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China’s New Rural Cooperative Medical Scheme

Evolution, Design and Impacts


Dan Liu

The New Cooperative Medical Scheme (NCMS) was implemented in 2003 in response to the poor state of health care in rural China. It holds the primary objective of insuring rural residents against catastrophic health expenses, protecting them from impoverishment caused by medical expenses. The objective of this study, therefore, is to explore variation in the determinants of household enrolment in this scheme and the impact of enrolment on health care utilization and medical expenditures in three large geographic regions in China and further to simulate the reimbursement package design in order to achieve better financing protection and policy effectiveness.
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3. An overview of health care system in rural China


Stretching from its southern borders in the Himalayas to the deserts of Mongolia in the north, and from the East Sea through the Yangzi river valley plains to the Tibetan plateau in the western mainland, The People’s Republic of China (PRC) covers a territory area of 9.6 million square kilometers and a maritime area of 4.3 square kilometers, and is the third largest country in the world behind Russia and Canada. Benefitting from a staggeringly vast and diverse land, China is abound with natural resources. Complicated topography, a marked continental climate, prolific rivers and diversified land resources provide China with prior irrigation farming conditions. China accounts for 1.37 billion of the world’s population (2011, National Population Statistic Bureau), with around 60% living in rural areas and primarily engaged in agriculture production (UNFPA, State of the World’s Population, 2007). Classified by different features, there are 56 nationalities in China, with the Han representing the majority and accounting for 91.6 percent of the total population, and the remaining 8.4 percent being minorities.

China is considered one of the few Socialist States in the world. Administratively, it is divided into 23 provinces, 5 autonomous regions, 4 municipalities and 2 special administrative regions17. From top to bottom, the government structure includes the Central government, Provincial government, Prefecture and City government, District (in urban areas)/County (in rural areas) government, and Resident Street (in urban areas)/Township (in rural areas). Despite the Neighborhood (in urban areas)/ Village (in rural areas) Committees also...

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