In the past a few years，the reform of medical insurance system has laid the focus on enlarging the cover of insurance and changing the payment pattern. Now，Shanghai has already established a multi-layer medical insurance system which covers rural and urban residents as well as migrant workers. The medical insurance payment has changed from original pay-as-you-go to a prospective payment system，jointly with quota payment of specific disease to reduce the potential risk of low service quality. As to the implementation of this policy，the urban and rural residents in Shanghai have been covered by different types of medical insurance system. The insurance fund is residually balanced. Main concerns are a over-rapidly increasing total medical fees，high account balance in the individual accounts，and lack of transparency in the operation and management.