Reforming China’s Rural Health System examines the performance and workings of China’s rural health system leading up to the reforms of the 2000s, outlines the reforms, and presents some early evidence on their impacts.

The authors outline ideas for building on these reforms to further strengthen China’s rural health system, covering health financing and health insurance, service delivery, and public health. The authors conclude by using the experiences of the Organisation for Economic Co-operation and Development countries to gaze into China’s future, asking not only what China’s health system might look like, but also how China might get there from where it is today.

Reforming China’s Rural Health System will be of interest to health care policy makers, public health officials, university researchers, and others working to improve rural health and health service delivery in China and in other countries, especially those in East and South Asia.

INTRODUCTION
China’s Shift from Economic Growth to “Balanced Development”

Since 1978, when it embarked on sweeping agricultural and industrial reforms, China’s economic transformation has been remarkable. Its success in transforming itself within just three decades from a very poor lowincome country to a successful middle-income country is unparalleled.

In 1980, among the 130 countries for which consistent data on income per capita at constant purchasing power parity exchange rates are available, China ranked 127.1 Over the period 1980–2007, China averaged an annual average growth rate of per capita income of around 8.5 percent.2 No other country came close to this achievement.3 By 2007, China ranked 73 among these 130 countries. In 2007, China’s income per head in real terms was almost 10 times what it was in 1980. Comparisons with the Organisation for Economic Co-operation and Development (OECD) countries also help to underscore the scale of China’s transformation. In 1980, China’s per capita income was just 3 percent of the average of the OECD countries. By 2007, it was 15 percent (Figure 1.1). ...

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Adam Wagstaff, Magnus Lindelow, Shiyong Wang, Shuo Zhang
© 2009 The International Bank for Reconstruction and Development / The World Bank
1818 H Street NW
Washington DC 20433
Telephone: 202-473-1000
Internet: www.worldbank.org

CONTENTS
Chapter 1 Introduction 1
China’s Shift from Economic Growth to
“Balanced Development” 1
The World Bank’s Analytic and Advisory Activities on
China’s Rural Health Sector 5
Overview of the Book 7
Chapter 2 China’s Health Challenges at the Start of the
New Millennium 13
Trends in Health Outcomes 14
Trends in Health Inequalities 18
Out-of-Pocket Costs—A Barrier to Care and a
Cause of Poverty 19
Accounting for the Household Burden 22
Provider Incentives, Costs, and the Quality of Care 25
Health Insurance Contraction 28
Inequality in Government Spending 29
Challenges and Reforms—Creating a
Path Forward 30
Chapter 3 The Rural Health Reforms of the 2000s 33
The New Rural Cooperative Medical Scheme 34
Medical Assistance 38
Public Health 42
Provider Payment Reform 49
Other Reforms in Service Delivery 52
Sizing Up the Recent Reforms 56
Annex: Impact Evaluation of NRCMS 57
Chapter 4 Looking Toward a New Decade: The Big Picture 61
Health Systems—Goals, Functions, and Actors 62
Evolving Ideas and International Best Practice 64
Reform over the Medium Term 72
Reform over the Longer Term 78
Chapter 5 Financing Rural Insurance Coverage 81
More Resources for NRCMS 82
Converting NRCMS into a “Purchaser” 96
What Should Be Covered? 98
Strengthening Management and Governance 107
Priorities and Sequencing 111
Chapter 6 Improving Service Delivery: A Question
of Incentives 115
Changing Provider Incentives 116
Enabling Providers to Respond to New Incentives 133
Reform Priorities, Sequencing, and Capacity 143
Chapter 7 Enhancing Accountability and Incentives
in Public Health 147
The Misalignment of Incentives and Accountability 151
Geographic Disparities in Spending 153
Roles and Responsibilities across Levels
of Government 160
Clarifying Responsibilities and Financial
Incentives at the County Level 171
Priorities, Sequencing, Political Economy,
and Skills 182
Annex: Case Study of Public Health Financing
and Organization in Two Counties 185
Chapter 8 The Longer-Term Reform Agenda 187
Limitations of the Emerging Health Insurance
Model 187
A Dual Agenda for Financing Long-Term Reform 192
Getting from Here to There 198
Chapter 9 Conclusions 201

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