Why Are Medical Costs So Low in China?

Last fall, I underwent a minor procedure in Shanghai—a laparoscopic cholecystectomy. The total cost for preoperative tests, surgery, and postoperative hospitalization was less than 8,000 yuan (about $1,100). When I received the bill, my first reaction was to suspect a calculation error: in the United States, the same procedure without insurance would cost between $30,000 and $50,000. Even with commercial insurance, the out-of-pocket expense would be at least $5,000. As a surgeon who has practiced medicine in the U.S. for 20 years, I understand all too well what this gap signifies.

Over the past two years, frequent work-related travel between China and the U.S. has allowed me to observe how China's healthcare system operates consciously. Chinese citizens often lament the “high cost of medical care,” but viewed on a global scale—especially compared to developed Western nations—China's healthcare expenses are remarkably affordable. This “affordability” isn't accidental; it stems from a systematic design.

I. The Government-Backed Healthcare Safety Net: Prioritizing Resources

In China, “universal healthcare coverage” isn't just a slogan. Taxi drivers, convenience store clerks, and university professors I've encountered could almost instantly name their insurance type—employee medical insurance or urban-rural resident medical insurance—covering over 95% of the population. Crucially, the government directly participates in pricing and payment through administrative measures, keeping the base costs of medications, tests, and surgeries within a reasonable range.

Last year, while accompanying a Chinese friend to a community hospital for blood pressure medication, she waved her insurance card and remarked, “This used to cost over 40 yuan out-of-pocket, but now insurance covers 70%, leaving me to pay just 12 yuan.” This bargaining power, achieved through volume-based negotiations, stems from the sheer scale of China's healthcare fund—in 2022, national basic medical insurance revenues exceeded 3.06 trillion yuan, providing ample support for centralized procurement of drugs and medical supplies. I once observed a provincial drug procurement negotiation where pharmaceutical representatives were pressured to slash prices on the spot or lose access to the entire provincial market. Ultimately, an imported diabetes drug dropped from 200 yuan to 20 yuan per box. Such “soul-crushing price cuts” are virtually unheard of in Europe and America, where fragmented commercial insurance systems make unified bargaining power nearly impossible.

II. Public Hospitals: Maintaining Public Service Through Public Ownership

At Shanghai Ruijin Hospital's emergency department, I witnessed patients queuing at 3 a.m. and inquired about emergency physicians' incomes. Their response was candid: “Salaries primarily come from government subsidies, with minimal performance-based pay tied to tests or prescriptions.” China's public hospitals operate as public institutions, whose core mission is delivering public services, not generating profits.

In contrast, many community hospitals I encountered in the U.S. are private, for-profit institutions where physician income directly correlates with the volume of consultations and tests ordered. I once met an elderly American who was advised to undergo a CT scan (costing $2,000) for a minor cough. The doctor candidly admitted: “Without the test, the clinic's profits would be affected.” In China, however, the average outpatient cost at a tertiary hospital is about 300 yuan (including tests), with medication costs strictly capped below 30% of the total—not through physician self-discipline, but as a result of medical insurance payment reforms (DRG/DIP) and the government's “public welfare assessment” of public hospitals.

III. Primary-Level Networks for Preventing Illness Before It Starts: Blocking Disease at the “Last Mile”

During last year's research in Chengdu's suburbs, I observed that every neighborhood had a community health service center, while villages maintained standardized health clinics. These grassroots facilities focus not on treating major illnesses, but on establishing health records, managing chronic conditions, and administering vaccinations. One community doctor remarked, “We oversee the health records of 30,000 residents. Our hypertension follow-up rate exceeds 90%. Many patients achieve stable blood pressure control, eliminating the need for trips to large hospitals.”

This “strengthening primary care” strategy directly reduces overall healthcare costs. U.S. CDC data shows that 75% of American healthcare spending goes toward treating chronic diseases. In contrast, China's primary healthcare management keeps many diabetes and hypertension cases under control at an early stage. I once calculated the costs: If a diabetic patient progresses to kidney disease requiring dialysis, annual expenses could exceed 100,000 yuan. But if the condition is managed through diet and medication at the community level, annual costs amount to only a few thousand yuan.

IV. The Cost-Saving Impact of Technological Innovation: Squeezing Out Inefficiencies Through Efficiency

Many assume China's healthcare is “cheap” due to technological backwardness, but the reality is quite the opposite. I visited a smart pharmacy at a top-tier hospital in Hangzhou, where automated dispensing machines process 800 prescriptions per hour with 99.9% accuracy, reducing labor costs by 60% compared to traditional pharmacies. More crucially, China's investment in healthcare informatization enables cross-hospital recognition of test results—a CT scan done in Shanghai can be used in a Nanjing hospital without repetition, saving unnecessary expenses.

Of course, China's healthcare system isn't flawless. I've seen outdated equipment in rural township hospitals in Gansu and witnessed out-of-town patients queuing at dawn for specialist appointments at Peking Union Medical College Hospital. Yet it's undeniable that China's government has struck a balance between ensuring accessibility and controlling costs through its “strong government + large market” approach. While this model may not be replicable everywhere, it proves that healthcare doesn't need to rely on high prices to function—the key is returning the system to its core purpose of serving people, not generating profits.

Before leaving China, I visited a community hospital to get a box of cold medicine. The medication costs 18 yuan, with 12 yuan covered by insurance. The pharmacist smiled and remarked, “Nowadays, if someone falls seriously ill, people will find ways to treat them—they won't immediately consider selling their homes.” This statement offers perhaps the most heartwarming commentary on the affordability of China's healthcare system. (Author: John Smith, American surgeon currently conducting global health policy research at Harvard T.H. Chan School of Public Health)

Document dated 2025-11-10 09:51 Modify