The Rural Cooperative Medical Scheme (RCMS) dates back to late 1950s, during the time of collective economy in rural China. The schemes were financed at the village and commune level and aimed to provide nearly free preventive and curative care to farmers. In late 1970s, China started its rural economic reform. The collective commune economy started to disappear and the RCMS lost its main source of funding. Then in October 2002, the State Council announced that the New Rural Cooperative Medical Schemes (NCMS) would be the main strategy for financing rural health care.
Two-third of the NCMS fund is from central and local governments. Population coverage has extended rapidly: by the end of 2008, the NCMS had been introduced in 2729 counties and now covers 91.5% of the rural population and has 830 million members.
The origin of NCMS revenues is threefold: it comes from central and local governments and households. In 2008, the contribution from central and local government doubled to 80 Yuan and households were required to contribute 20 Yuan. The government contributed on behalf of poor households who could not afford the premium. From 2010, the expected minimum local and central government contribution will be increased further to 120 Yuan, whereas households will contribute about 30 Yuan.
4.Revenue management and benefit package
In general, the NCMS intends to cover high cost services such as inpatient care. The reimbursement rate is between 30% and 80% for inpatient services.
5. NCMS Performance
6. Challenges and the way forward
The NCMS has made progress in extending coverage and improving access to care for China’s rural population. However, for the NCMS to achieve its full potential, several challenges need to be addressed. Firstly, whereas the NCMS reduced some of the financial burden of health care costs for households, the degree of risk protection is still quite limited.