Insurance is an effective tool to mitigate
financial risk. Health insurance is a well-accepted tool
today in both developing and developed countries. In developing
countries like China, the urban and rural demands for health
insurance varies significantly. A major reason behind this
is the disparity in the level of income, which has a bearing
on the affordability of insurance. In addition, the perception
of whether insurance is needed or not differs significantly
between the rural and urban people.
In China, during the last five decades
health insurance was accessible only to enterprise employees
in the rural areas. In several areas, there existed small-scale
rural cooperative medical schemes. However, these schemes
offered very low coverage and that too for a small number
of people. With the restructuring of China People's Insurance
Company in the 1990s, the insurance industry in China had
developed quite rapidly. Improved income and living standard,
increased healthcare cost, and reduced family size in the
rural areas have all contributed to the newly emerged demand
for health insurance in rural China.
Under the country's pre-reform planned economy, almost all citizens of China were covered by some form of health insurance. Agricultural laborers were covered by the old commune-based Cooperative Medical Scheme (CMS) and State-Owned Enterprise (SOE) workers by the Labor Insurance Scheme (LIS). The Government Insurance Scheme (GIS) covered the civil servants and other government workers. A valid reason for the country's impressive success in improving health outcomes during the 1970s has been its near-universal coverage. |
