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China’s Rural Cooperative Medical Care System: Miles to go

On May 30, 2011 while talking about China’s Rural Cooperative Medical Care System (RCMCS), Yao Lan, professor with the School of Medicine, Huazhong University of Science and Technology, Wuhan remarked that “China has established a basic medical care system that nearly covers the whole nation in only five years. It took Germany a hundred years and the Republic of Korea 12 years to achieve the goal. China has created a record.” Yao’s statement is a bit exaggerated, as there is no comparison between the medical care systems of China and other developed economies. However, a system has been evolving in China, which is not uniform as different provinces have evolved their own medical care system, yet China can boast that the system has already covered 1.26 billion residents, or 90 percent of the total population.

Generally speaking, China has done well compared with other countries at the same stage of economic development. People are living longer and healthier lives now than sixty years ago. The average life expectancy has reached 74 years, and from 1970 to 2010, the infant mortality rate fell from 61 to 23. However, there is regional disparity and the rural health care system has raised some serious questions. China experimented its first RCMCS on August 10, 1966 from Hubei Province. The experimental health care required the peasants to pay 1 yuan per year; meanwhile, 5 jiao or ½ yuan per person was paid from the village collective public fund towards medical care. By 1968 such system was implemented throughout China. By late 1970s it is reported that 95% of the rural population benefited from cooperative health care (RDI 2006: 32).

However, after the initiation of economic reforms in 1978, and more so after the implementation of Household Responsibility System (HRS), the RCMCS was weakened with the weakening of the community organizations. This resulted in a decreased supply of rural health workers, increased burden of illnesses, disintegration of the three tier medical system, reduced primary health care, and an increased demand for hospital medical services. Since then, China is struggling to find an equitable, efficient and sustainable way of financing and organizing its rural health services.

In 2003, China started to carry out a new-type of RCMCS based on “major illness health insurance coverage” (yi dabing tongchou weizhu 以大病统筹为主). Under such a system, each farmer pays 10 yuan to a medical fund every year, with the central and local governments each contributing 10 yuan to the pool too. When a farmer receives medical treatment, he could have a certain proportion of the medical expenses refunded. By September 2005, the system had spread to 671 counties covering 233 million rural dwellers accounting 26.30% of rural population, and a total of 6.49 billion yuan had been paid in to 82.66 million farmers (RDI, 2006:33). By the end of September 2006, the system had been extended to 1,433 counties, which accounted for 50.1 percent of the China’s total.  A survey report carried out on People’s Daily online edition on January 24, 2007 showed that the rural families were reimbursed 25.7 percent of their total medical expenses, with an average refund of 731 yuan (about 91 U.S. dollars). The survey polled 19,195 rural families in 32 counties of 17 provinces. The survey also showed that 90 percent of families who participated in the system were willing to stay in the system. From 2007 onward, the Chinese government has decided to double government allowances of 20 yuan (2.5 U.S. dollars) this year for each farmer participating in the RCMCS. In addition, China plans to extend the scope of current trials to 1,145, or 40 percent of its counties in 2007. The Chinese government has pledged to invest more than 30 billion yuan (3.85 billion U.S. dollars) to improve its rural medical care network during the 11th Five-Year Plan (2006- 2010).

From the government policies towards RCMCS, it could be discerned that the system has following main characteristics. One, the government intends to build a three tier medical care network involving the counties, towns and villages. The purpose behind such a system is realizing the goal of “curing minor ailments at village level, serious ailments at town level, and chronic ailments at county level” (xiaobing buchu cun, dabing buchu xiang, zhongbing buchu xian 小病不出村,大病不出乡,重病不出县). Two, the RCMCS is based on “major illness health insurance coverage” implying that the more serious the disease, more reimbursements you expect. Three, as regards the policy, the RCMCS is inclined towards curing illness at town and township level health centers or hospitals. The policy stipulates that the rural people who treat themselves for ailments in township and town hospitals, the reimbursement would be greater than those curing aliments in county hospitals. Four, the cooperative medical care fund would be set up with the funds originating from individual peasants, local and central governments.

Luochuan County in Shanxi Province was one of the counties that implemented the RCMCS early on. By the end of 2004, 80% peasants had participated in the RCMCS. In 2005 the provincial government decided to reduce the amount of self payment by peasants for township, county and beyond hospitalization to 100 yuan, 300 yuan and 600 yuan respectively. If the amount exceeds this bottom line, the peasants would be reimbursed 60% if the treatment is carried at township; 50% if it is at county level and 40% above county level. Even though a certain percentage gets reimbursed from the RCMCS Fund, but it has been found during my field investigations in China that to see a doctor, it is still a nightmarish experience for any peasant. Dujiangyan City in Sichuan Province has evolved its own system since it initiated the pilot RCMCS in 2003. Peasants joining the RCMCS hold a “Family Outpatient Account” FOA (jiating menzhen zhanghu 家庭门诊账户). Peasants joining the RCMCS have to pay 10 yuan, but 15 yuan would be entered in their FOA. While seeing a doctor, the peasant only needs to show his FOA and can even get a treatment for minor disease. A family of three would have a 45 yuan FOA that would enable them to see a doctor at township and town level from 4 to 5 times.

The scholars at Rural Development Institute of the Chinese Academy of Social Sciences, Beijing are of the view that the RCMCS so far has not been able to resolve the basic issue of peasants difficulty in seeing or consulting a doctor. The major problem of the RCMCS is that guarantee levels are very low, for the amount paid by the peasants towards their ailment is still very large and it would be difficult for many to pay the amount. Therefore, many in the countryside would still be forced to “drag on with minor disease and wait death with chronic disease” (xiaobing kangzhe, dabing dengsi 小病扛着,大病等死), for the RCMCS is purely based on “major illness health insurance coverage.” According to a recent report some 3.7 million Chinese people (85% of all deaths) die each year before the age of 60 due to chronic diseases. Many peasants have expressed that since serious diseases are developed from minor diseases, why not to nip the problem in the bud? At this point the government not extending the coverage for all diseases has been attributed to the paucity of funds. The officials agree that there is a scope to make the RCMCS relevant to all sorts of ailments, but that could be possible with the increase of rural income and raising more funds for the purpose.

According to a report published by Xinhua on July 11, 2008, a total of 804 million rural residents had joined the system as of the end of March 2008, accounting for 91.05 percent of the rural population. Quoting Mao Qun’an, spokesman of the Ministry of Health, the report says that RCMCS has expanded to 2,679 counties, county-level cities and city districts, covering approximately 98.17 percent of the country’s rural areas. The government is hopeful that the system would cover all rural areas by the end of 2008. As regards the pool funds, at present, it has been raised to 100 yuan, with a split of 20 yuan from the participant and 80 yuan from the governments. However, provinces in the middle and western parts of China failed to meet the standard, mainly because individuals in poverty-stricken areas hadn’t increased their participation. Lack of government investments has long been the major cause for the country’s poor medical care system.

As China’s economic juggernaut continues to roll on, it has been able to pump more money to the medical care system. According to wang Jun, Vice Minister of Finance, China invested 1.13 trillion yuan in improving the medical care system during 2009-2011, 284.2 billion yuan more than the original budget. It also raised the ratio of the medical care spending in fiscal expenditure to 5.35 percent in 2011, up from 4.57 percent in 2008. However, irrespective of the fast economic development, China still has a long way to go to establish a high-standard medical care system. There is still huge gap between the rural and urban medical care systems. During the 12th Five-Year Plan (2011-2015) period, China is aiming to reduce individual’s shares of total medical expenditures to less than 30 percent, and perfect the medical care system by the year 2020, till then we will have to wait and watch.


RDI (Rural Development Institute) of the Chinese Academy of Social Sciences, comp. (2006) 农村经济绿皮书2005-2006年:中国农村经济形势分析与预测 (Green Book of Chin’s Rural Economy 2005-2006: Analysis and Forecast on China’s Rural Economy). Social Sciences Academic Press, Beijing.

(The Writer Dr B R Deepak is Professor of Chinese and Dean, School of Languages Doon University. He could be reached at

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