In August 2011,the Sangzhi County government,Hunan Province,adopted a series of new health care policies as a national pilot of the New Cooperative Medical Scheme(referred to as 2011 NCMS).These policies were designed to further resolve illness-led poverty and the poor state of health care in the local area.The program had a positive impact and spread to other regions in Hunan Province.This paper will discuss the progress made as a result of the policies and several issues that challenge the scheme in practice.A total sample of 1212 individuals and 303 households were included in the analysis,and98 interviews were conducted with people related to the scheme.Our major findings indicate that the 201!NCMS has significantly reduced the out-of-pocket medical payment of rural residents,and also increased the township hospitals’patient flow.However,the medical scheme still faces many challenging issues during the implementation.With the increasing interest among the Chinese policy makers in strengthening and promoting the Sangzhi Model,the impacts of the scheme deserve greater attention in practice so as to further improve NCMS in rural China. In August 2011, the Sangzhi County government, Hunan Province, adopted a series of new health care policies as a national pilot of the New Cooperative Medical Scheme (referred to as 2011 NCMS). These measures were designed to further resolve illness-led poverty and the poor state of health care in the local area the program had a positive impact and spread to other regions in Hunan Province.This paper will discuss the progress made as a result of the policies and several issues that challenge the scheme in practice. A total sample of 1212 individuals and 303 households were included in the analysis, and 98 interviews were conducted with people related to the scheme. Our major findings indicate that the 201! NCMS has significantly reduced the out-of-pocket medical payment of rural residents, and also increased the township hospitals’patient flow.However, the medical scheme still faces many challenging issues during the implementation.With the increasing interest among the Chinese policy makers in s trengthening and promoting the Sangzhi Model, the impacts of the scheme deserve greater attention in practice so as to improve improve NCMS in rural China.