With a population of 1130 million in 1990, China is the world's most populous country, accounting for 21% of the global population and for 28% of those living in developing countries.[1-2]. China is also the largest agricultural country in the world with over 70% of its population living in rural areas.(a) Since 1949, when the People's Republic of China was established, improved social conditions and health services have given the Chinese people vastly improved health status. The near doubling of life expectancy from 1949 to the present time (from 35 years to 69 years) has put China on a par with developed countries. Overall mortality has fallen from 25 to 6.6 per 1000 population. Infant mortality has also declined markedly from 200 to 34.68 per 1000 live births, which compares favourably with the average for developing countries of 92 per 1000 live births and the average global level of 81 per 1000 live births[4-6]. Many features of China's health policy and system have been embodied in WHO's principles for community-oriented primary health care and its call for health for all by the year 2000[7, 8].
Despite these significant achievements, China is facing new problems. From a social policy perspective, changes in the health care system not only reflect health reform measures but also the impact of the general economic reforms. China has now experienced three decades of Maoist-style Communism and one-and-a-half decades of economic and structural reform since 1978. This economic reform has dismantled many aspects of China's Maoist health and medical system, including the cooperative medical system in rural areas[9, 10]. Demographically, aging of the population presents a major challenge; 90 million people are aged over 60 years (8.59% of the population) and this is expected to increase to 130 million (11% of the population) by the turn of the century[11-13]. Population aging and the continued growth of the population put significant demands on health care resources. In addition, health care costs have increased dramatically. A recent survey of hospitals from 13 provinces found that medical costs have increased by 30-50% annually since the economic reforms. These escalating medical costs were ascribed to a number of factors, e.g., inflation and the fact that health care providers were disadvantaged by price reforms that increased their costs but continued to freeze the charges they were allowed to make to patients and insurers. The charges for outpatients, inpatients, and medical operations account, on average, for 29%, 63% and 40%, respectively, of the actual costs of these services.
These problems interact and exacerbate the disparity between rural and urban health. During the 1980s, the rural people's communes were dismantled, as was the cooperative medical system, which was organized and highly subsidized by the production brigades under the communes. Today, in most of China's rural areas, health care has shifted to a fee-for-service system, in which the former rudimentary arrangements for health and medical insurance have not been preserved[1-5]. Reduced access to medical care has already been experienced in some rural areas, although urban residents are more or less covered by state insurance because of work-related benefits.
Over 80% of the elderly in China live in rural areas. Unlike most of the urban elderly, who generally receive a pension of 70-80% of their final salary when they retire, the rural elderly are mostly agricultural farmers, primarily dependent on their children and savings for old-age support. As the size of families becomes much smaller owing to strict family planning policy, and family members migrate to urban areas, the future care of the rural elderly in China is of great concern[20-22]. The aging of the rural population will also mean aging within the elderly group. Of today's rural population aged 65 years, 70% are aged <75 years; in the future, however, an increasing proportion of the elderly will be older and more frail[23-25]. …