Financing Health Care in Poor Rural Counties in China: Experience from a Township-Based Co-Operative Medical Scheme

Abstract

The economic reform programme in China, which started in the late 1970s, has had a major impact on rural health services. The replacement of collective agricultural production by the ‘household responsibility system’, lead to the widespread collapse of collective-funded Co-operative Medical Schemes ( CMSs), which at that time assisted farming households with health care costs in more than 90% of villages in rural China. The design and implementation of new forms of CMS which are compatible with the economic reform has become a central focus of rural health policy. With strong political support from the central government, which has proposed that most rural areas should have such schemes in place by 2000, widespread CMS implementation is proceeding at considerable speed. Effective regulation, based on systematic monitoring and evaluation methodologies will be essential if these new schemes are to be sustainable. This paper examines the issues involved using empirical evidence from an evaluation based on the logical framework approach of an experimental scheme which was initiated in Hechi Prefecture, Guangxi Province in 1995. The study findings suggest that the very restricted forms of CMS now being introduced on a widespread basis to meet government targets may have some merit in terms of the organisation and regulation of health services and could represent a valuable first step towards a viable financing option. However, the focus on village based schemes, with minimal levels of funding and consequent inability to provide assistance with drug costs or treatment at higher level facilities, raises considerable doubts as to their sustainability when the current enthusiastic support provided by local government declines. The case study reinforces the point that the establishment of a CMS can do little to overcome basic deficiencies in service provision. It also indicates that such schemes will not solve the problem of access for the poorest households in the absence of specific and effective mechanisms to finance their inclusion.