One unforeseen consequence of the change from collective to household production in rural China has been that the financial basis of the rural health services has been eroded.

The majority of peasants now pay for health care on a fee-for-service basis.

A major initiative aimed at the establishment of prepayment schemes for funding rural health services is underway.

A nationwide survey which compared health utilization and expenditure under different financing mechanisms was carried out in 1988.

This paper presents the preliminary findings of that study.

There is evidence that hospital charges were a barrier to inpatient care for those not covered by an insurance scheme.