Abstract This paper is aimed to provide some responses to the following three hotly debated issues regarding China’s new rural cooperative medical system (NCMS), which was launched at the beginning of 2003. Firstly, how many people would join the system voluntarily? Secondly, can the system be self-balanced? And thirdly, would the lump-sum tax benefit the rich more than the poor? We build a decision model with heterogeneous agents and we compute the implications of NCMS and find under certain conditions, the balanced-system can be sustained and the rate of participation could be higher than 90%. Moreover, it is the unhealthy poor that benefit more from NCMS.

Keywords rural medical system, rate of participation, welfare implications

本文发表于Front. Econ. China 2009, 4(2)

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