The rural cooperative medical insurance system initiated in 2003 to offer farmers basic healthcare now covers about 86 percent of the rural residents of the pilot areas, Health Ministry spokesman Mao Qun'an said Monday.

"By September 30, about 726 million farmers had joined the scheme, accounting for 86 percent of the rural population in the pilot areas," Mao told reporters.

The system covers 2,448 counties, county-level cities and city districts, or approximately 85.5 percent of rural areas, Mao said.

Participants pay 10 yuan (US$1.35) a year to join the scheme, seen by many as a way to help farmers with virtually no medical insurance.

State, provincial, municipal and county governments supply another 40 yuan per person to the fund.

When rural residents fall seriously ill, the pooled funds cover part of their medical costs. Coverage varies according to the type of illness and costs of treatment.

Mao said 35.3 billion yuan had been pooled by the fund in the first nine months of this year.

The fund paid out about 22 billion yuan during the same period in reimbursements, Mao said.

Some 84.7 percent of the money went to in-patient charges, and 13.4 percent to out-patient services.

The spokesman said the ministry has asked local health authorities to keep close watch on the money in the fund.

In 2006, the county government of Xichuan, Henan Province, was found to have stolen 712,000 yuan from the fund by inflating the number of farmers getting checkups.

"All the money has been recovered, and the head of the Xichuan health bureau was dismissed from his post," Mao said.

The director of the county's medical cooperative insurance management office and the heads of five township hospitals were demoted.

Senior officials of another 10 township hospitals received administrative disciplines.

(Xinhua News Agency November 13, 2007)