Mon, Jul 11, 2016 - Page 15 News List

Medical loans push China debt burden

IMPOVERISHED BY ILLNESS:Healthcare spending in China is expected to increase fourfold by 2025 with an increase in chronic diseases, such as cancer and diabetes


As China’s medical bills rise steeply, outpacing government insurance provision, patients and their families are increasingly turning to loans to pay for healthcare, adding to the country’s growing burden of consumer debt.

While public health insurance reaches nearly all of China’s 1.4 billion people, its coverage is basic, leaving patients liable for about half of total healthcare spending, with the proportion rising further for serious or chronic diseases such as cancer and diabetes.

That is likely to get significantly worse as the personal healthcare bill soars almost fourfold to 12.7 trillion yuan (US$1.9 trillion) by 2025, according to Boston Consulting Group estimates.

For many, like Li Xinjin, a construction materials trader whose son was diagnosed with leukemia in 2009, that means taking on crippling debt.

Li, from Cangzhou, Hebei Province, scoured local papers and Web sites for small lenders to finance his son’s costly treatment at a specialist hospital in Beijing, running up debts of more than 1.7 million yuan, about 10 times his typical annual income.

“At that time, borrowing money and having to make repayments, I was very stressed. Every day I worried about this,” said Li, 47, adding that he and his wife had at times slept rough on the streets near the hospital.

“But I couldn’t let my son down. I had to try to save him,” he said.

Li’s boy died last year, but the debts will weigh him down for a few more years yet.

Medical loans are just part of China’s debt mountain — consumer borrowing has tripled since 2010 to nearly 21 trillion yuan, and in eight years household debt relative to the economy has doubled to nearly 40 percent — but they are growing.

That is luring big companies like Ping An Insurance Group (平安保險集團), as well as small loan firms and peer-to-peer (P2P) platforms, as China’s traditional savings culture proves inadequate to the challenge of such heavy costs.

The stress is particularly apparent in lower-tier cities and rural areas where insurance has failed to keep pace with rising costs, said Andrew Chen, Shanghai-based healthcare head for consultancy Parthenon-EY.

“It’s a storm waiting to happen where patients from rural areas will have huge financial burdens they didn’t have to face before,” he said, adding people would often take second mortgages on their homes or turn to community finance schemes.

The Chinese government has moved to ramp up rural health insurance, boost coverage for major illnesses and put pressure on drug companies to slash prices, but it is an uphill battle.

Official data show up to 44 percent of families pushed into poverty were impoverished by illness.

The Chinese Ministry of Health, which did not immediately respond to requests for comment, is currently investigating the impact of these costs on the country’s labor force.

“Typically, what happens in China is the whole family contributes when someone gets a severe disease like cancer,” said Severin Schwan, chief executive of Roche Holding AG, the world’s biggest maker of cancer drugs. “When it comes to innovative medicines, the financial burden is just too much. Families can go broke.”

Roche itself has schemes in China to make cancer drugs more affordable, including an insurance scheme developed with Swiss Re.

There are no reliable figures for total healthcare lending, as lenders do not usually advance the money for healthcare-specific purposes.

This story has been viewed 2278 times.

Comments will be moderated. Keep comments relevant to the article. Remarks containing abusive and obscene language, personal attacks of any kind or promotion will be removed and the user banned. Final decision will be at the discretion of the Taipei Times.

TOP top