Bachelor Thesis, 2009
100 Pages, Grade: 1.7
List of abbreviations
2 China’s healthcare organisation
2.1 The development phase of the healthcare system
2.2 China’s healthcare system
2.3 The health care financing system of China
2.4 The healthcare insurance of China
2.4.1 Basic medical insurance for urban workers
2.4.2 Basic medical insurance for urban residents
2.4.3 The rural cooperative medical care system
2.4.4 The survey of University students’ free medical care system
2.4.5 Survey of children’s medical insurance
2.4.6 Survey of medical services for foreigners
2.5 Refund of costs through the healthcare insurance
2.5.1 The doctor choice and hospital choice behaviour in China’s New Cooperative Medical System
2.5.2 Main medical expenses reimbursement problems of the New Rural Cooperative Medical System
2.5.3 Subsidies for severe disabilities
2.6 Reasons for non- participation of farmers in the medical care system
3 Reasons for the increasing poverty in the country-side
3.1 Back into poverty due to illness
3.2 The generally low cultural quality of the rural labour force
3.3 The rural economic and social environment
3.4 The relatively poor natural conditions in rural areas
4 Problems in the supply of drugs
4.1 Prevention of the circumvention of law
4.2 Some Regulations of the Drug Control Law
5 Relation between the doctor and patient
5.1 Medical corruption
6 Problems during the treatment
6.1 Bail as a delay of the treatment
6.2 Lack of Medical Knowledge of the farmers towards the pains
6.3 Problems with the diagnosis of illnesses
6.4 Hygiene problems
7 Health and illness
7.1 Understanding under “health and illness” of the World Health Organization
7.2 Understanding under “health and illness” of the farmers
7.3 Misbehaviour of farmers concerning health and illness 85 Abdula Hamed MEB 7
8 “Market failure” in the health services in the absence of the government intervention
8.1 Alternative models of government intervention
9 Suggestions for the problem of Chinas health care system
Thema der Bachelor-Thesis:
Die Problematiken des Gesundheitssystem Chinas
Verfasser: Abdula Hamed
Semester: Wintersemester 2009/2010
Hinsichtlich vieler dramatischer Szenen im Gesundheitssektor Chinas und nach intensiver Recherche über die Problematiken des chinesischen Gesundheitssystems wuchs das Interesse, mehr über die Problematiken der Gesundheitsversorgung in China zu erfahren, um hierfür Lösungsansätze zu erörtern. Nach der Einführung der Reform- und Öffnungspolitik von Deng Xiaoping wird auf der ganzen Welt von Chinas atemberaubendem Aufstieg berichtet. Der Wandel zum liberalisierten Handel führte zu einem verminderten Armutslevel und festigt China an die spitze der weltweiten Wirtschaftsmacht. Es ist nicht zu leugnen, dass sich China in einer Ära, von noch nie da gewesener Empfänglichkeit hinsichtlich ausländischer Einflüsse, befindet. Neben den Vorteilen die die neue Reform mit sich gebracht hat, sind innerhalb des ehemaligen zentralisierten Krankensystems schwere Probleme aufgetreten. Trotz dem intensiven Engagement der Regierung gibt es zahlreiche Bevölkerungsgruppen die im Gesundheitssystem benachteiligt werden. Nicht nur die Einführung der Wirtschaftsreform ist für die Chinesen ein Segen, sondern auch die Verbesserung der Gesundheitsreform hat viel zum höheren Lebensstandard beigetragen. Anderseits hat der Reformwechsel im Gesundheitssystem Nachteile mit sich gebracht. Durch die höhere Qualität der medizinischen Versorgung, ist auch der Zugang aufgrund Preiszuschläge schwerer als je zuvor. In dieser Thesis wird das Fehlverhalten vieler Bauern hinsichtlich der Gesundheit und Krankheit dargestellt, als auch die Funktion des zu überteuerten Gesundheitssystems, das im Schatten des Einheitsstaates von der Regierung geführt wird. Des Weiteren werden Lösungs- und Verbesserungsvorschläge vorgestellt, die zu einer Verbesserung des Gesundheitssystems in China führen können.
Title of Bachelor-Thesis:
The problems of China’s health care system
Author: Abdula Hamed
Semester: Wintersemester 2009/2010
A couple of dramatic scenes were seen in China and also after getting more information about the problems of the healthcare system of China the decision were created to learn more about the healthcare system of China for being able to present solutions for the general problems. Trough the change in 1978 from communism to the implementation of the economic reforms by Deng Xiaoping the media all around the world is talking about the incredible increasing of China. The changes to liberalized trade principle waged to decreased poverty levels and determine China on the path to economic sharpness. There is no doubt that China ushered in an era of unprecedented receptivity to foreign leverage. But beside the positive effects of the reform it also showed massive change within the once centralized medical system. Even though many efforts of the government some sections of the population are at a disadvantage. The implementation of the economic reforms have been a blessing for the Chinese as well as the improved reforms concerning to the healthcare system. On the other hand through the higher quality of the healthcare system the access is very difficult due rising costs.
In that research it will be schematize the misbehaviour of many farmers concerning to health and disease and it will be shown that the present health care system that is working in the shadow of the centralized state which is managed by the government, is not the efficient way concerning to the rising costs. Furthermore solution and suggestions for improvement which could lead to an improvement in the health care system in China are introduced.
Abbildung in dieser Leseprobe nicht enthalten
At this point I would like to thank the people who have stood to me during the treatment of my Bachelor thesis aside:
My heartiest thank-you is valid Mr. Prof. Dr. Med. qualified engineer (BA) Gerd Haimerl who has supported to me with his engagement and his perpetual help and has supported me over and over again on with worth-woollen to advice. I thank him for his patience, and the extraordinary coordination in spite of the distance between Germany and China. I show his zeal and hard work really very much to estimate.
I thank also rather warmly the staff of the University of Soochow in China which have stood to me any time aside and have supplied me with enough material and information. My thanks are also directed to Mr. Prof. Dr. Zhu as well as the dean of the faculty of mechanical engineering Mr. Prof. Dr. Zailiang Chen. They gave me the chance to write my dissertation on the Soochow University as well as Mr. Prof. Dr. Yannian as my supervisor has assigned whose auxiliary readiness I estimate very much. I would also like to thank Mrs. Suzhen Wu from the foreign affairs office who has formed the stay to me very pleasantly.
By this work I have learnt not only the methodology of a scientific work in China in cooperation with Germany, but also things which completely took place off this topic - in particular human warmth which auxiliary readiness of my surroundings have deeply impressed me, so that I am really stirred to tears, thank you very much!
Soochow, 31.12.2009 Abdula Hamed
Reasons and motive of the work
In the public media the positive developments of China dominate there to the industrial state, while the shadow sides of this development, among the rest, the health system are hardly picked out as a central theme.
A row of dramatic scenes and riots in the town and her surroundings, caused by varied deficits in the health system, was decisive to write about this complicated subject and their problems. To learn more about the reasons of the deficits in the health system was the aim. In spite of many efforts of the government some population groups seem to have been neglected by this system up to now. Many vital menaces caused by illnesses ask for an urgent solution. This work wants to pick out as a central theme the failure of the farmers in the area "Health" and "Illness", discuss the being in way difficulties and indicate possible improvements in the health service, the area "doctor's patient" as well as structural areas concerning.
Then as a result of the investigation it should also become possible for population groups as for example for farmers and for financially weaker groups of town-dwellers to be able to call away adequate achievements from the health department. On the one hand with personal experiences, observations and views on the other hand, the contact with Chinese by birth and beginning doctors could be always called away the topical references that supply a picture of the current state in China. These experiences and observations should underpin my criticism of the ruling health care system.
Indicating of various deficits in the health service should serve for a future improvement of the same.
Objective and subject areas
a) The organisation of the health service
Illnesses and disasters accompany the humanity since primeval times. Nevertheless, the kind, recognition and treatment of illnesses have changed by the social developments recently rapidly. For the judgement of the topical situation of the health system the work offers a structural and institutional comparison between the town and their surroundings. The present draughts and facts are observed under various aspects and are analysed then.
In this work concrete points are worked on for the first time to bring the grounding of the health system to the reader. On this occasion, it will be explained for the first time which organisations in the health system exist in that of the town as well as in the country. Afterwards general basic principles of the health service as well as the health insurance sector are described.
In modern China becomes traditional above all on Confucius being based, ethics more and more by profit striving substituted. Today in the past as "a holy" called medicine staff „white lion (bailang) “is often called.
Here the setting should be examined by patients and doctors concerning the medical care and phenomena and selective experiences are shown concerning uses of drugs, emergency treatment as well as the phenomenon of the "Hongbao".
C) Health and illness
The reason why many people do not feel their illness as a personal destiny is because the numerous tragedies which would be to be prevented by better education and information easily occur. The traditional rituals play an important role which can be in way by the production of a clinical picture as well as the prevention measures and with the health care. These ideological images concerning illness and health which are delivered by the traditional are described and will be shown through some case studies.
This work refers to the general big towns of China like Suzhou as well as the neighbour towns like Shanghai or also Beijing. Furthermore there are various villages which have been suggested by informants.
Over and over again big discrepancies appear between official and anonymous statements to the health system. These differences complicate an exact analysis of the situation.
Concerning the literature it was very difficult to find topical and true information about the current situation of China’s health care system. Hence, the numerous Chinese references which have been recommended by doctors and medicine students were selected beside western references.
Finally, briefly usable strategies are discussed for the solution of the problems appeared on the basis of hypotheses and proposals namely mainly in such a way that for an other discussion of the future measures can be led to allow with it the affected population groups an improvement of the situation.
Through the last years China’s healthcare system was developed through several concepts which were created by the government. In the following chapter the proceeding of the healthcare system will be described as well as how the different structures are working in the urban area and in the countryside.
The development of the entire health care system is divided into three phases. The first phase includes the years from 1995 until 1999. There was the lowest safety in the health insurance for the inhabitants in the town. The inhabitants in the countryside did not even have any kind of health insurance. The second phase was from 2000 until 2004. In that time they increased the aid fund for disadvantaged groups like the unemployed population. According to the opinion other farmers the unemployed population that got the aid fund would have a higher standard of living then the poor farmers. But in that phase these poor farmers were ignored by the program of healthcare. After developing the healthcare system till 2005 the poor farmers were integrated into the third phase of the program in the healthcare system. The law will determine that the insurance money should be at least 10 Yuan. For all whom that have children or a lower standard of living, the communal tax office will pay the above mentioned amount. The status of the healthcare insurance in China around the countryside is pre much the same. In 2003 the Chinese State Council decided to prepare some strategies for the current insurance in terms of the countryside. They were focused on the health care which were introduced in the fifties for the employee of the government and nationalised companies.
The aim was to upgrade different fields like accident welfare, maternity protection, disease welfare, pension insurance and social welfare benefits.1
Chinas healthcare system is divided into two different parts for two different areas. Since decades most of the money which came from the government went to the town inhabitants while the rural poor got 63 times less. The town inhabitants were working for companies which were government properties. During the years the inhabitants were not afraid or even worried about getting unemployed or shortage of money. Because of staff reduction in the past through insolvent adventure many people could not pay for health insurance anymore. So the government decided to establish a healthcare system in which all the people are divided in different groups like unemployed persons, children, disabled people, students and pupils. These groups get financial help for treating diseases, births and emergencies. It is undeniable that town people have an advantage compared with country people. The government spent in 1978 for about 170 million town inhabitants 5.1 billion Yuan for healthcare when 790 million country people got entirely 230 million Yuan. In comparison of both inhabitants there is a relation of 1:22 to the disadvantage of the country people in 1980. In 1984 until today the relation of them has been 1:63 to the disadvantaged of the country people.
Since many years the country people were in disadvantage concerning to the healthcare compared with the town people because of none existing of pension insurance and national aids. But in the meantime fewer and fewer people are able to afford the increasing treating costs in the hospitals. For the sick country inhabitants there is no way to pay these expensive fees except taking expensive and illegal credits from private persons. By this time the reason for the latest generation of poverty is seen by the illegal way for getting money. Most of them are not able to pay the mostly huge amount back. In the majority of cases it comes to vicious circle. Without help it is not possible to get out of that vicious circle.
There is a project in the villages called “five guarantees” for the persons in need of care. This initiative is especially for sick people, orphan children, childless marriages and widowed people from the village. All these people get financial help for being able to defray the basic requirements like nourishments, clothes, fuel as well as an education for the children. As time passed after the households have been strengthened they refused to continue paying the healthcare. Therefore the project “five guarantees” has been stopped and many sanitary stages were closed. The trained doctors from the university also refused treating in the countryside because of their financial poorness. They prefer to work in the cities where they have the possibility to earn more money. Because of that problem the government allowed the traditional healers known as “bare-foot doctors” and shaman that had been followed in the past by the government to continue treating people for improving healthcare in the countryside. Recently, the government established a new rural farmer’s insurance policy. The village doctors in the country region “bare-foot doctors” do not have only the old-age insurance, but also financial subsidies from the government.
According to "Implementation of the village doctors’ pension plan" provisions, village doctors’ who enjoy the new farmer's insurance are divided into two grades. Firstly, village doctors’ who reach legal and emeritus age, and own more than 20 years working experience in the village, shall enjoy the new rural social pension insurance. The participant’s insurance premium, the government subsidy pays 60 %, a total of 12,863 Yuan go entirely to the personal accounts, community health service stations and village doctors’ individuals share 40 %. Secondly, the village doctor who have more than 30 years medicine experience but not working as a village doctor anymore (over 50 years old and own the license of village doctors at least 15 years), and did not enjoy other social basic old-age insurance, can participate in the new farmer's insurance. Village doctors’, who reach legal and emeritus age, only have to pay 8575 Yuan at one time in cooperation with the community health service station. Then the person in line with the conditions of the first category will get 200 Yuan / month, the person in line with the conditions of the second category will get 140 Yuan / month. Village doctors formerly known as "bare-foot doctors", they Medicare door-to-door in the village and protect a large number of the peasants’ health. The implementation of the village doctors’ pension plan to some extent solve village doctors’ pension problem, give "bare-foot doctors" a pair of " warm shoes " and to make them walk more convenient and comfortable.
In 2004 the Chinese secretary of health and human services said that the Chinese government would be ready to establish an emergency plan in some parts of the country. Because of the bad health environment the government agreed an investment about 11.4 Billion Yuan. The major investment points were the improvement of the treatment system, prevention and checking systems of diseases. The government has also changed its policies concerning medical device imports.
In 2000 the tariffs on medical equipment import fell from 9.9 % to 4.7 %. The medical device market increases within two years of almost 60 % within 2003-2005 in comparison to 70 % in 1997-2003.2
After the modernization of the hospital the prices for the health care services rose up although the numbers of hospital have been increased during the last years. In 1980 to 2005 the number of hospitals doubled from 9.800 to 18.700. Because of the permanent state-of-the-art in city regions the hospital need to import the latest and expensive medicine technology e.g. MRI and CT scans as well as surgical equipment. Despite the establishment of the free market economy and the rapid increase of pure competition the prices for the service soar very fast. The problem is due to the government that was just focused on the accelerated growth. Beside that they untended many other areas like the health care system. Over the years the health care sectors were privatized simultaneous they got the power to increase the price for services. As a protection against epidemic and pandemic the information system has been enlarged in many parts of China. Finally the system has been proved several times against SARS, sea quake and the tsunami in India 2003.3
Before 1980 three different type of health care financing systems were exist in China. These are the labour insurance medical care scheme, the public service medical care scheme, and the cooperative medical care scheme. All other inhabitants those are not covered by the above mentioned schemes have to pay the medical care by themselves. During the years the labour insurance scheme covered all employees in state-owned companies and also the workers in collective-owned companies.
The public service medical care scheme has the authority to pay the medical care consumption of government employees. In rural areas were about 90 % of the population covered by the cooperative medical scheme. In 1951, the Chinese State Council stipulated, that all companies with more than one hundred employees should establish labour insurance. That insurance signifies that the companies should pay the expenses of their workers. And the employees dependent entitled health to a 50 % refunding of their medical cure costs. In the beginning they budgeted 5.5 % of the company’s total wages for health care costs. Several years later the government established a new regulation. So the expenditures increased to 15 % since 1980.
17.8 % of the Chinese population were covered through that insurance.
The public service medical care said in 1952 that the government staffs as well as students are validly to free medical care. The budgeted expenditure until 1980 was 24 Yuan per person and rose in 1984 to 36 Yuan per person. The total expenditure of the public service medical care scheme was 680 Million Yuan in 1980 and grows up to 5420 Million in 1990. In 1990, 26.84 Million inhabitants were covered by the public service medical scheme. It is proofed, that inhabitants covered by the labour insurance and public service medical schemes have higher medical care utilization, longer stay at the hospital and higher medical costs per visit as compared with those who are not covered at all and paying that out of pocket. The expenditure for the labour insurance coverage in 1980 has a rate of growth about 9.2 % and the expenditure for the public service coverage has had a rate of growth about 11.1 %. The other disadvantage of the public service medical scheme and the labour insurance is their limited ability to spread risk. Because of the huge management of these insurances at the enterprise or government institution level the enterprise has a limited ability to enrage great financial risks. It is for an example not possible to pay an expensive bill for an employee with disease or cancer. The cooperative medical scheme released as a result of agricultural collectivization that began in the mid 1950s. In 1970 the cooperative medical scheme had been established in almost 90 % of Chinese villages and became an important position in financing the peasants in the country sides. In the end of 1970 the Cooperative Medical Scheme collapsed because of the combination of financial, political and managerial problems. The other reasons for the weakness were problems in management of the scheme. The schemes were published without advice from professionals in health planning and financial management. Some of the cooperative medical schemes are still available in some parts of China. The provinces have strengthened the schemes by the rural enterprises and other welfare funds. The increasing heath expenditure has become a heavy economic problem. The issues of the medical treatment which are paid by the government and the enterprises are the main source of income for service providers. Consequently have neither providers of the medical treatment, nor consumer every stimulus to control consumption of the medical treatment under this insurance pattern. This is the real reason, why use was higher, more on an average length of the stay longer and medical costs per visit and admission than those of patients who pay from the pocket for the medical treatment. Another disadvantage of the working pattern of the medical treatment of the assurance and civil service is, to some stretch themselves, her limited ability from to spread out danger. Because the management pattern mainly in the enterprise or government equipment level, every enterprise of the equipment has a limited ability to carry big finance dangers like hospital payment for a cancer patient, for example.4
In China are four important health insurance schemes. The basic medical insurance system for urban residents, the basic medical insurance system for urban employees, the new rural cooperative medical service, the urban and rural medical relief and the commercial health insurance. All these insurance schemes are integrated into the medical security system. In contrast the children’s medical insurance is inaccessible in most of China. Children who are living in the country-side do not belong to the Urban Health Care System. According to Chinese scholar studies, due to the various levels of economic development in each area, there are roughly three forms of children's medical insurance in China which will be mentioned in that chapter.
This system is a combination of public health service and labour insurance. It is an important constitution of national social security system, and also an indispensable in social insurance. The medical insurance has the properties of social security: mandatory and mutualisation. So the medical insurance system is usually set up through states legislation which is carried out by forces. Through fund systems, which are paid by employer and employee, the government can reduce workers’ risk from illness and working injuries by giving tangible aid. The system of medical insurance for urban workers has 6 frames. The first is to set up a suitable fare collection integration scheme. The basic medical insurance is co-paid by the employee units and individuals, reflecting the compulsory features of state social insurance and the idea of rights and obligations of unity. The medical insurance premiums are paid by units and the individuals can expand the source of health insurance funds. More importantly, that system shows distinct responsibility of the unit and staff and increases their sense of self-protection. In the recent reform, the government pointed the state standard contribution rate provided for employers and individuals clearly out: employers’ contribution rate was around 6 % of workers’ total wages and employee contribution rate is generally 2 % of wages.
The second is to establish general fund and individual account. Basic medical insurance is constituted of social fund, which is planned by the government as a whole, and personal accounts, which are used by individuals. All the fees paid by individuals enter into personal accounts, and about 30 % of the money provided by enterprises enters also into personal accounts. The rest of the money offered by units is to establish the social fund. The personal account is especially for each individual, which also can be inherited. The capital and interest are both possessed by the same individual. The third is to set a definite system of paying money. Co-ordinate funds and individual accounts determine the scope of their payment. Co-ordinate fund is to cover hospital (large) medical treatment costs, personal account pays for the medical expenses of out-patients’ treatment. The co-ordinate fund should have strict standard of minimum payment and the maximum payment. What else is necessary than setting up an effective way to manage medical service system? The medical insurance only pays for medical expenses required in the basic medical insurance pharmacies directory, clinics items and medical service facilities; which implements fixed-point management to medical institutions and pharmacies which provide basic medical insurance services; social insurance institutions and the basic medical insurance service providers (fixed-point medical institutions and on-site pharmacies) ought to settle account according to the settlement rules.
At the same time, it is indispensable to establish a unified system of community- based management services. The basic medical insurance carries out at a certain level of society to operate. In principle, it is co-ordinated at the level of prefecture- level cities. The social insurance agencies are responsible for the fund collection, use and management of the unity, and ensure that the Fund is fully collected, rationally used and timely paid. Finally it is to establish an improved and effective monitoring mechanism. The government must guarantee that the basic medical insurance fund implements a special fiscal account management and the social insurance institutions establish a sound regulatory system. Moreover, in co-ordinating area the foundation of the basic medical insurance is consequent and the supervision by society organizations should be strengthened. These elements are essential for a new basic medical insurance system for urban workers. The general frame-work is a foundation for a unified national system and facilitates the formulation of reform programs, but also leave space for specific provisions.5
In 1998, China started to build the basic medical insurance system for urban workers, in order to achieve the objectives that build a basic medical security system covering the entire population of urban and rural. The State Council decided that from 2007, the basic medical insurance for urban residents would be carried out in certain districts. In 2007 the government choose two to three conditional cities to start experiments. The pilot started 2008 and expands until 2009 up to more than 80 % nationwide. In 2010, the government will push the process in order to gradually cover all urban residents in the non-practitioners.
The provisions and management of medical insurance for urban residents
The principle of the pilot
Firstly, the experimental work should begin from a low level, according to various aspects of economic development and affordability, and set up a reasonable level of funding and security standards, focusing on the medical needs of the serious illness of urban residents in the non-practitioner and gradually increasing the protection level. Secondly, this insurance should adhere to the voluntary principle; fully respect the wishes of the masses. The third is to clear the responsibility of central and local governments. The central government sets basic principles and major policies, the local areas develop specific measures for the administration of insured population.
Lastly, we should stick to the principle of co-ordinating and do well in the convergence among all kinds of medical insurance system in the basic policies, standards and management measures.
The scope of the insured
Primary and secondary school students (including vocational high school, secondary school, and technical school students), children and other non-practitioners of urban residents who do not belong to the scope of the basic medical insurance system for urban employees can voluntarily participate in the basic medical insurance for urban residents.
Contributions and subsidies
The basic medical insurance for urban residents is paid mainly by family, accompanied with appropriate government grant subsidies. Residents pay for basic medical insurance in accordance with the provisions of the insured and enjoy the corresponding medical insurance. Conditional employers may give the families of the insured grant. State develops tax incentives rules to encourage subsidies for individuals and units contributions. The annual per capita subsidy is not less than 40 Yuan for insured residents in pilot cities, of which the central government pay for the central and western regions by 20 Yuan per capita one year through special transfer payments from 2007 onwards. On this basis, to families of students and children belonging to the lowest subsistence security system or severe disabled, the government gives more than 10 Yuan per capita each year for grant subsidies in principle, of which the central government gives the central and western regions 5 Yuan per capita for grant. To the rest objects, severe disabilities who lose the ability to work, and low-income families with 60-year or older people, the government grant more than 60 Yuan per capita a year, of which the central government grants the central and western regions 30 Yuan per capita .The finance department of the central government will provide appropriate subsidies for the eastern region referring to the granting ways of the new rural cooperative medical care system. The concrete programs for financial assistance will be determined by the financial department, labour security department, civil affairs department and other departments. At the same time, grant funds should be included in the budget of all levels of government.
Urban residents’ basic medical insurance fund focuses on medical expense used by the insured population of the inpatients and outpatients severe illnesses. Areas where conditions permit can gradually try integrating out-patients’ medical costs. The basic medical insurance pays medical expenses for urban residents within the provisions of the fund. Other costs can be provided by supplementary medical insurance, commercial health insurance, medical assistance and social charitable donations and other means.
Management of system
In principle, medical service management and organizational management of the basic medical insurance for urban residents is carried out referred to the relevant provisions of the basic medical insurance for workers. And the fund of urban residents’ insurance is brought into special accounts of the social security funds for unified management of fiscal accounts.
Under the leadership of the State Council, the basic medical insurance for urban residents Inter-Ministerial Joint Conference of the State Council, (referred to as the inter-ministerial joint conference afterwards) is responsible for the organization, coordination and macro-guidance of pilot work, study and formulate relevant policies, supervise and inspect the implementation of the policy, review the assessment experimental work, co-ordinate to solve problems occurring in pilot process, and to submit a report and recommendations on major issues to the State Council. And the Labour and Social Security department will develop relevant policies and measures in conjunction with development and reform, finance, health, civil affairs, education, drug supervision and Chinese medicine and some other departments. Departments coordinate with each other according to their respective duties, to accelerate the process of all the supporting reforms.6
China's current rural health insurance, generally have several forms: cooperative medical care, medical insurance, co-ordination to resolve hospital charges, preventive health care contracts and some more which will be described below.
Cooperative medical service is a primary form of health insurance suitable for China’s rural conditions.
Rural cooperative medical care system is supported by the government. It is co- financed by farmers and rural economic organizations; the nature of rural health protection system is helping each other in the level of insurance. The farmers pay a certain amount of cooperative medical care funds every year and the government may also invest a part of it collectively, jointly forming a special fund for medical treatment, then the farmers can be reimbursed at a certain percentage of the medical expenses. Once it covered more than 90% of the rural areas in the 1970s. The fact has proved that various forms of rural cooperative healthcare are not only a good way for the peasants to reduce the risk of disease, but also a key to improve China's rural health conditions. Due to the tradition of mutual assistance in rural areas, and medical care having been practised in a wide range of rural areas before, coupled with, that the rural economy has greatly developed, the medical insurance can be an implementation to social security to provide necessary financial support.
On the other hand, the rural cooperative medical care has its limitations. First, theoretically speaking, the rural cooperative medical care is essentially a community security, rather than social insurance. It is merely a welfare system in order to protect the community residents within a certain community, associated with economic development in the community. It is not a security system imposed by the state on the citizens in the nationwide. There is no state financial support, nor does it belong to a form of the national income distribution and redistribution. However, this security pattern is unstable, for it is a transitional form of security in some socio-economic condition. On the premise of the absence of the social security system, community protection is the best alternative, but it is easy to be replaced. Eventually it is replaced by other security supplies. And community security is likely to exacerbate social inequalities and the fragmented state of market: community protection is provided for community members, the more regional differences of community protection exist, the more difficult the security of the whole society realizes in horizontal level. At the same time, community protection is likely to increase barriers between the urban and rural communities; thereby a negative impact on economic development occurs. Secondly, seeing from the current implementation, although the rural cooperative medical care in recent years has been restored and developed in some degrees, the progress is quite slow. In 1996, villages that introduced cooperative medical care only account for 17.6 % of the total, and the coverage of rural population is just 10.1 %. Greater to our sorrow, in some areas it has been carried out for merely one or two years.
Three factors lead to the bad condition. First factor is the inadequate attention of leaders. In 1997 the Government advocates to carry out the rural cooperative medical care, which set off a burst of impletion of the rural cooperative medical care nationwide. But the passion has not lasted long. Even in some areas there is no individual responsible for it then the impletion is poor. Second, little amount of funds is collected and inadequate government subsidies given, which can not solve the problem that the farmers are impoverished by hospitalization, falling back into poverty. Third, supervision and management mechanisms are inadequate. In some areas all the health funds should remain in the township hospitals, randomly wasted by the hospitals.
Medical insurance can play an important role in economic security
Medical insurance has dual nature of social insurance and commercial insurance, of which the former is regarded as a basic security, the latter a supplement. The currently provided insurance has company medical insurance, family health insurance, hospital insurance, outpatient insurance. To promote the development of health insurance, the state specially allow that farmers’ hospital insurance, sickness co-ordinating hospital insurance, residents’ additional hospitalization insurance and some other insurances shall be exempted from business tax. The implementation level of the medical insurance is high. Social health insurance bases on large-scale of insured population that have a high standard of income, and a high level of basic credit and management in legal insurance companies, which is forced by the state or local law. On the contrary, commercial health insurance excludes the poor health people to be insured. Nowadays, the vast majority of rural areas in China have not such conditions, therefore not suitable for general promotion.
Co-ordination is an effective supplement to resolve medical expenses
In some areas, every year farmers just need to pay a dollar per person, the country and village finances give 1 Yuan respectively. Social co-ordination combined with family accounts, it can effectively reduce the medical burden of farmers. Whereas it is a self-saving type of social security, which benefits who pays at first. Farmers do not pay at first; the collective will not give the corresponding subsidies. And the more a farmer pays, the more the collective subsidizes. This objectively form a picture that the richer you are, the more protection you get, but the poorer, the less. The result is „the rich richer and the poor poorer ", which is obviously contrary to the goal of Social Security: helping the poor. There are so many forms of medical insurance though; a good many constraints still exist in the process of construction of China's rural medical insurance.
Inadequate sources of funding
The most important point of establishing a sound social security system is to deal with the funding origins. First, the Government can not set apart a large amount of financial income for rural social security. In 1991 China's urban residents social security expenditure was 455 Yuan per capita. If referred to this standard, farmers enjoy the same treatment in social security. It means that the state will increase by 455 billion Yuan in annual expenditure. Compared with the increase of 455 billion Yuan in rural social security, the state would be more willing to pay it for the "poverty", or promoting economic development. In fact, even in 1998, the central financial revenue was 548.3 billion Yuan.
Therefore, in the principle of "development priorities and efficiency priority", the government has not afforded to establish a rural social security system yet. Second, as the rural "tax reform" has been carrying out, township finance and collective revenues are declining sharply. Collective disposable income reduces, and even in some areas the income goes over expenditure. Therefore, the collective grant is limited. But to establish a unified social insurance system of funding in the vast rural areas last a long period and the collection of social security tax is not feasible.
Imbalance in regional economic development results in the difficulty to establish a unified social security in rural areas
Regional economic development in China is highly uneven, forming the income gradient among the eastern, central, and western. In 1995, the eastern, central and western income ratio is 1:0.72:0.43:0. And this imbalance is still growing. Due to rapid differentiation of rural labour force within the region and large-scale of non- agricultural-based and staff-oriented farmers’ demand for social security are not equal, which gives objective obstacles to the establishment of a unified social security in rural areas, namely difficulties in unified criterion to the subject, project, fund raising, management, standards of treatment and other aspects of social security in rural areas.7
In 1989, The Administration of Public Health Service Procedures which issued jointly by the Ministry of Health and the Department of the Treasury, state clearly that colleges and universities students enjoyed free medical services, except a few items should pay oneself by the individual, the other medical expenses all funded by the government. Since the college students have joined the public health care system in 1952, the officials almost did not conduct a systematic investigation about this system. The real situation was that most of colleges and universities were self-management and the lack of management caused the problems that the university students has been stay in a neglected status.
The cost of Government investment in the universities students’ public health care system specifically reflected this situation:
In 1987, 15 Yuan / year / person In 1992, 30 Yuan / year / person In 1993, 40 Yuan / year / person In 1994, 60 Yuan / year / person
The survey also revealed that except the average per capita 66 Yuan in Beijing and the average per capita 60 Yuan in Chongqing , many colleges and universities insurances are much lower than the level of 1994’s, and some are even came down to 12 Yuan per year. According to the relevant colleges or universities regulations, students whose enjoyed free medical services just needs to pay a part of the medical expenses or the hospital bills.8
In China, the medical security system include public medical services, social basic Medicare, rural cooperative medical care (new-type rural cooperative medical care), and other systems. The medical security system covers civil servants, enterprises workers, urban residents, farmers, except minors. At present, Shanghai, Beijing, Chengdu, Hebei and some other cities have given effect to the project of children's medical mutual funds for children and adolescence until the age of 18 years. Its purpose is by the way of social assistance to solve family financial difficulties which brought by the expensive medical expenses. Because children's medical mutual fund is a social public welfare undertaking, its development face up to many difficulties.
Although new-type rural cooperative medical care system have been implemented in some pilots and provinces in 2004, but it has not been promoted throughout the country. In other words, the minors are not totally covered in the medical security system. Many families may not afford the huge medical expenses and give up the treatment, resulting of the child dies. Only a few of children luckily get support form the community donations, thus save life’s.
Facing with the demands of children and their families, our cities have conducted mutual aid actions for the children who have serious illness. Shanghai medical mutual funds for primary and middle school students and infants have established since September, 1996. The Fund set up by the Shanghai Red Cross, Shanghai Teachs Committee, and the Department of Shanghai Municipal Health Bureau, and with the idea of being a public welfare. In September 2004, the project „Beijing medical mutual funds for primary and middle school students and infants" have also been implemented. Although the Children's Mutual Funds solved sick children and financial difficulties and have achieved good social benefits, the mutual funds were mainly sponsored by the Red Cross. The Governments support, to a large extent, attributed to the leaders’ attention rather than the system.
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