URBANIZATION AND HEALTH CARE IN RURAL CHINA

I. INTRODUCTION In the past two decades, China has experienced unprecedented economic growth at an average annual rate of 10% in the 1980s and 11.2% in the 1990s, whereas the worldwide average rates were 3.2% and 2.5%, respectively (World Bank, 2000a). Accompanying this growth has been an increasing urbanization resulting from the transition from the Soviet-style industrialization to a market economy. The pace of urbanization has accelerated following the success of rural reforms that increased agricultural productivity and freed labor from a dependence on agriculture. As people continue to move away from traditional farm activities toward non-farm businesses in more urbanized areas, the urban population is expected to nearly double, increasing from the current 455 million to more than 712 million in 2020 (World Bank, 2000b). The spatial dimension of urbanization is also changing. Physical boundaries (such as city walls) used to separate a city from the countryside are disappearing. Today in China, urban activities have far extended the city walls to encompass township and village enterprises that are very much part of an expanded economic market formed in different regions. As dubbed by the great urban historian Lewis Mumford (1961), beyond the urban fringe are invisible cities where the influence of urban consumption and culture is widespread, thanks to dramatic advances in transportation and telecommunication. China's urbanization has led to a wide range of opportunities and developments in multiple dimensions of the society. As a result, there have been enormous changes and improvements in infrastructure, industrialization, migration, labor force participation, education, and social welfare programs in both urban and rural areas. Although much attention was paid to the development of urban cities, few studies documented the extent of urbanization across rural areas, and how it may have influenced the social welfare of rural population. In particular, little is known about the impact of urbanization on health care in rural China. This is a critical and significant issue in China for several reasons. First, over 70% of China's population still resides in rural areas. A recent report by the World Bank (1996) indicates that the urban-to-rural population ratio was about 30/70 in 1993, but the urban-to-rural health expenditure ratio was reversed at 70/30. On average, urban residents spend over four times as much on health care as do rural residents. Differences in the supply of health care facilities and manpower are also striking across urban and rural areas (China Ministry of Health, 1996). The overall urban-rural gap has been demonstrated, but little research has documented how rural health care conditions change in response to various levels of economic development and urbanization. Second, health care financing in China has long been segmented between urban and rural residents. In urban areas, health care has been primarily financed through two major public programs: the Government Insurance Program (GIP) and the Labor Insurance Program (LIP). Although both programs are being merged into an integrated community-based insurance system, the new system continues to cover only the urban population (Liu et al. 1999a, 2002a). The rural population, in contrast, is ineligible for any publicly financed insurance programs. Thus the vast majority of rural patients must pay out of pocket for health care, and some may go through the cooperative medical plans (CMPs) managed by villages and townships, which typically pool the voluntary contributions of local residents and organize medical services at the local community level. Nonetheless, the lack of publicly financed health insurance for the rural population represents a great challenge to China, shedding much light on the urban-rural inequity in he alth care (World Health Organization, 2000). Given the current socioeconomic conditions in China, it is likely that the rural population will continue to use self-financing or CMP schemes. …