A Research On The Equity And Efficiency Of China’s New Rural Cooperative Medical System

The New Rural Cooperative Medical System (NRCMS) is an important part in the social medical insurance system of China, which, together with the Basic Medical Insurance for Urban Employees and the Basic Medical Insurance for Urban Residents, constitutes the basic medical insurance system of our society.From 2003 to 2009, China’s NRCMS showed good development tendency and the participants accounted for over 95 percent of the total rural population, nearly reached the target of "full coverage". The amount of funding for each person doubled and the average growth rate of the number of beneficiary reached 58.4%, which is regarded as a miracle in the great country with large population in the short 5 years. However, we should also realize clearly that there are many problems, such as the funding and compensation levels remain low, the difference among regions is remarkable, the risk of "returning to poverty due to illness" is still very serious, the overall coverage of clinic is low, the condition of primary medical services resources is poor and farmers are still facing "difficult to see a doctor", the phenomenon of "over-medication, over-treatment" is serious and farmers still face the trouble of " expensive to see a doctor", the current management system of NRCMS is low in efficiency and is not perfect. All the problems have attracted the attention of the government and many scholars.The NRCMS of Liaoning province is a microcosm of the whole country’s, its achievements and problems are specific and universal.As a important part of China’s social medical security, the problems of NRCMS comprehensively reflect the lack of equity and efficiency. Under this background, by using the available data and quantitative analysis methods, NRCMS’ equity and efficiency from 2003 to 2009 are analyzed respectively in the whole country, the east area and Liaoning province, in order to reveal the main reason of the lack of equity and efficiency from the angle of NRCMS’ current problems, so that the policy advices about improving NRCMS’ equity and efficiency are addressed.The basic idea of this paper is:First, according to the problem of the NRCMS, the author extensively read the articles on the equity and efficiency and other relating theoretical researches and empirical study at home and abroad; second, grasps economic theory about the equity and efficiency, and then take it as base of this paper. Third, chooses appropriate research methods; fourth, hierarchically researches the equity and efficiency of the NRCMS respectively in the whole country, the east area and Liaoning province. Finally, offer advice on improving the equity and efficiency of NRCMS.The conclusion of this paper is:1. Even in the most developed area, there is significant difference among princes and the difference affect the national difference. Allocating the resources of NRCMS and making the plan of medical system reform (especially the plan of basic medical system reform) based on the present partition way that lack pertinence would influence the effect of resource allocation and medical system reform. So in order to make proper policy, the central government should divide regions basing on the efficiency of medical service resources (especially basic medical service resources).2. NRCMS funding and compensation equity are mostly contributed by economic development level. Based on the condition of restricted by the economic development level and farmer individual paying capacity cannot rapidly improving, the central and local governments should design different NRCMS funding and compensation system according to different economic area, increase financial aid efforts especially to the underdeveloped economic areas. On the one hand, the governments should work hard to increase financial subsidy in developed areas; on the other hand, the governments should put the saving central and local fund to underdeveloped areas to promote equity between regions.3. The difference of NRCMS funding and compensation condition among the east provinces are significant, which is the decisive factor of national differences. Although the east area are the most developed in our country, as well as the best development of the NRCMS, the supporting levels by central and local governments are different, which result in the difference of NRCMS funding and compensation condition between the east area are significant. On the purpose of constantly anarrowing the differences between provinces in the east and promoting equity of the national NRCMS, the governments should pay more attention to the harmonious development of NRCMS among eastern provinces.4. Under the principle of "expenditures according to revenues, slight surplus", limited financial scale seriously impact farmers’beneficial level. Promoting financing level is an inevitable path to reach the target of NRCMS.5. When the funding scale is limited and that cannot be expanded in short time, excessive medicine use and excessive diagnosis and treatment of medical service institutes result in the farmers’excess medical expense and the farmers still face the risk of becoming or returning poor. In order to improve compensation utility effectively, governments at all levels should pay attention to achieve compatible relationship between in-patient services compensation and out-patient services compensation, and form scientific normative compensation programs basing on actuarial science.6. The quality of basic medical services resources is one of the important factors which affect the realization of the NRCMS’purpose. The suburban’s medical service resource is significant worer than urban’s not only in quantity but also in qulity, resulting in the basic medical service level that the farmers received is significant low and has not yet be improved. Under the guideline of the overall objectives of the NRCMS, the governments at each level should effectively improve the quality of basic medical services resources, and make the farmers obtain the same medical care level as the urban citizen, finally help the farmers to benefit from the NRCMS. Because of the present state of medical service in rural area, it is an important act to establish and improve compensation mechanism of basic medical and health institutions.7. Publishing the new NRCMS policy will have great impact on the operational efficiency of NRCMS fund all over the country. Although resulting from the sudden change of national NRCMS policies, the impaction results from the lack of the fund management and operational experience and the ability to meet an emergency is inadequate. Today, under the present situation that the fund management and operational experience is inadequate, the NRCMS policies should be advanced smoothly to avoid substantial policy adjustment. Governments at all levels should establish accurate actuarial and statistical system, adjust related policy on the base of the system timely and appropriately, ensure the smooth connecting of the phased NRCMS policies, so as to realize the stabilization of the operation efficiency of NRCMS.8. It is important to enhance operational level in the NRCMS, which can impact the range and degree of NRCMS compensation. Although, overall, the operational efficiency of provinces in our country increased since 2007, some provices (include Liaoning) still has inadequate manegment experience, low management level, improper fund allocation and backward technology which effet operational efficiency improvement. Governments at all levels must advocate the NRCMS optimum and innovation, management method and pattern innovation so that the NRCMS fund operation ability is advanced. Governments at all levels must grasp the profound connotation and relevance of NRCMS policy made by the central government, take active action, explore suitable policy for the concrete conditions of local area, advocate innovation, increase the level of design and reform and the management of NRCMS fund. Among which system innovation is the most important and the first work. Innovation originates in learning from advanced area, the accumulation of experience and prospective thinking.9. To the NRCMS, we should adopt the principle of "equity priority and giving attention to efficiency". The equity of the NRCMS not simply means that everybody all-covered having medical safeguard, but also the farmers obtaining proper medical service compared with urban citien’s and also farmers in difference areas. We should also deal with the relations between the disease preventing and treating and encourage famers intensify disease preventing and diagnosing in early days under some corresponding restraint policy. Equity priority doesn’t mean giving up efficiency. Farmers’ compensated level depends on the efficiency of the NRCMS. Today, the farmers still face risks of treating difficultly and expensively and the risk of becoming or returning poor. Under the limitation of central government’s financial input, local government, according to its realistic financial condition, should continuously enlarge the subsidy to farmers in order to enhance the local farmers’ medical expense compensation year by year.The innovation of this paper lies in the following five aspects:1. In order to research the equity of the NRCMS, two methods, Gini coefficient and Theil index, were used. As the Theil index can be divided into several groups, the paper emphasis on making use of it. According to the research, the results of Gini coefficient and Theil index of all indicators change in the same direction, the divided Theil index also clearly reveals the main source that resulted in lacking of equity. In the paper, the above two methods were used to analyze regional differences of the main NRCMS indicators in Liaoning province and the whole country. However, previous studies mainly applied them either in equity study of social resources allocation or specific indicators of the NRCMS. 2. Apply the DEA method on study of NRCMS fund efficiency. The DEA method not only effectively avoids the limitations of the parameter method SFA but also clearly discover the reasons of low efficiency, so the method was used to evaluate the operating efficiency of the NRCMS fund. Because of lacking of medical statistics, the paper pays more attention on the general effect of funding and compensation, and before we arrive at the social efficiency evaluation of the NRCMS, we added some statistics of the Third and the Fourth National Health Service Survey.3. When researching the equity and efficiency of the whole nation, the paper directly uses current administrative division (the east, middle and west area). But when researching the Liaoning province’s, the paper divided the whole province into several areas basing on per-capita agricultural GDP, which demonstrated that different economic development would exert different effects on the NRCMS and also made the comparative research between areas more reasonable.4. Compared with previous studies which analyzed single or a few indicators of the NRCMS, the paper uses authoritative data analyzing and comparing as more as possible indicators of Liaoning province and the whole county systematically, so the conclusions would be more integral.5. The paper suggests that the authorities should divide areas on the base of medical resources, which indicates direction for the system designing and policy supporting of the NRCMS.Because NRCMS has been implemented for only 7 years and the data is available with restrictions, the data is not enough, so the paper mainly collect the NRCMS data of each province from 2004 to 2008, Liaoning province, from 2004 to 2009, and data relating to medical service is even less. Though health resources largely affect the system’s equity and efficiency, the paper analyze more on the NRCMS funds rather than medical service for lacking of related statistics.