Experts said the benefits would mainly be felt by urban dwellers, leaving millions of rural residents to rely on a fledgling cooperative insurance system dogged by delays.

The basic medical insurance system is currently established in about 98 percent of the country's urban areas, and 86.9 million workers or retired people in cities and towns have joined.

More than 70 percent urban dwellers supported the system, a reform of the decades-old free medical care system in 1998, according to a survey in 10 cities conducted by Ministry of Labor and Social Security.

Under the old practice, almost all medical fees of company employees or governmental staff in towns and cities were paid by employers. However, the new medical insurance system collects money from government, employers and employees who share the medical burden.

Urban workers and retirees will benefit most. People in rural areas, who account for about 70 percent of the population of China, must wait for a "co-operative medical service insurance system" that is still undergoing trials.

Official statistics show that the system worked well in 2002. In the first 10 months of the year, the foundation broke even with an income of 46.6 billion yuan (US$5.6 billion) and expenditure of 31.3 billion yuan (US$3.77 billion).

But many problems still exist in the reform of the system, said Wang Jianlun, former vice-minister of the Ministry of Labour and Social Security.

The quality of medical service management is poor and is even beginning to hinder the process of reform, said Wang at an international symposium on medical insurance and medicine economics in Shanghai yesterday.

The practice of prescribing a number of drugs to patients with a mild cold was prevalent under the old system. It placed a heavy burden on both patients and their employers.

According to the new system, people can visit doctors at any hospitals covered by the system and buy medicines in drug stores.

Increasing numbers of Chinese AIDS patients are turning to the State medical insurance system for protection of their rights and interests.

"Patients like us that have AIDS are also human beings and have the right to survival," said an elderly couple from Kunming, capital of Southwest China's Yunnan Province.

Both pensioners became HIV-positive as a result of a contaminated post-operative blood transfusion 10 years ago.

But after scouring local newspapers and government documents concerning relevant regulations, they were still uncertain about whether AIDS qualified as a "serious disease" covered by the medical insurance system.

Xiong Xianjun, chief of the medical insurance division under the Ministry of Labour and Social Security, said many people were misled by the medical insurance for "serious conditions".

"Medical insurance services are not classified into disease categories," Xiong said. "All diseases, including AIDS, are included in the medical insurance system. Therefore, we haven't highlighted AIDS in any particular way."

The basic medical insurance excludes no illness, said Xiong, stressing that AIDS patients enjoy the same coverage as others.

However, he pointed out that AIDS patients and HIV carriers may still confront many difficulties when requesting additional medical insurance assistance due to prejudices and the misinterpretation of policies.

None of the anti-AIDS drugs have been incorporated into the list of medicines covered by the medical insurance system, said Xiong, adding the question of whether anti-AIDS drugs will be covered by the medical insurance system depends on experts' opinions and is subject to approval by the State.

(China Daily December 16, 2002)