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Guo admits that as funds are prerequisite to bringing these policies into effect, a free medicare program in Shenmu ten years ago, when it was a national impoverished county, would have been out of the question.

These groundbreaking medical reforms were launched as a result of Guo Baocheng's extensive grassroots research. "Most of the poor families were impoverished by heavy medical bills they had to foot for sick family members, or by natural calamities. I thought then that the government should at least cover their hospitalization," Guo recalled.

January 2008 saw the establishment of the Shenmu County Rehabilitation Work Committee with Zhang Bo, chief of Shenmu County Food and Drug Administration Bureau, as director of its general office. "As far as I know, free medicare of a full population coverage had not been adopted by any local government in China at the time; it operated only in certain developed countries," Guo remarked.

The committee conducted investigations to ascertain two basic data. One is the exact size of the population to be covered by medicare; the other is the volume of medical resources needed for the program. Demographic calculations came up with an eligible population of 330,000, after deducting migrant workers that had settled in other parts of the country. Seven of the 12 hospitals in the county, five provincial hospitals in Xi'an and six hospitals in Beijing were accordingly designated as the pilot medicare network.

Hospitalization fees of various hospitals in Shenmu County in 2007 came to a combined total of RMB 80 million, according to statistics. The Rehabilitation Work Committee estimated that RMB 70 million more was needed to support the new program. The county therefore budgeted its 2009 medicare expenditure at RMB 150 million.

Prior to 2007, the combined annual expenditure of the Rural Cooperative Medical System and Basic Medical Insurance for Urban Employees had been RMB 30-40 million.

The pilot medicare program is a reimbursement scheme that covers any registered permanent resident of Shenmu County who has joined the Cooperative Medical System for Rural Residents or the Basic Medical Insurance for Urban Employees. They receive each year an outpatient medical card that represents RMB 100 worth of treatment and medication. Hospitalized patients need to pay by themselves a tiny part of their hospitalization expenses – RMB 200 if they go to township hospitals, RMB 400 for county hospitals and RMB 3,000 if they seek hospitalization outside Shenmu County; they get a refund for the amount above the benchmark. Besides regular medical items, the program also covers certain special costs – for example examinations, treatment and materials needed for an organ transplant operation. The ceiling of medical costs covered by the program is RMB 300,000 per person per year, taking into account that the annual average income of urban Shenmu residents is RMB 16,000, and that of rural inhabitants is RMB 6,000.

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VOL.59 NO.12 December 2010 Advertise on Site Contact Us