ABSTRACT
Chapter 5 will begin the analysis of the local implementation of the NRCMS. It reconstructs the dynamics of policy design decisions, which are of greatest magnitude during the early years of a local implementation, and are most relevant for the time between 2003 and 2008. Over the years, the system of regulatory guidelines has become increasingly dense, and therefore the formal decision space of local governments has gradually decreased. Furthermore, the later cohorts of implementing counties systematically imitated the NRCMS models devised by the earlier cohorts. The earlier cohorts had the greatest leeway in designing the system and provided models for the following cohorts. Nevertheless, as the NRCMS system is being modified and adapted on an annual basis, the basic dynamics of the decision-making process reconstructed in this chapter form a social mechanism that continues to repeat itself. The first part of this chapter will introduce the main actors and structures
of the local policy arenas with a focus on the county as jurisdiction. It thus provides a foundation for the analysis in this chapter and in Chapter 6. County-and township-level governments are treated as integrated actors, whose preferences are strongly determined by the dysfunctional public finance system and the leading cadre evaluations. In health policy, their political priorities are on family planning and public health, whereas health insurance and the provision of curative care services are of subordinate priority. Adequately funding their healthcare providers is neither a priority nor an attractive choice for most local governments in both poor and wealthy areas. The healthcare providers, on the other hand, are strongly affected by the
institutional misfits between health sector regulation and the public finance system. They are required to adhere to the pricing system, but governmental funding is insufficient to support such adherence. County hospitals are in a comparatively comfortable position, as they can rely on a diverse clientele including wealthy urbanites, and because their portfolio comprises profitable diagnostic services. Village clinics rely almost entirely on drug sales, but benefit from their proximity to the patients and their low costs of operation. THCs are in a difficult position in between, competing with village clinics for outpatient service provision, and with the county hospitals for inpatient
service provision. Overall, the competitive relations inhibit the mutual aid and cooperation that once facilitated the strength of the rural health services. In the course of the implementation, the county governments made strik-
ingly homogeneous decisions across very diverse socio-economic settings. The vast majority chose to integrate outpatient services into the NRCMS reimbursement catalog, despite the additional administrative workload and the funds being diverted from the main policy goal-the reimbursement of catastrophic health costs caused by inpatient services. Furthermore, most localities chose MSAs as the method of outpatient reimbursement, which is rather ineffective: MSAs only pool risks at the household level, and thus provide little protection. The most common policy design in Eastern, Central and Western China thus diverted scarce administrative and financial resources away from productive use, which appears counterintuitive at first. Analyzing the policy design as the outcome of negotiations between the
local governments and the healthcare providers can explain this pattern of decision-making. Local governments were responsible for the administrative expenditures of the NRCMS. Delegating administrative services to the providers, and the THCs in particular, brought the NRCMS closer to the rural population and lightened the financial and administrative burden of the county health administration. In exchange for this, county governments could compensate the THCs by integrating outpatient services into the reimbursement plans. As village clinics were mostly excluded from NRCMS reimbursement, the NRCMS outpatient funds were often exclusively allocated to the THCs. The administration of the MSAs could be entirely delegated to the THCs, and thus provided no administrative burden for the county health administration. The motivation of county governments to delegate administrative services
to THCs and use MSAs for outpatient reimbursement was also enhanced by the problems of premium collection. Due to the contradiction between voluntary enrollment and universal coverage, and the reluctance of a large part of the rural population to enroll with the NRCMS, grassroots cadres were caught in a trap. If they observed voluntariness, they risked not achieving their enrollment targets. If they coerced people to enroll, they risked political criticism from the higher levels. Therefore, local governments and grassroots cadres devised an array of innovations and informal practices to mitigate this problem. Using MSA funds to pay for the premiums was a simple, effective and thus highly attractive measure. Having the funds administrated at the township level further withdrew them from the scrutiny of higher levels.
