China health care system is divided into two main components The Rural Health Protection System and the Urban Health Protection System which differ according to the need of the populations located in each category. China was the first major country in the world to create community financing programs that covered the rural population nationwide. This system is called the Rural Cooperative Medical System or CMS which primarily served to fund and organize prevention, primary care, and secondary health care for the rural population. The system developed in the 1950's established access to basic drugs and primary health care by paying doctors to deliver care, provide drugs, and partially reimbursed patients for services received at township and county facilities. .
The Urban Health Protection System for China's urban workers was established in the early 1950's and contains two primary divisions. The two divisions are the Government Insurance Scheme or GIS and the Labor insurance Scheme or LIS. The Government Insurance Scheme covers government employees, retirees, disabled veterans, and university teachers and students. The Labor Insurance Scheme covers state enterprise employees, retirees and their dependents. Only enterprises owned and managed by central or provincial governments with less than 100 employees have the option not to participate in the health plan. The Smaller state enterprises and industries owned by county or town governments can provide LIS on a voluntary basis. Each year each participating state-owned enterprises contributes approximately 11-14% of total wages as a welfare fund to finance health expenditures incurred by beneficiaries for the LIS. Currently, health care is free to citizens in this category whenever they see a doctor, however they are actually paying for doctors in the form of taxes and not on a as needed basis. Additionally, registration fees, nutrient medicine fees and plastic surgery are not covered.