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Today we celebrate the Chinese New Year with 2007 being the year of the Pig. So it’s a good day to bring this new blog into the world. And since health and China are on our agenda there’s plenty to think about.

Since I visited a rural health clinic in Hongkou, Sichuan Province a couple years ago, a recent WSJ article by Nicholas Zamiska caught my attention. Zamiaka reports that farmers in Xinlian, China have taken charge of financing health care in their village of 1600 residents. They created their own private local health insurance cooperative, each paying a modest amount –$4.50 annually – for a very modest amount of health care in return. The twist on this health plan is that the farmers have a major voice in how the money is spent. Participation and democratization of health care here seems popular but not surprising as I will explain.

The plan was originally conceived in 2003 by William C. Hsiao, a senior professor of economics at Harvard’s School of Public Health and is taking off in other villages. The government is also keeping an eye on the program as it struggles with re-building China’s rural health care delivery system.

One immediate battle that the farmers are waging, with some reported success it seems, is with doctors who make money from prescribing costly drugs and procedures for people who just don’t need them. This is a very common and widespread problem in China given the perverse market incentives that now drive this behavior. And if all this sounds too familiar, then you’ve probably been following the debate on medical errors and evidenced-based medicine in the U.S., a topic for a later discussion. Even today only 30 to 40 percent of China’s population are urban dwellers.

The organizing farmers are also somewhat reminiscent of the American experience after the Great Depression. The social insurance movement was then in high gear giving birth to the U.S. social security program as well as hundreds of locally organized non-profit mutual benefit associations that eventually became the Blue Cross and Blue Shield movement. So there is a little of both the new school (getting into managed care) and the old school (local democratic private associations governing the medical money) in these rural happenings.

To understand why this new collectivism is not a surprise, let’s kick it up a historical notch. While much has been made of the rapid urbanization of China and the emerging business elite, it has often been in the rural areas where both revolution and markets have been fermenting since the founding of the PRC.

Mao’s army was an army of peasants. Conversely, it was poor farmers in Anhui Province trying to get out from under the yoke of official rural collectivization that sparked urban China’s venture into a freer marketplace. Even today only 30 to 40 percent of China’s population are urban dwellers.

Voluntary cooperatives like the one in Xinlian appear to be part of a new private collectivism struggling to deal with market conditions. The themes of fairness, participation and mutual benefit flow through these collective experiences. So some theorists see these rural collectives as leading the way to a unique and distinctly Chinese form of modernization. Others grant that these kind of rural enterprises are making real contribution to finding local solutions to local market problems, but worry that the impact of globalization is simply too big and too embedded in these local problems for them to have any serious impact.

Yet, my visit own to the Hongkou rural health center showed me that when a proud community has the resources and the will to fund health care, good things can happen.

There is an old axiom in the business, that all health care is local. Maybe it still is in Xinlian, at least for now.