* Chinese patients take on debt to fund rising medical costs

* Personal medical expenditure expected to hit $1.9 trln by2025

* Public health insurance broad but shallow, so much notcovered

* Patients liable for about half of total healthcarespending

* Consumer borrowing has tripled since 2010

By Adam Jourdan and Ben Hirschler

SHANGHAI/LONDON, July 10 As China's medicalbills rise steeply, outpacing government insurance provision,patients and their families are increasingly turning to loans topay for healthcare, adding to the country's growing burden ofconsumer debt.

While public health insurance reaches nearly all of China's1.4 billion people, its coverage is basic, leaving patientsliable for about half of total healthcare spending, with theproportion rising further for serious or chronic diseases suchas cancer and diabetes.

That is likely to get significantly worse as the personalhealthcare bill soars almost fourfold to 12.7 trillion yuan($1.9 trillion) by 2025, according to Boston Consulting Groupestimates.

For many, like Li Xinjin, a construction materials traderwhose son was diagnosed with leukaemia in 2009, that meanstaking on crippling debt.

Li, from Cangzhou in Hebei province, scoured local papersand websites for small lenders to finance his son's costlytreatment at a specialist hospital in Beijing, running up debtsof more than 1.7 million yuan, about 10 times his typical annualincome.

"At that time, borrowing money and having to makerepayments, I was very stressed. Every day I worried aboutthis," said Li, 47, adding that he and his wife had at timesslept rough on the streets near the hospital.

"But I couldn't let my son down. I had to try to save him,"he said.

Li's boy died last year.

The debts will weigh him down for a few more years yet.

Medical loans are just part of China's debt mountain -consumer borrowing has tripled since 2010 to nearly 21 trillionyuan, and in eight years household debt relative to the economyhas doubled to nearly 40 percent - but they are growing.

That is luring big companies like Ping An Insurance Group , as well as small loan firms and P2Pplatforms, as China's traditional savings culture provesinadequate to the challenge of such heavy costs.

The stress is particularly apparent in lower-tier cities andrural areas where insurance has failed to keep pace with risingcosts, said Andrew Chen, Shanghai-based healthcare head forconsultancy Parthenon-EY.

"It's a storm waiting to happen where patients from ruralareas will have huge financial burdens they didn't have to facebefore," he said, adding people would often take secondmortgages on their homes or turn to community finance schemes.


ROOTS OF POVERTY

China's government has moved to ramp up rural healthinsurance, boost coverage for major illnesses and put pressureon drug companies to slash prices, but it is an uphill battle.

Official data show up to 44 percent of families pushed intopoverty were impoverished by illness.

The Ministry of Health, which did not immediately respond torequests for comment, is currently investigating the impact ofthese costs on the country's labour force.

"Typically, what happens in China is the whole familycontributes when someone gets a severe disease like cancer,"Severin Schwan, chief executive of Roche Holding AG, theworld's biggest maker of cancer drugs, told Reuters.

"When it comes to innovative medicines, the financial burdenis just too much. Families can go broke."

Roche itself has schemes in China to make cancer drugs moreaffordable, including an insurance scheme developed with SwissRe.

There are no reliable figures for total healthcare lending,as lenders do not usually advance the money forhealthcare-specific purposes.

"If you want to use it for medical bills, cosmetic surgeryor plastic surgery that's all fine," says Ping An Puhui, whichadvertises that its loans can "alleviate the pain of illness"and "bring new hope to sick families".

But there is plenty of anecdotal evidence from onlinelenders that it is a growing segment.

"Our loan numbers have risen steadily, and no small numberof people have used these for medical purposes," said Li Jin, acustomer service worker at peer-to-peer (P2P) lender ppdai.com.

"Healthcare costs are high, and lots of people don't havegood state cover, so they need a loan."

China Minsheng Banking Corp has launched ahealthcare loan scheme in the western city of Chengdu, whileShanghai Pharmaceuticals Holding Co Ltd rolled out aloan scheme in April to help patients access expensive drugs.

Some desperate patients are pawning their personalbelongings.

"They use things of various value from jewellery to pursesand even cars," said Chen Yi, an office worker at online lenderminbaodai.cn.

"Previously the majority of people were looking for extracash flow for their business, but last year and this we've seena rise in healthcare loans." ($1 = 6.6696 Chinese yuan renminbi) (Additional reporting by SHANGHAI newsroom; Editing by WillWaterman)



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