With the introduction of the household contract responsibility system, the traditional ruralcooperative medical service has declined rapidly in terms of its coverage, reaching thelowest level at present. The operation of the medical service with funds raised by the citygovernment and commercial insurance in Jiangyin has provided a new line of thought. Thismodel has not only better solved the difficult problems of fund raising and service equity inthe rural medical insurance, but also helped to alleviate serious problems of adverseselection and moral hazards widely present in commercial medical insurance. It is alsothat extending such a model to other regions without regard to local conditions is dangerous. With the introduction of the household contract responsibility system, the traditional rural cooperative medical service has been rapidly rapidly in terms of its coverage, reaching the lowest level at present. The operation of the medical service with funds raised by the city government and commercial insurance in Jiangyin has provided a new line of thought. Thismodel has not only better solved the difficult problems of fund raising and service equity inthe rural medical insurance, but also helped to alleviate serious problems of adverseselection and moral hazards widely present in commercial medical insurance. It is alsothat extends such a model to other regions without regard to local conditions is dangerous.