Providing Comprehensive Health Insurance Coverage in Rural China: a Critical Appraisal of the New Cooperative Medical Scheme and Ways Forward
| Date | 01 March 2017 |
| Published date | 01 March 2017 |
| Author | Wei Yang,Xun Wu |
| DOI | http://doi.org/10.1111/1758-5899.12209 |
Providing Comprehensive Health Insurance
Coverage in Rural China: a Critical Appraisal of
the New Cooperative Medical Scheme and
Ways Forward
Wei Yang
Centre for Health Services Studies, University of Kent, and
Department of Social Science, Health and Medicine King’s College, London
Xun Wu
Division of Environment, Division of Social Science,
Hong Kong University of Science and Technology
Abstract
Health insurance reform for rural China is at a crossroads. The achievements of recent reform initiatives appear remarkable as
measured by coverage through the New Cooperative Medical Scheme (NCMS); yet there is little evidence that NCMS has
made major strides toward improving the financial protection of health care for the rural population. Our assessment suggests
that the system may become trapped in a vicious cycle of increases in government subsidies and resulting cost escalations in
health care due to strategic responses among health care providers, a factor that hitherto has been largely overlooked. We
argue that to improve the sector’s overall performance, a thorough reform is needed to change provider payment incentives.
Attention should also be directed to strengthening the ability of government agencies to manage health insurance funds
effectively through their roles as purchasers and third-party payers.
Policy changes in health insurance for China’s rural popula-
tion in recent decades can best be described as pendulum
swings. Before 1978, the vast majority of the rural popula-
tion was covered by the Cooperative Medical Scheme
(CMS), under which access to basic health services was pro-
vided at relatively low cost. The economic reforms launched
at the end of the 1970s led to the collapse of People’s Col-
lective Communes, the institutional backbone of CMS, and
the rural population was left almost completely on their
own to pay for health care. The absence of insurance cover-
age, coupled with the introduction of fee-for-service (FFS)
payment requirements in the health system, rendered
health services unaffordable for the majority of the rural
population: according to a national survey, about three-
quarters of rural residents no longer sought care when rec-
ommended (Gu, 2008, 2012).
The New Cooperative Medical Scheme (NCMS) introduced
in 2003, formed part of a shift in the opposite direction.
Subsidised heavily by the government at different levels, the
scheme aimed at providing universal coverage for basic
health care for rural residents regardless of individual char-
acteristics, including job and socioeconomic status, educa-
tion, pre-existing health conditions or level of wealth. Thus
far individual contributions to the insurance premium by
rural residents have remained low. To improve enrollment
into the plan, the government has substantially increased its
contribution to the individual premium, from merely 10RMB
(US$1.21) in 2003 to 240RMB ($30.02) in 2012.
The expansion of NCMS has been remarkable by any
measure: 726 million rural residents in 2,448 counties were
covered under the program by 2008 (You and Kobayashi,
2009), and coverage reached 97.5 per cent by 2012, making
NCMS arguably the largest medical security program in the
world (Table 1). More importantly, the bene fit package for
the insurance plan, which was initially meant for cata-
strophic illness, was expanded in 2007 to include outpatient
and preventive care (Xinhua, 2012).
Beyond these official statistics, however, performance
assessment of NCMS has delivered less optimistic results.
The main goal of the program is to protect households
against the financial risk of ill-health by reducing patients’
liability for the cost of catastrophic illness (Babiarz et al,
2012; Zhang et al, 2010a). Yet, there is little evidence that
the program has made major strides toward that objective.
Studies have shown that NCMS has had limited impact on
out-of-pocket payment reduction; in some cases, health care
payments in fact increased (Wagstaff et al, 2005; Sun et al,
2010; Sun et al, 2009; Yip and Hsiao, 2009b). Some scholars
©2017 University of Durham and John Wiley & Sons, Ltd. Global Policy (2017) 8:Suppl.2 doi: 10.1111/1758-5899.12209
Global Policy Volume 8 . Supplement 2 . March 2017
110
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