China's rural health system in a changing institutional context

China’s rural health services are experiencing problems associated with the transition to a market economy. The cost of care has risen rapidly and arrangements for local health insurance have collapsed. Government health budgets have lagged behind the rise in costs. Major illness has become an important precursor of household poverty. Policy-makers acknowledge that something has to be done to improve access to effective services at an affordable cost. Government policy statements have articulated a vision of a future health system. Few disagree with this vision but people do disagree about how to attain it. Chinese health policy analysts have begun to ask fundamental questions about the role of government, forms of facility ownership and alternative health financing mechanisms. This paper argues that the health sector’s problems are best understood in the context of China’s attempt to create institutional arrangements appropriate to a market economy. It suggests that the performance of rural health services will be strongly influenced by the degree to which rules-based local administrative and regulatory systems and local accountability mechanisms become established. Keywords: China, rural health, transition, governance, health finance