Health insurance must be suited to th e level of the productive forces,the forms of the productive orga-nizations and the distribution systems.Health insurance in Chinese rur al areas had made great achievements in the past.However,the reconstruction o f it is facing severe challenge.The s olution to this issue should not be di vorced from the rural realities.The govern ment should base it policy on the cost efficiency rule,begin to build up me dical infrastructure,human resource,capital and other basic factors,and develop a diversified and multi -layered health insurance system.