The New Cooperative Medical System in China: A Cure for All?

The New Cooperative Medical System in China: A Cure for All?

Julie Ann Luiz Adrian (University of Hawaii at Hilo, USA), Tam Bang Vu (University of Hawaii at Hilo, USA) and Karla S. Hayashi (University of Hawaii at Hilo, USA)
DOI: 10.4018/jhisi.2012070102
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This paper examines the effects of the New Cooperative Medical System in China. Data on village clinics, local hospitals, private medical expenditures, and government and social medical expenditures are collected from the National Bureau of Statistics of China. Preliminary tests are performed on multicolinearity, endogeneity, omitted variables and also reveal both heteroskedasticity and autocorrelation problems. The Newey-West estimations are used to obtain corrected standard errors for coefficient estimates. The results show that the new cooperative medical system appears to help households reduce medical expenditures and decrease numbers of deaths; it also seems to reduce the numbers of pharmacists and physicians in local hospitals, redirecting these pharmacists and physicians to village clinics.
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Existing Literature

In the 1950s, China practiced a system called the Rural Cooperative Medical System (Zheng & Zhang, 2009). This system was launched by farmers, agricultural collectives, and physicians (Zheng and Zhang, 2009). The lack of funding due to low premiums paid by farmers and the lack of governmental financial support proved detrimental to the system (Zheng & Zhang, 2009). During the 1970s, China was recognized for initiating health programs, but that reputation has since been damaged (Tang et al., 2008). In the mid 1970s and according to Feng et al. (1995), the Rural Cooperative Medical System protected over 90% of the rural population. This coverage rate plummeted to 9.5% in 1998 because of a transition of the rural economic structure to a household responsibility system from a collective agriculture system (Liu, 2004). As a result, major health crises become reality in rural regions of China (Zheng & Zhang, 2009). There was also limited access to health care facilities (Zheng & Zhang, 2009). The limited access to health care became the major interest of the government and the people of China (Zheng & Zhang, 2009).

During the 2002 regulation, the people of China were still not confident in the system (Harris & Wu, 2005). This was because limitations and complaints still needed to be worked out toward reformation (Harris & Wu, 2005). Ideally, this would have set forth a system with credible medical liability (Harris & Wu, 2005). Many have attempted to create “comprehensive evaluation indices” for the New Cooperative Medical Scheme for reasonable and suitable indices (Du et al., 2006; Wang, 2004; Wang, 2005), as well as manifold evaluating to help investigate the limitations (Li, 2007). For instance, reports document many attacks on doctors or other health care personnel by patients or members of patient’s families (Harris & Wu, 2005). Harris and Wu (2005) found that these attacks were attributed to deficiencies of the legal system for handling medical disputes occurring before 2002. In 2002, the State Council of the People’s Republic of China implemented the Regulation of the Handling of Medical Accidents on the New Cooperative Medical Scheme to remedy the deficiencies in the previous 2002 regulation (Harris & Wu, 2005). According to Harris and Wu (2005), the new 2002 regulation improved the sufficiency and equality of compensation, made improvements in resolving medical arguments, was capable of decreasing medical errors, and improved quality of care. A profoundly subsidized health insurance agenda for rural citizens began in 2003 (Wagstaff et al., 2009).

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