One unforeseen consequence of the change from collective to household production in rural China has been that the financial basis of the rural health services has been eroded. The majority of peasants now pay for health care on a fee-for-service basis. A major initiative aimed at the establishment of prepayment schemes for funding rural health services is underway. A nationwide survey which compared health utilization and expenditure under different financing mechanisms was carried out in 1988. This paper presents the preliminary findings of that study. There is evidence that hospital charges were a barrier to inpatient care for those not covered by an insurance scheme. The data were less clearcut with regard to access to outpatient care. There is a need for further study which focuses on poor households and those living in remote villages. The study found that drug charges are an important source of revenue for the rural health services. The impact of this on prescription practices is an area which requires additional research. The cost of rural health services was relatively low. It is feasible to finance them almost entirely out of local resources in the more developed regions. The situation in the poorer provinces is more complicated. In spite of the fact that average health expenditure was almost 5% of household income in 1988, there was evidence of lack of access. This suggests that it may be more difficult to develop prepayment schemes to cover the full range of rural health services in the less developed regions.