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Justin Yifu Lin vs. Nobel Laureates: The Injury of American and China’s Medical Reform from the Perspective of Economics


On the evening of December 15, 2020, Professor Anne Case, Alexander Stewart 1886 Professor of Economics and Public Affairs Emeritus at Princeton University and Member of the National Academy of Sciences, Professor Angus Deaton, 2015 Nobel Laureate in Economics and Chair Professor of Economics and International Affairs at Princeton University, and Professor Justin Yifu Lin, former Senior Vice President and Chief Economist of the World Bank, Dean of Institute of New Structural Economics at Peking University and Honorary Dean of National School of Development at Peking University carried out an in-depth discussion from different perspectives of China and the United States to analyze the relationship between economic development, health care system and national health. Professor Tang Min, counsellor of the State Council of China and former Chief Economist of the Asian Development Bank in China, presided over the meeting.

The dialogue is the opening of “PUP Global Author Talk”, a television program co-produced by Princeton University Press and China Newsweek magazine. It is jointly sponsored by Princeton University Press, China Newsweek, Institute of New Structural Economics at Peking University, and National School of Development at Peking University.

Since the 20th century, the steady decline of mortality marks one of the significant achievements and typical characteristics of economic and social development of modern countries. The life expectancy has increased with growing economy around the world, especially in rich countries. However, Professor Anne Case and Professor Angus Deaton found that the average life expectancy of middle-aged white Americans has been falling for 3 straight years, which is rare in the US for a century, rather surprising and thought-provoking.

This academic couple analyzed the long-run forces behind such phenomenon in their new book Deaths of Despair and the Future of Capitalism , pointing out that the decrease in average life expectancy of American can mainly impute to excessive mortality of the white working class. In the United States, the white working-class accounts for two-thirds of the total population, and most of them fail to have access to higher education. Three factors, namely suicide, drug abuse and alcoholic liver disease, contributed to the rise of mortality in this group, which is the "Deaths of Despair" called by Case and Deaton.

The couple believed that the unique medical system of the United States should be to blame for the immediate increasing, instead of expected declining, in white labor’s mortality rate. The United States puts the largest investment in medical in the world, and is also known as the country with most advanced biomedical and clinical treatment research, but why people’s average life expectancy in this country gradually falls rather than rise year by year?

Case and Deaton argued that the healthcare industry in the United States does not mean to improve people's health, but prefers to create wealth for health care providers. Although there have been a lot of discussions on disadvantages of the American medical system, Case and Deaton stood out from others in this regard by revealing the root cause: the three main bodies in the American healthcare market-pharmaceutical enterprise, medical institution and insurance institution, constitute an invisible consortium on the supply side. By leveraging the overwhelming market position, the consortium also lobbies US Congress for "escorting" their monopoly and rent-seeking, thus jointly acquiring the fast-growing medical profits. This is the secret of "Deaths of Despair".

In such case, professors Case and Deaton hold that it is urgent for the United States to fix its capitalist system to make it more equitable and carry out in-depth reform to medical system at the same time. The COVID crisis may serve as a wake-up call to the relevant authorities in US for giving an opportunity for medical reform.

Later, Professor Justin Yifu Lin analyzed the achievements and disadvantages of China's medical system, saying that from the founding of the People’s Republic of China until the reform in 1978, China's medical and health service has achieved remarkable results, increasing the average life expectancy by 30 years in 30 years. In 1978, as one of the least developed countries in the world, the average life expectancy of Chinese people was 1.5 years longer than that of highly and moderately developed countries, which is undoubtedly a miracle. Such achievement can be attributed to the medical system developed after the founding of new China: public medical care is available across cities; and three-level preventive medical care system, cooperative medical care and village doctors go together in rural areas. China's medical system was subsequently introduced to other developing countries as an advanced experience by the World Health Organization in 1978.

However, although China has undergone rapid economic development since 1978, the improvement in health and medical service is barely satisfactory, and the increase in average life expectancy is not as fast as that of other middle-income countries because of the problems occurred during the market-oriented reform of medical system: the “hospitals hope to subsidize their medical services with overly expensive drug prescriptions“, such as making profits through unnecessary prescription and examinations; accepting rake-off, rent-seeking and corruption are very common among doctors; and the allocation of medical resources are imbalance between large and small hospitals, the patients thus swarm forward to large hospitals, which makes it difficult and expensive for people to get medical service, and further intensifies hospital-patient conflicts.

In order to solve the problems, China is currently carrying out pilot medical reform, which not only provides lessons from failure but also accumulates successful experience. Professor Lin suggest China build on the model of medical reform created by Sanming City, Fujian Province in the future by setting up national healthcare security administration, purchasing medicine by healthcare security administration in each province and city, listing the catalogue of drugs to ensure reasonable prices, and carrying out sunshine salary reform to raise doctors' salaries to a reasonable level.

He also stressed that information asymmetries still exist in the medical system, which are prone to bring about moral hazards. Therefore, the authorities should take active measures and avoid being manipulated by interests, so as to achieve success in medical reform and implement Healthy China initiative.

In the final discussion, the guests exchanged their perspectives concerning the lessons from European medical system, the government supervision on the medical system, how to reduce the waste and imbalance of medical resource allocation, and the main reasons of less job opportunities for poorly educated people.

This dialogue was supported by multiple live streaming platforms, such as Baidu, China Business Journal, Sino Foreign Management, MBA China, and Haojing.


Princeton University Press and “PUP Global Author Talk”

Princeton University Press (PUP), established in 1905, is a world-renowned non-profit academic publishing institution for its perfect and rigorous publishing process. PUP is committed to bridging up authors and readers in different fields, disseminating research findings of human civilization and bringing positive changes to the world by conducting academic dialogue.

“PUP Global Author Talk” is jointly initiated by Princeton University Press and China Newsweek. Besides building a platform for top Chinese and Western scholars to conduct dialogue and cross-cultural communication, PUP also invites top authors from Princeton University Press in various fields to share their perspectives on pressing issues, to attract people’s attention to the most advanced academic thoughts and extend the influence of the thoughts reflected in the books.


China Newsweek

China Newsweek, sponsored by China News Service, was officially founded in 2000. It is committed to "recording the changes of the times and promoting social progress", and “affecting the influential people" through providing the most updated political information. The Chinese edition of China Newsweek pays close attention to state affairs, social conditions and public opinions, and provides analytical and in-depth reports on major events at home and abroad. In addition to that, nine versions in seven languages, including English, Japanese, Korean, Italian, French, Russian and Arabic, are also circulated in more than ten overseas countries and regions.


Institute of New Structural Economics at Peking University

The Institute of New Structural Economics at Peking University (INSE) is a pilot academic institute in China that aims at achieving independent theoretical innovation of social sciences. Its predecessor, the Center for New Structural Economics, was founded by Prof. Justin Yifu Lin, former Chief Economist and Senior Vice President of the World Bank, in December 2015, as one of China Top25 Think Tanks.


National School of Development (NSD) at Peking University

The National School of Development (NSD) at Peking University is a comprehensive institution that offers a multidisciplinary environment for teaching and research in economics, management science, and public policy. Its predecessor, China Centre for Economic Research (CCER), was established in 1994 by Professor Justin Yifu Lin and five other overseas-trained economists. Following its expansion of teaching and research, CCER was renamed the National School of Development at the Peking University in 2008. The NSD is one of China’s leading institutions that combine teaching, research and policy advising, with many globally recognized scholars gathering here. While upholding Peking University’s values of inclusiveness and academic freedom, the NSD promotes socially meaningful research in economics, management science, and public policy, and is committed to contributing to China’s economic and social progress, making it an integral part of Peking University’s drive to become a world-class university.


Text: Bai Yao, Cai Rupeng  |  Editor: Wang Xianqing