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 ($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 in Hebei province, scoured local papers and websites 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.
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 (601318.SS)(2318.HK),
as well as small loan firms and 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.
ROOTS OF POVERTY
China's
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
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," Severin Schwan, chief executive of Roche
Holding AG (ROG.S), the world's biggest maker of cancer drugs, told Reuters.
"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 (SRENH.S).
There
are no reliable figures for total healthcare lending, as lenders do not
usually advance the money for healthcare-specific purposes.
"If
you want to use it for medical bills, cosmetic surgery or plastic
surgery that's all fine," says Ping An Puhui, which advertises that its
loans can "alleviate the pain of illness" and "bring new hope to sick
families".
But there is plenty of anecdotal evidence from online lenders that it is a growing segment.
"Our
loan numbers have risen steadily, and no small number of people have
used these for medical purposes," said Li Jin, a customer service worker
at peer-to-peer (P2P) lender ppdai.com.
"Healthcare costs are high, and lots of people don't have good state cover, so they need a loan."
China Minsheng Banking Corp (600016.SS) has launched a healthcare loan scheme in the western city of Chengdu, while Shanghai Pharmaceuticals Holding Co Ltd (601607.SS) rolled out a loan scheme in April to help patients access expensive drugs.
Some desperate patients are pawning their personal belongings.
"They
use things of various value from jewelry to purses and even cars," said
Chen Yi, an office worker at online lender minbaodai.cn.
"Previously
the majority of people were looking for extra cash flow for their
business, but last year and this we've seen a rise in healthcare loans."
(Additional reporting by SHANGHAI newsroom; Editing by Will Waterman)
Source: Reuters
Post a Comment