cutting fees can only make sense if we relieve them of the horrible burden of malpractice insurance and create disincentives for ambulance chancing lawyers.

    Just today at a town meeting Mr. Obama announced that if a person has to return to a hospital "because they (the doctors) didn't get it right the first time.", the hospital will be denied payment for the second visit. Last time I checked, lawyers charge exorbitant hourly rates whether they win or lose the case and for everything in between.

    While my mother was in an irreversible coma after a series of strokes, she remained in an expensive ICU bed for 22 days after we requested that the hospital cease life support. One day we arrived to find them conducting a Doppler study on her legs. I trust Medicare paid dearly for this unwar-ranted treatment and similar exploitations of Medicare while waiting for her to expire.

    If Medicare fraud was curtailed, illegal immigrants denied free health care, a limit on medical lawsuits enacted, and the cost of drugs equal to that of other countries, Medicare would be solvent years down the road.

    Of course, this is only skims the surface of the health care debate. There are so many land mines and surreptious "catch words" in the proposed legislation that we need volumes to express concerns about each one.I can only concur that, in all fairness, Congress, the President and all federal employees test drive any passed health care bill before subjecting the public to it.

    Sincerely, Cindy E.

  2. The President and Congress tend to go to military hospitals so most of them use 'govt run healthcare'...literally. They seem to like it!

    I am sorry for that experience with your mom.

    I agree fraud is bad, and we should get rid of it....I am skeptical about how much can be saved and suspect that Congress likes to talk about fraud so much because it doesn't have a lobbyist. And I wrote about malpractice on Aug. 7 or July 31 and proposed a $250,000 cap on noneconomic damages which would be a serious reform. I actually don't think it will save as much money as you think it will or other proponents, but I would be thrilled if we could save so much through such a change. But, I doubt it.

    Medicare is not likely to be paying much care for illegal immigrants...and I don't think such care generally will save enogh, dropping drug prices could raise some money, but it will take more fundamental changes to make Medicare solvent I think, even if we did all that you say.

    I don't see how without a commission as I described...this wouldn't preclude lots of flexibility for docs and patients. You could start by red lining things with no clear benefits, working through by conditions with providers driving this work. At some point the decisions get harder....when you get there if Medicare is still not solvent there are two choices: raise taxes or cut benefits. The good bad news is that CBO has reviewed the evidence and says we could significantly cut costs without hurting the health of beneficiaries.