"The current Chinese system has all the downsides of an almost unregulated market in the presence of considerable poverty," said David Blumenthal, director of the Institute for Health Policy at Massachusetts General Hospital.

"That makes the expenses people have to pay tremendously damaging to the health and economic health of the country," he told United Press International.

After decades of significant health and life-expectancy gains, the Chinese government has effectively dismantled its system of universal basic care. In its place is a market-based system where roughly half of urban dwellers have employer-based coverage. Rural areas have been largely left behind: about four in five rural Chinese are uninsured.

For the uninsured in China, access to healthcare is nowhere near guaranteed. Healthcare costs are 40 times higher than they were in the early 1980s, but 58 percent is financed by individual out-of-pocket payments.

The problem is exacerbated by a physician payment system that gives doctors an incentive to provide unnecessary treatment and drugs in order to bolster their meager incomes.

In the wake of the 2003 SARS epidemic, the Chinese government has expressed intent to tackle healthcare reform, but any solution will likely be complicated and expensive, experts said. Until change occurs, the country is ill-equipped to cope with infectious disease threats like avian flu and AIDS, and increasing rates of lifestyle diseases like tobacco-related lung cancer and heart disease.

"The Chinese understand their system as currently organized is not functioning in a sustainable fashion," Blumenthal said. "It's a huge, huge problem. Their system is vastly expensive, but they haven't decided what to do yet."

Given the fact that their economy has grown about 16 percent per year over the last decade, "they have some room to spend more," Blumenthal said, "but if they spend the way they're currently spending, they won't get much for their money."

Meanwhile, many health conditions are becoming worse, said Erika Elvander, a policy expert at Health and Human Services' Office of Global Health Affairs.

In addition to the threat of avian flu, non-infectious diseases are threatening Chinese health. There are 320 million smokers in China and lung cancer is on the rise. Cardiovascular disease, which is also often lifestyle-related, is now the cause of almost one in five deaths.

The lack of access to care for those conditions is leading to political unrest, Elvander said Tuesday at the Woodrow Wilson International Center for Scholars.

"People are angry. They don't want to be deprived of healthcare. The don't want to go bankrupt because somebody gets sick," she said.

"This is the largest domestic issue for the Chinese government and they're struggling with it."

Some of the difficulties the central government might face in the advent of a large infectious disease outbreak can be gleaned from another pandemic, AIDS.

There are now at least 650,000 HIV-positive individuals living in China, most of whom got the disease from injecting drugs with infected needles.

But the government has only positively identified 184,000 of those individuals, said Bates Gill, a China expert at the Center for Strategic and International Studies, and public health efforts -- including 320 methadone distribution clinics -- have met with mixed results.

The 650,000 government estimate is probably an understatement of the number of HIV cases, he said, "and the disease seems to be moving into what you might call the mainstream population."

But there are signs of hope.

After the SARS outbreak, the Chinese government greatly increased its cooperation with outside health bodies like U.S. government agencies, particularly in the area of scientific research, said Deborah Seligsohn, environment, science, technology and health counselor at the U.S. Embassy in Beijing.

"The relationship is expanding and growing really rapidly," she said.

Drug manufacturer Merck recently made a $30 million contribution, and -- at press time -- Bill Gates was touring China.

The Chinese government has also launched some pilot projects, which amount to a partial revival of its previous government-run healthcare coverage system. Under one plan designed for low-income Chinese that is scheduled to go nationwide by 2010, the government will pay $2.50 per year for insurance for a low-income individual, while that individual will pay a premium of $1.25 per year.

But critics point out that even that plan would leave the poor only covered for inpatient care and facing high deductibles.

In the end, the same economic forces that led to the unraveling of the old system may mobilize political will for a new one.

"The driver is really (the economy) rather than health," Seligsohn said.

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