Is community financing necessary and feasible for rural China?

The collapse of the Cooperative Medical System (CMS) in China after the agricultural reforms of the early 1980s caused serious concern and doubt about the viability of community financing of basic health care for the low-income population. This paper examines the rise and fall of China's community financing schemes and ascertains the need for and feasibility of community financing. Of the Chinese rural population, 90% now pay out-of-pocket for their health services. Both the problems with the fee-for-service system on the one hand and the observed advantages of the existing community financing schemes on the other indicate the necessity and desirability of revitalizing community financing as a major rural health care reform strategy. However, the feasibility of the community financing approach depends on adequate financial and social resources. Our study found that there are multiple potential funding sources for health care in rural areas, including households, village welfare funds, local enterprises, and the government. We designed several illustrative benefit packages and estimated their costs. It appears that a basic benefit package with high co-insurance would be affordable if funds could be mobilized from multiple sources. More importantly, community financing would require governmental promotion and support.