Objectives : To describe the development of NCMS in the past decade including three sections and to bring up relevant policy implications. Methods: Based on secondary data and literature review, the evolution and achievement of NCMS in the past decade and the expected future challenges were analyzed. Results: Impressive advances have been seen in establishing the largest medical insurance system, New Cooperative Medical Scheme (NCMS), covered more than 800 million farmers in rural China during the past decade. Remarkable achievements during the development of NCMS include universal health coverage among rural residents, rapid increasing premium, balanced pooling fund, improved service, cost and coverage of farmers, and a strengthened primary health care system. In the meantime, the NCMS also confronted certain challenges: Institutionalization and legalization lagged behind the development of NCMS; payment reform failed to control the rapid growth of medical expenditure and financial protection for enrollees was insufficient; solidarity and equity between NCMS and other medical insurance systems is still an issue that needs to be solved; sustainable financing mechanism was not established successfully and moreover, it was also not compatible with the aging population and epidemiological transition of rural China; double coverage for rural residents turned up as portability was not achieved.
Establishment of health financial protection for rural residents in China has experienced ups and downs since the foundation of People’s Republic of China (P.R.C.) in 1949 [
In the late 1970s, CMS, together with barefoot doctors (village doctors) and rural three- tiered health delivery networks, successfully gave rural residents access to primary health care [
During the late 1980s and early 1990s, there was an attempt to re-establish CMS. These early insurance schemes typically pooled money from the whole population (10,000 - 50,000) of a township [
In 1993, risk-pooling mechanisms (the government, state enterprise insurance systems and rural community financing schemes) covered only 21% of the population [
Consequently, the majority of rural residents had to pay their medical expenditure out of pocket (OOP). Around one third of rural residents could not receive timely access to primary health care due to lack of health insurance coverage. Health care expenses led 2.5% of households to fall below the poverty line in 1995, [
Increasing medical demands among rural residents coupled with the high cost of medical services severely decreased access to health care for rural residents [
To address these problems, the China National Rural Health Conference was held in Beijing in October 2002. The Central Committee of the Communist Party of China (CPC) and the State Council released a “Decision on Further Strengthening Rural Health Care Work”, the first document on rural health issues from the Central Committee since the foundation of the P.R.C. [
NCMS has made impressive progress in the past ten years since CPC Central Committee and State Council declared this new medical insurance system for rural residents. Covering more than 800 million rural residents, NCMS has become the largest social medical insurance scheme in the world and has won international recognitions for its success [
This paper aims to describe the development of NCMS in the past decade including three sections: the evolution of NCMS, the achievement of NCMS in rural China, and the challenges on NCMS development. Finally, relevant policy implications are proposed to shed some light on the developing countries with the same goal to achieve universal health coverage.
Most data on NCMS was collected from the Bureau of Rural Health Management within the MOH. National operating data on NCMS was collected from the national handbook of new rural cooperative medical scheme information and China health statistical yearbooks from 2004 to 2014. Data on co-payment rates for NCMS enrollees was collected from the national health financial statement yearbook between 2004 and 2013 and the reports of National Health Service Survey in 1993, 1998, 2003, 2008. Data about access to primary care was also collected from the reports of National Health Service Survey in 1993, 1998, 2003, 2008. Some data on access and reimbursement was collected from a mid-review report on China’s health reform progress, which was the result of a National Health Service survey conducted in 2011. Process-tracing was used and all the national documents on NCMS from 2002 to 2013were collected and reviewed.
Our review was based on both international and domestic reports, official documents, and published papers. We searched Pub Med, Google Scholar, the Social Science Research Network, and China Knowledge Resource Integrated Database for articles and publications since 2003; we also included cross-references, landmark or highly regarded reports, and work suggested by peer reviewers. The language was limited to English and Chinese by using the search terms, “health insurance”, “medical insurance”, “cooperative medical scheme”, “cooperative medical system”, “rural health financing”, “financial risk protection”, “universal health coverage”, “health security”, “equity”, “healthcare reform”, “health reform”, and “China”, and combinations of these terms. The date of the last search was Dec 31, 2013.
In accordance with the aim of this paper, the entire contents are developed around the evolution and achievement of NCMS in the past decade and the expected future challenges. The evolution was divided into three periods, the piloting period (2002-2006), the scaling up period (2007-2008) and the fixing and development period (2009- present). The four greatest achievements of NCMS include; a pooling fund including premium collection, payment and balance; population, service and cost coverage based on the universal health coverage framework proposed by WHO in 2010 [
In October, 2002, “Decision to further strengthen health work in rural areas”, issued by CPC Central Committee and the State Council, required that government establish NCMS in rural areas in order to protect rural residents from poverty due to catastrophic disease [
During the initial stage in 2003, 257 counties from 29 provinces were selected as piloting sites [
After three years’ pilot, rural residents had a better understanding of NCMS and were gradually more likely to participate. Based on the successful piloting experience, MOH decided to expand NCMS to all rural residents within the country. In January 2006, MOH, together with National Development and Reform Commission (NDRC), MOF, MOA, State Food and Drug Administration (SFDA), and SATCM, issued a notice on the advancement of NCMS. It required local governments push the expansion of NCMS forward and clearly documented that 40% and 60% of counties should be covered by 2006 and 2007 respectively, and all counties need to be covered by NCMS by 2008 [
In July 2009, based on “Opinions of the CPC Central Committee and the State Council on Deepening the Health Care System Reform” [
During this period, the focus of NCMS changed from population coverage to payment reform for providers, containment of growing medical expenditures, lower co- payment rate and reduction of disease burden incurred by rural residents.
Premiums increased rapidly and the pooling fund remained steadily balanced. CMS experienced ups and downs several times before 2003 [
the insured [
With the stable development of NCMS, farmers were inclined to enroll because they realized it was different from CMS. In 2004, 84.04 million farmers were covered by NCMS, and the coverage rate of the poor was 75.2% and 71.51%. Since then, NCMS rapidly expanded coverage. In 2011, 831.63 million farmers, 97.50% of rural residents in China, were covered by NCMS (
Year | Premium per capita (¥) | Payment per capita (¥) | Premium as % of net income for rural residents | Individual contribution as % of net income for rural residents |
---|---|---|---|---|
2003-2004 | 44.32 | 32.8 | - | - |
2005 | 42.14 | 34.54 | 1.44 | 0.55 |
2006 | 52.11 | 38.01 | 1.60 | 0.43 |
2007 | 58.93 | 47.73 | 1.64 | 0.37 |
2008 | 95.94 | 81.25 | 2.32 | 0.36 |
2009 | 113.02 | 110.78 | 2.37 | 0.49 |
2010 | 156.14 | 142.15 | 3.03 | 0.57 |
2011 | 245.17 | 205.64 | 4.14 | 0.61 |
2012 | 308.54 | 299.01 | 3.90 | 0.70 |
2013 | 370.59 | 362.58 | 4.17 | 0.75 |
Data source: National handbook of NCMS information from 2004 to 2013.
Benefit package became more inclusive. At the beginning of NCMS, the benefit package was very limited. Inpatient and delivery services were seen as priorities, while outpatient service and physical examination were only included in some counties [
With an increasingly wider benefit package, rural residents received easier access to primary care. Some evidences showed an increase in the utilization of preventive services and outpatient and inpatient service for rural residents [
Delivery service was included into the benefit package during the initiation of NCMS in 2003, which made most pregnant women deliver in hospitals [
Year | Visit rate within Two weeks (%) | Admission rate (%) | Self-discharge rate (%) | |||
---|---|---|---|---|---|---|
Rural residents | Urban residents | Rural residents | Urban residents | Rural residents | Urban residents | |
2003 | 13.9 | 11.8 | 3.4 | 4.2 | 47.0 | 34.5 |
2008 | 15.2 | 12.7 | 6.8 | 7.1 | 39.3 | 29.6 |
2011 | 15.3 | 13.7 | 8.4 | 10.1 | 33.7 | 27.2 |
2013 | 13.3 | 12.8 | 9.0 | 9.1 | 16.7 | 17.6 |
Data source: Report of the 3rd and 4thnational health service survey in 2003, 2008 and mid review report on China’s health reform progress in 2011.
Co-payment rate for medical expenditure decreased. With increasing financing and a wider benefit package, farmer’s co-payment rate for inpatient expenditure decreased from 74.28% in 2004 to 43.4% in 2013. But co-payment rate for outpatient expenditure fluctuated in the past decade, it was 69.35% in 2004, then reached the summit of 82.11% in 2007, and decreased to 48.1% in 2013 gradually (
With rapid economic development in China, many farmers left their hometown and found jobs in urban areas. NCMS adopted household based enrollment, which meant portability would have a deep impact on farmers’ equitable access to timely medical services [
Primary health care system was strengthened. At the beginning of the 21st century, China’s rural three-tiered health care network declined due to low investment from public finance, and some township hospitals confronted the dilemma of collapse [
township health centers [
No act and regulations guaranteed the development of NCMS in China. China’s Act on Social Insurance was enacted on 1st, July in 2010, but NCMS was not included in this act [
Provider’s payment reform is an important element necessary to perfect NCMS. Fee for service (FFS) was very popular in most providers in rural China when NCMS began, but FFS is not an optimal option to contain the growth of medical expenditure [
Solidarity is an important principle needed to achieve universal health coverage [
for urban employee basic medical insurance (UEBMI) was ten folds higher than premium for NCMS and urban resident basic medical insurance (URBMI); in 2011, the gap between NCMS, URBMI and UEBMI narrowed, but premium for UEBMI remained six times higher than that for the other two medical insurance systems. This was also the case for payment among three medical insurance systems between 2008 and 2011 in China. Due to different financing mechanisms and different benefit packages, reimbursement rates for medical expenditure for NCMS was significantly lower than that for UEBMI, as shown in
Equity is a commitment at the heart of UHC [
Year | Premium per capita (¥) | Payment per capita(¥) | ||||
---|---|---|---|---|---|---|
NCMS | URBMI | UEBMI | NCMS | URBMI | UEBMI | |
2008 | 95.94 | 130.98 | 1443.07 | 81.25 | 54.03 | 1010.07 |
2009 | 113.02 | 138.17 | 1673.81 | 110.78 | 91.87 | 1198.91 |
2010 | 156.14 | 181.02 | 1666.51 | 142.15 | 136.47 | 1490.69 |
2011 | 245.17 | 268.67 | 1772.80 | 205.64 | 186.79 | 1518.81 |
Data source: China’s statistical yearbook from 2009 to 2012.
Inpatient reimbursement rate (%) | Outpatient reimbursement rate (%) | |
---|---|---|
NCMS | 50.5 | 23.2 |
URBMI | 49.9 | 29.7 |
UEBMI | 68.3 | 50.1 |
Data source: Mid review report on China’s health reform progress (2011).
NCMS reduced inequity of financing between the rich and the poor and public finance played an important role in contributing to more equitable health financing, and concluded that it was a pro-poor medical insurance design in terms of financing. While others suggested that NCMS did not reduced inequity of access to health services and even increased the gap between the poor and the rich and concluded that it was a pro- rich design in terms of access to health care services [
Portability was not achieved creating the emergence of double coverage. Many provinces tried to solve portability through on point reimbursement when rural residents used health services outside of registered counties but portability among provinces remains a problem. Transferability for rural residents among NCMS, UEBMI and UR- BMI has still not been achieved. No information system or portal existed to identify double covered. As NCMS adhered with voluntary enrolling on a household basis, many farmers who moved to urban areas would be double covered when they were insured by UEBMI or URBMI. In 2010, URBMI covered 194.72 million enrollees, 9% of them were rural residents [
Premium for NCMS is insufficient compared to UEBMI and URBMI. NCMS remains a voluntary enrolled medical insurance scheme, and financing for NCMS is not institutionally guaranteed or legalized. Responsibilities for NCMS contributions between individuals and public finance, and between central government and local governments have not been identified. Enrollees’ contribution to NCMS fund is very low compared to UEBMI [
Population aging in rural China exacerbated insufficient financing for NCMS. Three decades of the one child policy quickly created an aging society in China. [
Universal health coverage is not an intrinsic characteristic of developed countries. Low and middle-income countries (LMICs) and transitional economies can also build their medical insurance systems based on country context and move towards universal health coverage [
Political commitment is a premise to achieve universal health coverage. China is the largest developing country in the world, and more than 800 million residents live in rural areas. It is a big challenge for China’s government to build a health safety net for such a huge rural population; China’s government made a promise ten years ago and successfully kept their promise.
Public finance is of critical importance to cover informal employees, especially for rural residents. Enrolling informal employees is a big challenge to move toward universal health coverage in developing countries, especially in large countries such as China. During the period of establishing NCMS, the contribution of China’s public finance played a leading role. It is very impressive that China successfully built and implemented NCMS in only ten years.
Health financing should develop in line with health delivery system. China’s government integrated health financing and primary health delivery systems successfully during the development of NCMS, which provided more equitable access to primary health care to rural residents than ever before. The financing level of NCMS is relatively low, especially in the years when it was just built. Given the limited fund, to cover more people and more service the Chinese government made much effort to strengthen the primary health system and incentive people to use the primary health service. After several years, both the NCMS and primary health system got developed.
Portability, an important element of UHC, should be considered when designing health insurance systems. Portability was neglected when NCMS initiated in 2003 in China. Non-portability limited the function of NCMS and was unhelpful in improving the benefits of enrollees. With the urbanization in China, more and more rural people went to big cities to work; however, they were usually informal employees and didn’t enroll in the urban employee health insurance, which cover the formal employees in urban. When these informal employees get sick, they have to go back to their hometown to get treatment and reimbursement. China is still working towards a national NCMS platform to create portability.
Solidarity and equity should be adhered when designing health insurance systems. China is experiencing rapid socioeconomic transition, creating a large public concern of how to narrow the socioeconomic gap among different communities [
UHC will be achieved over a long period, but developing countries can accelerate their progress if they can learn from experiences and lessons of other countries. Most developed countries spent more than 20 years achieving UHC creating many experiences and lessons [
Special gratitude is given to Prof. Shenglan TANG (Duke University) for his valuable discussions and advices during the stage of paper-writing, and Betsy Asma (Duke University) for editing the manuscript.
Zhu, K., Zhang, X.J., Yuan, S.S. and Tian, M.M. (2016) Evolution, Achievements, and Challenges for New Cooperative Medical Schemes in Rural China. Modern Economy, 7, 1564-1583. http://dx.doi.org/10.4236/me.2016.713140