Way back when I studied abroad in Beijing in 2001, I did a little "research project" on health reform in China. My professors put me in touch with some talkative retirees and gave me newspaper articles to read (which was difficult back then, given my limited Chinese level). I came back with a glowing report on the future of the country's health system and was told I was being too optimistic, which I obviously was... I just hadn't been given the right resources.
A couple years later, a friend of mine in the countryside was surprised to be charged somewhere between 1,000 and 2,000 RMB for his daughter's broken tooth to be fixed. This was a couple times his monthly earnings. Another person I knew, an urbanite, had to pay extra under the table for his mother to get proper hospital treatment. These people's experiences with price-gouging and corruption, I discovered, were not unique (see this article in China Elections and Governance and this one in The Telegraph). When SARS swept through, the disease showed how dangerous China's system or lack thereof could be: people carrying SARS were shaken down for money and turned away in some instances, at least initially.
Obviously, the Chinese health system, like America's, is in need of a fundamental overhaul. Especially in rural areas. And it seems like it will, at last, get some changes in the near future (see USA Today's recent, surprisingly in-depth article). The details of the current plan pretty much mirror the plan that I read about way back, eight years ago: individuals will pay a certain amount, their employers and local government will kick in some, and the central government will pay the remainder.
This sounds fine on the surface, but the balance is, in fact, skewed: local governments are responsible for 60 percent of the funds. They simply cannot pay this, having already tried out random taxes, land seizures and other methods to raise cash, all with socially destabilizing consequences. Academics like Christine Wong have written about how what was essentially a progressive tax in the Mao era (with localities and enterprises sending all their profits into the center and getting back more or less what they needed to catch up to other areas) evolved into a regressive system, whereby poor areas pay for growth in Beijing and Shanghai, leaving little left over for an ever-increasing number of mandates: to provide education free, to reduce pregnancies, to build hospitals, etc.
In these circumstances, it is not surprising that some are calling for more private solutions, a la the American model. I hope no one pays attention to these voices. This would only lead to more corruption and less responsibility. What is needed is a national, socialized system... but I don't envy anyone trying to put it together.