¡@¡@This study applies the method of literature analysis. It aims at the investigation of the whole range of the reason and process of the making of Peasant Health Insurance and its performance and its following disadvantages and faults. This study mainly intends to get the findings and solutions so as to be the efficient reference for the authorities. First of all, in this thesis, the academic principles of Insurance, Social Insurance and Peasant Insurance have been widely and deeply investigated, and then the history of the start of the reason and its development and recent performance of Peasant Health Insurance Act has also been fully related so as to be the basis of the academic analysis. The disadvantages and faults of Peasant Health Insurance in detail pointed out. An analysis of the literature of the previous researchers mainly on financial issues has been presented in order to give the evidence that the findings and solutions offered by this study could better be used for the future related amendment and policy decision on behalf of the long-term development of Peasant Health Insurance and most importantly, for the interest of the farmers. This study¡¦s conclusion presents the solutions: first, professionalism and specialization¡Xavoiding political interference and building a sound financial system correspondent with the principles of insurance; second, re-examination of the qualification of the farmers, appropriate to the real social state and adjusting the identification; third, the re-organization of the administrative and supervising departments¡Xelevating their administrative ranks; fourth, the orientation from Peasant Health Insurance Act to Peasant Insurance Act, and the guarantee of the welfare state of the Civil Annual Insurance for farmers or a single unit of the old farmer annual insurance; fifth, the positive alternative strategies for agricultural products¡Xhelping farmers technically face the impact of mass foreign products after entering WTO.