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12-14 June 2025

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After SARS: China’s Search for Better Health Care

Time: 2018-12-12

People wait in an Inspection and Quarantine Line at a Beijing Airport in June 2003

People wait in an Inspection and Quarantine Line at a Beijing Airport in June 2003

In late 2002, a farmer in the Guangdong province of China suddenly came down with a “strangedisease” with flu-like symptoms that quickly turned deadly. His local physician, who was only able to diagnose his ailment as being “caused by a certain virus,” eventually alerted anti-epidemic officials. Upon further investigation, these officials identified his illness as Severe Acute Respiratory Syndrome, or SARS. After burying their findings in a top-secret report in January 2003, local and national governments were slow to respond to the gradual spread of the virus and, fearing widespread panic among the populace, also chose to maintain a “virtual news blackout” on the topic, even as cases continued to emerge.

By February 2003, the first overseas case of SARS had been reported in Hong Kong, and it soon became clear that the Chinese government’s silence had not led to a calm and orderly containment of the disease; instead, the lack of public awareness may have enabled its spread. A doctor who had unknowingly been treating SARS patients in Guangdong in early 2003 traveled to Hong Kong shortly thereafter, where he developed what he thought was just another respiratory illness. Chinese officials, fearing that any public admission of a health crisis could be politically and economically destabilizing, continued to downplay the severity of the epidemic, claiming that it was under control.

Even in its first official report on the outbreak to the World Health Organization in March 2003, China claimed that the outbreak was tapering off, contradicting the emergence of international cases in Canada, Germany, Vietnam, and Singapore. But with more than two thousand cases of the virus reported by April, China finally relinquished handling of the outbreak to the WHO, which then issued its strongest travel advisory to date. It would take until July 2003 for the WHO to declare the outbreak contained, and nearly another full year for the virus to be completely eradicated.

The lack of information, accountability, and communication enabled the disease to ultimately afflict over eight thousand patients and cause over eight hundred deaths across three continents. Beyond the human toll of the epidemic, the SARS outbreak accountedfor an estimated 1% decline in China’s GDP in 2003. Reeling from the political and economic damage, China moved quickly to improve the agility and accountability of its health care system, claiming that they had learned from their mistakes. “What we learned from SARS is that transparency has a vital impact on whether a crisis is properly handled,” a Ministry of Health spokesman admitted in April 2003. The economic and political consequences of the outbreak prompted an overhaul of the Chinese healthcare system, a radical shift that some experts believe has placed China among its peers of developed nations. But China continues to face unique difficulties as one of the world’s largest industrial economies that still maintains significant rural populations, and the healthcare system still lacks some of the agility that could have prevented and responded to the SARS outbreak, such as long-term primary care instead of hospital-based treatment of acute cases.

The New Rural Cooperative Medical Scheme (NRCMS)

As the last cases of the SARS outbreak were resolved in late 2003, the State Council of the People’s Republic of China, the country’s highest governing legislative body, introduced a major overhaul of the rural health care system through the creation of the New Rural Cooperative Medical System. The NRCMS promised to alleviate bureaucratic hurdles by placing public health under the jurisdiction of the central party’s Ministry of Health by 2010. The scheme was “voluntary in principle” at the individual level––though farmers were strongly encouraged to enroll––and two-thirds of the fund depended local funds matched by central government subsidies.

With this legislation, the Party officially elevated public health and healthcare to the status of “high political priority.” In an interview with the Washington Post, then-Premier Wen Jiabao acknowledged the “imbalance between economic development and social progress” as the central leadership’s reason for increasing emphasis on the importance of public health, particularly in rural areas.

The NRCMS set major objectives for improving Chinese health care, especially in rural areas, of increased responsiveness and centralization. The severity of the SARS epidemic was enabled by vast walls of bureaucracy and politics at the provincial level that hastened its spread among an uninformed and panicked public. The first epidemic report filed following the Guangdong farmer’s death was originally designated “top-secret,” meaning that only provincial health officials in Guangdong with appropriate clearance could open it, and the contents could not be discussed with officials beyond the province. It also remained unopened for several days because authorized officials were away for Chinese New Year, days that could have been utilized to contain the virus’ spread.

As new health policies were rolled out in the latter half of 2003, public health reform was framed as an anti-poverty measure and the NRCMS was placed under the central Ministry of Finance. The initiative in part involved alleviating the individual costs of serious illnesses through risk-sharing: in a 2012 pamphlet from the Ministry of Health and the State Council Information Office, a farmer likened the NRCMS reimbursements for his illness to a “pie falling from the sky” after it helped treat his nasopharynx cancer while supporting his family throughout the ordeal.

Though the NRCMS signaled a concerted pivot towards improving rural health care, it was not without its criticisms. A report by the State Council Development Research Center in 2005 noted that “patient contributions to medical fees rose from 20 per cent in 1978 to 52 per cent in 2005,” two years after the NRCMS was introduced, indicating that the NRCMS was not delivering on the goal of limiting patients’ financial burdens. Furthermore, the NRCMS improved only rural health care, while urban residents continued to face spiraling health care costs, a problem that will only grow as workers increasingly migrate to urban areas for work and education.

Health Care Reform Plan and Universal Coverage After NRCMS

In order to foster more equal access to quality health care between rural and urban residents, the State Council passed the Urban Residents Basic Medical Insurance, or the URBMI, in 2007 and the Health Care Reform Plan in early 2009, setting the bar for full universal coverage in urban areas by the end of 2020. The URBMI plans to establish an individual contribution-based risk-sharing system based on the NRCMS, with residents paying a few hundred yuan a year alongside government subsidies to receive basic coverage. The new reform bill means to equalize health care access by granting basic coverage to 90% of all rural and urban populations by 2010, filling in coverage gaps left by an earlier attempt at health care reform, the Urban Employee Basic Medical Insurance, or the UEBMI.

The Chinese Ministry of Health continues to declare that prospects for universal health care coverage are promising. Section headings in from a 2012 government pamphlet claim that the “Nationwide Health Security System is Basically Established,” and boast of “Powerful and Orderly Health Emergency Management.” According to a 2015 Rand Corporation report, by 2011, “government subsidies accounted for 85% of the premiums of NRCMS and URBMI,” which translated into lowers health care costs among both urban and rural citizens. In 2016, China announced that it would be merging the UEBMI and the NRCMS “to create an integrated system of basic medical insurance coverage” for both rural and urban residents.

This newest reform is intended to alleviate the outpatient and hospitalization expenses that disproportionately affect the rural areas, but does not to address a burgeoning weakness in the Chinese health care market: Primary care, such as annual physicals that would be better suited to address chronic health problems. Furthermore, experts predictthat it may further push Chinese health care, especially the pharmaceutical industry, towards an open market, placing future system reforms in direct conflict with the state’s highly centralized system.

Lingering Inequities: Urban-Rural, Public-Private

As the 2020 deadline approaches for URBMI, it is striking to consider the rapid progress Chinese health care has made in just fifteen years. The scale of this mission––to ensure universal health care coverage for over 1.3 billion people––has not gone unnoticed by members of the Western medical community. While many have approved of the reforms, there are still lingering doubts about some of the fundamentals of the Chinese health care system. Following the implementation of the NRCMS, China has come to be seen as a model for health care reform in developing nations, though still burdened by important inefficiencies, like hospital-based care and prohibitively expensive pharmaceuticals.

In an editorial for the New England Journal of Medicine, Drs. David Blumenthal and William Hsiao acknowledged how China “has undertaken a series of remarkable health system experiments that are instructive at many levels.” Though they lauded China’s relatively successful transition into a centralized healthcare marketplace, Blumenthal and Hsiao also identify uneven development from the reforms. For example, they note that the NRCMS was successful at relieving the acute financial stresses of hospitalization for rural residents but neglected to establish a primary care network that would have “ameliorate[d]China’s deep-seated health care problems.”

It is especially imperative that China establishes a primary care system as it continues to expand into one of the world’s largest economies. A burgeoning upper class will likely lead to “diseases of affluence” like diabetes, and the future Chinese health care system will need “to sustainably finance and manage programs to prevent and care for people with chronic diseases.” Other challenges lie in the remnants – or beginnings – of a free health care market: Though reforms of the past few decades have moved decidedly towards centralization and an increased  government presence in the health care market, some analysts identify fruitful opportunities for private providers to enter the market. Private providers could target the increasing and increasingly affluent class “by offering more comprehensive coverage, including access to high-end hospitals and services,” undermining the intent of a centrally-planned health care market.

The Chinese government had long recognized the importance of a robust health care system, even attempting to a free market version in the twentieth century. But the SARS outbreak was a point of inflection in the government’s approach to health care, particularly in response to the growing pains induced by China’s meteoric economic and political rise in the twenty-first century. The NRCMS accomplished much in directing the government’s attention toward rural areas, yet, as evidenced by continuing reforms, the system is still not wholly adapted to address the needs of China’s wide range of citizenry.