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There is little doubt among Chinese leaders that healthcare in China will be challenged in the 21st century. More and better medical services will be needed in coming years because of social developments and the variety of diseases in China, a country with a population of well over a billion. The income of families in urban areas of China is expected to be three times as high as its current (2006) level by 2020, and as a result there should be much more demand for basic medical services in the cities. In rural areas, family incomes are also expected rise by 2020, causing a similar increase in the need for foundational medical care. A relatively small number of Chinese will become wealthier, and as a result will expect higher quality healthcare. In contrast, as many as 200 million Chinese will still be living at or below the poverty line by 2020. These low-income people will be unable to afford the costs of a serious disease.

Since the founding of the People's Republic of China, the goal of health programs has been to provide care to every member of the population and to make maximum use of limited healthcare personnel, equipment, and financial resources. The emphasis has been on preventive rather than curative medicine on the premise that preventive medicine is “active” while curative medicine is “passive.” The healthcare system has dramatically improved the health of the Chinese people, as reflected by the remarkable increase in average life expectancy from about 32 years in 1950 to 69 years by the 1980s.

After 1949, the Ministry of Public Health was responsible for all healthcare activities and established and supervised all aspects of health policy. Along with a system of national and local facilities, the ministry regulated a network of industrial and state enterprise hospitals and other facilities covering the health needs of workers. In 1981, this network provided approximately 25 percent of the country's total health services, providing care in both rural and urban areas through a three-tiered system. In rural areas, the first tier was primitive, with doctors working out of village medical centers. They provided preventive and primary-care services, with an average of two doctors per 1,000 individuals.

The second tier includes township health centers, which functioned primarily as outpatient clinics for about 10,000 to 30,000 individuals each. These centers had between 10 and 30 beds each, and the most qualified members of the staff were assistant doctors. These two lower-level tiers made up the “rural collective health system” that provided most of the coun-try's medical care. Only the most seriously ill patients were referred to the third and final tier, the county hospitals, which served 200,000 to 600,000 individuals each and were staffed by senior doctors who held degrees from five-year medical schools.

Healthcare in urban areas was provided by paramedical personnel assigned to factories and neighborhood health stations. If more professional care was necessary the patient was sent to a district hospital, and the most serious cases were handled by municipal hospitals. To ensure a higher level of care, a number of state enterprises and government agencies sent their employees directly to district or municipal hospitals, circumventing the lower-level healthcare.

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