YANTAI: A year ago Wang Hongwei was hesitant about handing over 10 yuan for a trial medical insurance system. But now, as the 56-year-old farmer from Shandong Province recovers from heart surgery, he knows he made the right decision.

For 10 yuan (US$1.25), the local government reimbursed 65% of his bill, paying 26,000 yuan (US$3,250). Without the insurance, Wang would have used up almost all of his life savings.

"I never expected I could get so much money from the government. It really is a big help for me," he said.

Wang's story gives hope to hundreds of millions of rural residents across China struggling to pay high medical bills.

The insurance system, called the "new rural co-operative medical care system," was launched by the central government in 2003. Still on a trial basis, the system is currently being implemented in 671 counties in the country, home to a total of 177 million rural residents.

With the new policy, a farmer puts 10 yuan a year into his personal healthcare account and the government injects another 40 yuan (US$5). The government will then pay up to 65 per cent of his medical charges a year.

The highest payment can be up to 30,000 yuan ((US$3,750) in Laishan District in Yantai, where Wang comes from.

"With the insurance, I feel more willing to see doctors and know more about my health. My family and I feel much more secure than before," another villager Chu Zhongcheng told China Daily.

"China has 900 million rural people, and more than 700 million remain in the countryside and lack affordable healthcare. The system will guarantee a fundamental healthcare system for these people," Tian Mingbao, vice-mayor of Yantai, told China Daily.

The city has eight counties that have tested the new system. To date 84 per cent of residents, approximately 2.5 million, have participated.

According to the vice-mayor, this year the city government has allocated more than 88 million yuan (US$11 million) to support the system.

Next year the system will be introduced among all the city's four million rural population.

It is expected that by 2010, the basics of a rural healthcare system will be in place in all rural areas in China.

In addition to the financial benefits, the growing number of patients has led to the demand for better medical facilities and staff in rural areas.

In Shandong, the provincial government has announced an investment of more than 320 million yuan (US$40 million) in the next two years to construct or renovate 360 major township health centres, aiming to establish a complete rural healthcare system.

At the same time, the province is sending high-level professionals from major hospitals in big cities to work in backward rural areas.

Qingdao, another pilot city in the province, has in the past five years sent more than 4,000 urban medical professionals to work in more than 800 of its small towns and rural villages, the local health department said.

By the end of 2005, these doctors had performed more than 10,200 surgeries for rural patients, cutting operation fees by some 1,000 yuan (US$125) per case.

In the meantime, experienced professionals are helping promote hygiene knowledge and train staff in local hospitals. More than 8,000 medical workers in rural hospitals have undergone training.

All medical personnel in township and rural clinics must now have professional certification, and local health departments are carrying out regular inspections.

"As we optimize the medical structure, more resources are flowing into rural areas, balancing the overall medical resources distribution. These efforts have greatly improved efficiency and most importantly have benefited rural people and brought prosperity to the healthcare sector," said Bao Wenhui, vice-director of Shandong Provincial Health Department.