On Yunnan New Rural Cooperative Fund Loss Problem And Countermeasures

New Rural Cooperative Medical System is a basic medical care system in order to ease farmers’ difficulties in getting medical care, which is too expensive for them to afford and might cause them return to poverty because of illness. New Rural Cooperative Medical Fund is the essencial condition and fanancial support for ensuring the implementation of this system. Thus, its efficiency is the key factor to assure the New Rural Cooperative System to be implemented. Since the pilot project of this system has been launched in2003, the number of farmers who joined in has increased every year, alone with the expansion of the Fund. At the same time, however, it also emerges that there are participators who defraud for the Fund, designated medical institutions which embezzle the Fund, and doctor-patient alliance which conspires to cheat out of New Rural Cooperative Funds and other funds.This paper has made research into the development of the New Rural Cooperative Medical System (NRCMS), fund management, and patterns of fund loss, by setting Yunnan NRCMS fund management and the loss as an example, based on the economic analysis of of moral hazard and the game theory. Then it reaches a conclusion that the main reasons which lead to fund loss include excessive use, embezzlement and fraud of funds and cash. The countermeasures shall be enhanced supervision and regulation of the Fund, with the focus on designated medical institutions.