Approximately sixty million Chinese people live in China's poverty-stricken rural areas (annual income per capita is lower than 400 Chinese yuan, or US $50). Most people in these areas do not have any level of health insurance. About 72.6% of the individuals who need to visit physicians are not unable to do so because of financial difficulties. The death rate of newborns is as high as 10%. Many households are caught up in a vicious circle: they contract disease because of poverty, and they become poor because of disease.
It is vitally important to establish a basic level of health care insurance for these people. According to our investigation and calculation, it requires about 18 hundred million Chinese yuan per year in total (based on medical prices in 1993) to provide a minimum amount of health care for these people, including four prenatal care visits and delivery service, vaccine shots for children (thirteen times total for every child before the age of 13), and basic medical care (including three clinic visits and half a day hospitalization per capita per year). In our investigation, most people in these areas support such a plan for basic health care insurance and express their willingness to pay part of premium.
Currently, the average health care spending per capita per year in these areas is 17.40 yuan, or 3.75% of the annual income per capita. Accordingly, there should be no serious difficulty for everyone to pay 2.50% of their annual income for health insurance, except for those whose annual income is lower than 200 yuan. In addition, our investigation found that about 28% of the average household expenditures in these areas are spent for tobacco and liquor. Individuals can be encouraged to save this type of spending for their medical care. Currently, from individual premiums (2.50% of annual income), particular funds from villages and towns, and special government financial subsidies, the total amount of funding can reach about 10 hundred million yuan yearly. In order to obtain 18 hundred million yuan as required, about 8 hundred million yuan a year needs to be raised.
China used to attempt to provide basic medical care for people by way of providing financial support to health care providers, i.e., hospitals and clinics, so that they could offer cheap medical care for patients. This has not turned out to be a good strategy. The government should, instead, directly provide financial support to health care recipients, especially those living in poverty-stricken rural areas, so that they will financially be able to set up basic health care insurance for themselves. In contemporary times, it is vitally important to help them establish a basic amount of health care insurance.