To a large extent, China’s recent coverage expansion
represents a long-overdue government investment in the
country’s health care system. While the past three decades
have witnessed China’s economic take-off, the country’s
health care system has not kept pace with the economic
development [5,6]. As government officials became
increasingly occupied by economic development, government
health expenditures dropped from 37% of total health
expenditures in 1980 to 18% in 2004 [7]. The economic
reform also unexpectedly led to serious deterioration in
insurance coverage [8,9], with insurance rate falling to 5%
and38%inrural andurbanareas respectively in1998 [4,10].
Many researchers were alarmed by the falling coverage,
and some researchers started experimental studies in the
1990s in an effort to rebuild the health insurance system,
especially in rural China [11–13]. While the studies produced
a wealth of experience that was eventually drawn on
by Chinese policymakers, the studies did not lead to immediate
policy actions, especially at the national level. At the
turn of the 21st century, deteriorating insurance coverage