Gu Chaoshan is exulted these days. One month ago, the 62-year-old farmer from north China's Hebei Province felt suffocated all of a sudden, sweating and losing his breath. His son promptly dialed the town hospital. In 10 minutes, he was sent to a first-aid room, diagnosed as suffering from paroxysmal miocardial infarction, and was saved.

First-aid calls, most popular in Chinese cities, was something new to farmers in Guzhuang Village, Anzhai Township, Quzhou County.

"If I had such illness in the old days, I would have to go a long way to the county hospital," said Gu. "Nowadays, I am treated in the neighborhood in great convenience, saving a lot of money."

Glad of his recovery, Gu was often reminded of an incident 28 years ago. In 1980, his best friend in the village fell ill with the same symptoms. He died on the way to the county hospital.

"We had to send him to the county seat because the village and township had poor medical facilities," said Gu, with bitter hatred.

"For a long period, the township hospital remained shabby. The village clinic existed in name. The medical equipment was simple and outdated. The doctors were actually unqualified."

The rural healthcare system was once a core element of Chinese socialism. After the founding of the People's Republic of China in1949, rural people had access to subsidized health clinics run by "barefoot doctors," who were basically middle-school students trained in first aid.

The primitive service, essentially free, played a role in doubling the country's average life expectancy from 35 years in 1949 to 68 years in 1978.

When China began its economic reform in the early 1980s, the system was dismantled as the country attempted to switch to a market-oriented healthcare system. But the government failed to establish a viable substitute, leaving its large rural population without health insurance.

A national health survey in 2003 revealed about 73 percent of people in rural areas who should have sought medical treatment chose not to do so because of the fear of high costs.

China has a rural population of 737 million, accounting for 56percent of its total population. The per capita net income of farmers reached 4,140 yuan (US$606) in 2007.

The plight of Chinese farmers has provoked national leaders to move to restore rural medical cooperatives and to establish a nationwide safety net of minimal medical insurance.

New rural cooperative medical system

About two decades after the old cooperative fund program on medical expense collapsed in the countryside, China launched a new rural cooperative medical care program in 2003 to offer basic healthcare to rural residents who have virtually no medical insurance.

Under the program, a farmer participant pays 10 yuan a year while the state, provincial, municipal and county governments jointly contribute 40 yuan for the cooperative fund.

When rural residents fall seriously ill, the pooled funds cover part of their medical costs. Coverage varies by illness and actual expenses.

The national new-type rural cooperative medical treatment system has gone ahead smoothly from pilot operation to all-round promotion stage, said Chen Zhu, the health minister.

However, some provinces in the central and western parts of the country failed to meet the standard, mainly because individuals in poverty-stricken areas hadn't increased their participation.

To date, the scheme has covered 91 percent of total farmers and 98 percent rural areas through March, said Mao Qun'an of the Ministry of Health.

A total of 42.8 billion yuan was pooled by the fund in 2007, compared with only 4 billion yuan in 2003.

The fund paid out about 59.1 billion yuan over the past five years in reimbursements for 920 million claims.

"The program has helped ease the chronic difficulty faced by Chinese farmers in paying medical charges and significantly improved rural medical services," said Chen Zhu.

"China is working to establish a stable money-raising channel for the fund and efforts will be made to ensure that central and local government subsidies are allocated to the fund quickly and used efficiently," said Chen.

But experts believe there is a long way to go before the cooperative scheme can meet the needs of rural people.

Wu Ming, professor with the medical school of Peking University, said "With an average reimbursement rate for hospital fees only standing at a meager 27.5 percent, the current subsidies are still utterly inadequate in dealing with grave and terminal diseases."

Hand from insurance

A helping hand may come from Chinese insurers who are seeking more business opportunities in the country's rural cooperative medical care system as the value of cooperative funds they managed more than tripled last year.

In 2007, seven insurance companies were entrusted with the management of 3.66 billion yuan of cooperative medical care funds across the country's rural areas, 233 percent more than in 2006, said the China Insurance Regulatory Commission.

The companies included the country's top three life insurers -- China Life Insurance, Ping An Life Insurance and China Pacific Life Insurance. They provided fund reimbursement, settlement and auditing for medical care schemes that covered 30.17 million rural Chinese last year, an annual growth of 41 percent, said the commission.

Under the schemes, local governments paid management fees to the insurers without drawing money from the cooperative funds. Deficits in fund operation were undertaken by governments and surpluses went to the next year's scheme.

Such a mode boosted the rural insurance business while preventing fraudulent operations and saving government costs, said the commission.

It cited the example of China Life Insurance, which promoted life, health and accident insurance businesses in rural areas and raked in more than 200 million yuan of revenue last year.

Farmers can get only about 30 percent of their medical expenses reimbursed under the present system, resulting in a huge potential demand for medical insurance products, said the commission.

It urged capable insurance companies to seize the opportunity and develop insurance products supplementary to the rural medical care system.