Scientific health insurance in China

China's massive New Rural Cooperative Medical Scheme is listening to relevant science

SUMMARY: Wu Ming, Professor of Health Policy at Peking University School of Public Health has been researching China's New Rural Cooperative Medical Scheme in depth. She tells RealHealthNews that Central Government is to be praised for listening to its scientists, while researchers are responding to the needs of policy-makers.

>by Jie Gao

From the establishment of the New China in 1949 until the early 1980s, Chinese farmers enjoyed a form of cooperative healthcare system. However, with the rise of market economy in China, this old system gradually disintegrated, leaving 90% of Chinese poor farmers financially vulnerable to illness.

Responding to this, trials of a ‘ New Rural Cooperative Medical Scheme’ or ‘New Rural CMS’ – basically local health insurance - began in July 2003, in selected rural areas, to improve countryside families' risk-resistance to serious disease.

This year, over 600 Chinese counties – 40% of the total – are experimenting with this new scheme, and central government intends to raise the proportion to 60% next year.

The scheme sets up a Cooperative Medicare Fund Pool in each county. A farmer pays 10 Yuan (US$1.25) into the pool for medical insurance; the central government, and the local government, each pay an additional 10 Yuan into the pool for each farmer who joins. In regions where the local government is richer, it is asked to pay more.

Throughout the three years of its implementation, this scheme has been a heated topic - both at home and abroad. Is it a success or a failure?

Wu Ming, Professor of Health Policy at Beijing University, School of Public Health, has done a great deal of research into the scheme for the Chinese farmers. Her research is not simply theoretical – she has made many field trips to remote rural areas across China, and held hundreds of conversations with local farmers and grass-roots health workers. And although public communication is a delicate matter in China, she kindly granted an interview with RealHealthNews.

From her eyes and her language, Wu Ming’s compassion towards those poor farmers was evident – as was her passion for her research topic. “Some poor farmers have to leave hospital when they run out of money. However, maybe they needed just a few more days, to recover… China really needs to work out a good healthcare system for the countryside” Wu said.

Wu believes that good theories are important, but a researcher should check whether a theory could in practice thrive on China’s soil. In each rural county Wu visited, she would conduct thorough research interviews with individuals from the county head to the local peasants. And to guarantee authenticity, Wu and her colleagues would not allow any official to be present when interviewing farmers.

According to Wu, the scheme has some fundamental merits.

Firstly, the funds are strictly managed and supervised. After three years of trial running, the basic result is rather good. And the problems are generally “operational” rather than fundamental.

Secondly, says Wu, the scheme is welcomed by most farmers, and has benefited them, though the level of benefit should still be improved.

And thirdly, to allow for the very different cultures across Chinese rural areas, central government delegated a portion of policymaking power to local government. This decentralization encourages local government to find a mode of operation that is welcomed by local farmers and could maximize the efficiency of the use of the fund. (Government also intends to promote exchange of experience among experimenting counties.)

Of course, there are challenges as well. And explaining the scheme to farmers is difficult. For example, some farmers do not understand the concept of risk. If they bought the insurance for one year, but did not get sick that year, they would feel they had spent 10 Yuan for nothing and would be reluctant to join the insurance next year.

Some of t he m als o seldom bother to read printed materials, if they can read at all. So grass-roots workers go door-to-door, to explain the scheme. However the explanations sometimes are not clear enough; so some farmers may join the scheme based on a misunderstanding, and later, some trouble may occur.

In 2006, the central and local governments increased their subsidy from 10 Yuan per farmer insured to 20 Yuan respectively, making each insured farmer have 50 Yuan in total in the fund. However, Chinese scholars hope that a system could be established to guarantee continuous improvement in the level of healthcare that farmers could enjoy, so that with the economic development of China, the fund could become larger and farmers in rural areas could enjoy more advanced medical technologies.

The scheme is expanding rapidly, aiming to reach nearly two out of three counties in 2007. “I know relevant people of all levels are enthusiastically working hard on this, which is good” says Wu. “However, as a researcher, I feel this rate of expansion may have some potential risk.”

“My major concern is the ability of local management and personnel. It could be a big issue. The scheme needs rather accurate forecasting of medical expenditure, in order to set up management plan. However, the calculations are not easy. Even the baseline investigation and baseline data collection are big barriers to untrained local personnel.

“For example, they need to know statistics such as the local state of health, inpatient and outpatient levels, past medical expenditure levels, disease types and farmers’ preferences when choosing medical care providers, and so on and so forth.

“However, the records [of such things] are quite incomplete. What is also difficult is that, when forecasting, one should take into account behaviour uncertainty: farmers’ usage of medical services could be quite different when there is insurance and reimbursement…. To forecast under behaviour uncertainty needs lots expertise” Wu explains.

“If the forecasting fails, there could be the problem of an overdraft on the fund, which could seriously hurt the next year of the scheme; or a fund deposit [an excess of funds], which damages the fund utilization efficiency.

“Many local health works have no experience or expertise on forecasting. On the other hand, the numbers of forecast experts in China are limited - not enough to provide timely training to those grass-root workers across the country. If we expand too fast, problems may occur.”

Wu therefore proposes the prior creation of a mature intellectual workforce pool, through training, and the creation of other favourable conditions, before expanding the scheme to an even greater portion of China’s rural areas.

However, Wu is very pleased with the government’s attitude towards academic researchers. “The Ministry of Health often invites us scholars to symposiums for consultation. Our suggestions are very seriously treated. For the New Rural CMS, the Ministry of Health has especially formed an ‘expert-team’ composed of experienced scholars in the field to supervise the scheme and offer suggestions.”

“The policy makers and we scholars are working together to bridge the gap between academic research and policy making. On one hand, policy makers actively take academic instruction from us; on the other hand, we scholars focus more on how to link theories with real-world policy making. This is a two-way effort.”

“The greatest challenge is still financing” Wu told RealHealthNews. “Considerable portions of China’s rural areas are still quite underdeveloped. The local governments of those areas have very limited financial ability to appropriate more funds for local healthcare. This has resulted in the low health-service providing ability in the countryside and farmers’ low accessibility to healthcare. We are calling for international financial aid.”

For example, “a few ultrasonic B-scan machines [for breast cancer screening], some building repainting, solar batteries, and water supplies - these do not cost much, but would mean a whole lot of difference to the health services in China’s countryside.

If international donors were prepared to help but wanted to make sure their money was effectively used, they could invest selectively in medical services in rural areas. And they could ask for evaluation to make sure their money has really been used on poor farmers, not other things, Wu suggested.

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