Control The Escalating Medical Expense Under The New Rural Cooperative Medical System

High expense and difficulties in medical care is an outstanding social problem in China, and the government try to resolve the problem by establish the New Rural Cooperative Medical System (NRCMS), which had covered nearly all Chinese rural areas since a pilot project launched in 2003. However, several studies have shown that the money paid by rural residents did not reduce because the escalating medical expenditures erode the effect of the NRCMS. The rural residents pay the medical expense out-of-pocket directly to hospital before the NRCMS introduced, but now the third-party payer appeared that made control the escalating medical expenditures more possible.The NRCMS has the characteristics of both medical insurance and medical security, and the law of large numbers is the theoretical foundation of"Cooperative"to cope with the uncertain medical care risk together. The medical security, as a public good, can lead market, so the government regulation is needed. The asymmetric information could cause provider induced demand, adverse selection and moral hazard in medical industry, all of these factors and the characteristic of price rigidity contribute to the escalating medical expenditures. So the government and insured people must authorize administrative organization the NRCMS supervise and control the escalating medical expenses.The escalating medical expense are not only a global problem, but also a historic issue, so we have to learn from the experiences and lessons of history and other countries. From the experiences of control the escalating medical expenditures in other countries, we can see the provider payment method is the most important measure which affects medical expense. The main provider payment methods are Fee-for-service, Diagnosis Related Group System( DRGs),Service unit, Capitation, Global budgets and Payment for performance. These methods have different effectiveness in cost control, disease prevention and the quality of medical service, and how the doctors get salary should be considered if any provider payment method wants to achieve its aim from macroscopic to microcosmic level.From the experiences of controlling medical expense under rural and urban medical insurance in China, We found the traditional RCMS has a good effect in cost control, that because it took on cheaper Chinese herbal medicine and self-made medicine, primary health care which put prevention first, rural three-tertiary medical and preventive health care network, low salaried barefoot doctor. There is another reason cannot be ignored that health care costs could transfer to the people's commune because the political system in that period. The reform of urban medical insurance system is not so lucky.it was unsuccessful on the whole during the health care system transformation from free medical care and labor protection medicare to medical insurance for urban workers and basic medical insurance for urban residents. However, it still had some practices are worth learning from, such as introduced co-payment, adjusted the prices of health service, reformed the distribution system of drugs, ect.The policy environment of NRCMS has significant impact on controlling the medical expense. The interior conditions related with controlling medical expense include pros and cons of policy design, policy execute subjects and objects, policy resources. The external environment of policy are including characteristics of rural health service market, the producing mechanism of medical service price, drugs policy, public health financial policy and physician-patient relationship.There are some measures was designed in NRCMS benefit packages to control the medical expense. This study take H county, Shaanxi province as example, analyzed the control methods for inpatients, and found it is external control under fee-for-service payment method, but the DRGs is a kind of internal control. As for the outpatients, we selected 32 counties benefit packages of chronic diseases, analysis coverage of population, health service and costs, use three-dimensional of medical insurance as analytical framework and found that the policy level and compensation level are vary widely.The DRGs of NRCMS was introduced to control the medical expense. This study analyzed the detailed list of medical expenses of 781 inpatients in H county, researched the influence of different provider payment method to expense, including total medical expense, drugs cost, per day cost, per day drugs cost and expense components etc.we found that the reform of payment method changed the doctors'medical behavior, and there are 62% inpatients were prescribed the excluded directory drugs under fee-for-service, but 4% under DRGs, the per case expense under DRGs just half of the fee-for-service. The drugs fee account for 45% under fee-for-service, while 16% under DRGs. However, it is found that there is no difference between the DRGs and fee-for-service in the daily cost, the main reason is the DRGs reduced the days of hospital stay.We can draw six main conclusions by this study: controlling the medical expense should have premises; none of the provider payment method is perfect; it is not always the level of assurance higher is better; the measures of control the medical expense can not be limited within insurance scheme; the power of set up the health policy framework can not be authorize to county level; the DRGs of NRCMS had the desirable results to control the medical expense. This study also gives some policy proposal: the third-party payer should be play a positive role; the reform of provider payment method should be positive and careful; the government should pay more attention to the prominent issues after financial investment increased; the concept of greater health circulation should be encouraged in China.We also found and expanded four laws that can be employed to the issues of agriculture, rural residents and rural area, even social sciences. These are the law of inertia of unreasonable phenomenon, the law of policy strength transmission, the law of two-way circulation in social matters and the law of allowance disappears when related to rural residents in China.