3
December
2009

China and U.S. Health Care Reform

Since September 2009, my working days have focused on U.S. Health Care Reform. My working nights have focused on Chinese wellness, sickness care, and economic growth. I now see these two issues coming together for Chinese and U.S. entrepreneurs and consumers.

This afternoon my wife and I depart for Beijing, where we will be honored guests of the People’s Republic of China. On December 7-8, I will be delivering televised keynote addresses on Wellness, Nutrition, and Preventative Medicine from The Great Hall of the People. On December 10, I will be speaking on Economic Alchemy, The World Economy, and Entrepreneurship at Peking University.

Interested readers may google “Pilzer” and “China” to follow my trip, or usewww.Baidu.com (the Chinese search engine) to see the local reaction — set your Web browser to translate into English.

Recently, much of my time during the night (due to the time zone difference) has been spent in video calls researching and preparing for this trip to China.

Much of my time during the day has been spent in meetings with business leaders, opinion leaders, and politicians on pending U.S. health care reform.

U.S. health care reform started out with a noble purpose: (1) Obtain or offer health insurance to the millions of Americans falling through the cracks of private insurance, Medicaid, and Medicare; and (2) Institute reforms to reverse rapidly-escalating medical costs that now threaten the U.S. economy and way of life.

Unfortunately, as noted in more detail in my article below, the American people have been sold out by Congress on this noble purpose. The proposals still being debated in Congress do very little to control costs and will, in fact, increase medical costs more than $10,000/year for tens of millions of American families. Moreover, these proposals protect the incomes of lawyers, doctors, pharmaceutical companies, and insurance companies at the expense of all consumers. Most importantly, the proposals completely ignore the need for transparency which would allow the American people to openly see what Congress is supposedly trying to reform.

Mr. Smith, we need you more than ever in Washington today. (Mr. Smith Goes to Washington, 1939, directed by Frank Capra and starring Jimmy Stewart.)

As an American, a parent, and a former public servant, I have never been more upset with Congress than I am over the current version of health care reform. Both sides of the aisle have sold us out – the Democrats to the lobbyists, and the Republicans to the gadflies – rather than offering realistic, logical alternatives to the healthcare crisis. If this type of health care reform is passed by Congress, I hope that, come Election Day in 2010, we will all remember who voted for the bill.

Each evening, after I finish putting our four children to bed and answering critical emails on U.S. health care reform, I turn my attention to China. I am completely amazed and impressed with what is taking place there. I expect to write more about China after my return later this month. For now, let me share some preliminary observations.

China is no longer an emerging, developing nation. It is developed. There is no end in sight to Chinese economic growth and the improving Chinese lifestyle. This year the Chinese people will purchase 13 million new vehicles, including almost 2 million GM cars. Compare this to annual U.S. sales of 10 million new vehicles. By 2020 Chinese auto sales are expected to be double U.S. auto sales, and that expectation will probably be far exceeded.

Today, however, about 130 million people in China, 10% of the Chinese population, are not purchasing these new vehicles. This is because approximately 10% of the Chinese people live below the poverty line as defined by the World Bank ($1.25/day). These people mostly live in rural areas with few paved roads or gasoline stations. Before anyone despairs over this figure, such extreme poverty was as high as 64% of the population, 800 million people, only two decades ago. The Chinese government is committed to sharing the Chinese economic miracle with all of the country’s 1.3 billion people, a goal I believe they will accomplish. China has already done more in the past 20 years to eliminate or reduce poverty than all other nations of the world combined.

Hundreds of millions of mostly-urban Chinese consumers receive excellent sickness medical care, care which rivals that of any western nation. And, hundreds of millions of rural Chinese consumers receive subsistence sickness care. When analyzing the Chinese economy, it is important to throw out all forms of analysis that use average numbers.

The mostly-urban Chinese consumers who receive western-type medical care pay directly for their coverage. They pay in cash, at the time of each service. Numerous hospitals and medical providers compete vigorously for each consumer’s medical pocketbook, competitively offering western-style medical procedures and products (like MRIs and pharmaceuticals) for a fraction of what these items cost in the U.S.

Once the U.S. focuses on lowering the cost of existing medical procedures and products, there will be an opportunity for U.S. entrepreneurs to bring thousands of such procedures and products from China to the U.S. In 2007, I wrote this chapter about how Dr. Geoff Tabin, a U.S. social entrepreneur and philanthropist, figured out how to bring the most popular operation in the world-a cataract lens replacement which cost $3,500 per eye the U.S-affordably to the third-world for less than $20 per eye. This month Dr. Tabin is featured on the cover of National Geographic in a compelling story written by David Oliver Relin, the author of the worldwide #1 bestseller Three Cups of Tea.

Side-by-side with western-style medical care, Chinese providers offer Traditional Chinese Medicine (TCM), from acupuncture to weight loss to wellness-oriented supplements and vitamins. Most Chinese consumers embrace the best of both western medicine and TCM sickness and wellness/preventative care. In China, people are much less skeptical than people are in the West that wellness works. Wellness care and preventative medicine has been part of the Chinese medical culture for millenniums.

However, just as in the U.S., the number of Chinese consumers in need of wellness care is growing much faster than the number of people receiving wellness care. This is primarily due to the western diet being introduced to more affluent Chinese, particularly in the major cities. China currently has the largest and fastest growing populations of both overweight and obese people in the world-there are 195 million overweight and 97 million obese people in China, especially among the urbanized and younger populations.

One U.S. company is already in China addressing this problem. According to this compelling article in Forbes Magazine, Amway China has more than 250,000 distributors and stores with sales in China exceeding $2.5 billion, making China Amway’s biggest market. Similar success stories await many more American wellness suppliers, as well as entrepreneurs offering Chinese individuals the opportunity to own their own business.

In summary, great sickness care, wellness care, and entrepreneurial opportunities await:

(1) Entrepreneurs ready to bring proven Chinese wellness and sickness solutions to the U.S; and

(2) Enrepreneurs ready to bring proven U.S. wellness and sickness solutions to China.

Stay tuned.

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