This study examined the regional inequity in the New Cooperative Medical Scheme (NCMS) financing in Jiangsu, China. Counties were classified into three categories according to socio‐economic development level: South Jiangsu, Middle Jiangsu and North Jiangsu. Five counties (Changshu, Danyang, Gaoyou, Jiangyan and Ganyu) were selected on the basis of the following criteria: (i) NCMS had been implemented before 2005; (ii) county governments were willing and able to collaborate with the research team; and (iii) counties had different socio‐economic development status representing the low, medium and high level of socio‐economic development in Jiangsu. As shown in this study, local governments in Jiangsu took the major NCMS financing responsibilities (75.2% in 2009), and local governments (county and lower) subsidies ranged from 220 RMB per capita in South Jiangsu to 18 RMB per capita in North Jiangsu in 2009, with a larger contribution (73.3%) in South than that in Middle (40.0%) and North Jiangsu (18.0%). For achieving more equity in NCMS financing and carrying NCMS forward, we propose that provincial and municipal governments should increase their contribution to NCMS for balancing the regional inequity in subsidies from county and lower‐level governments, and the risk pool of NCMS should be promoted to a higher level (e.g., provincial). Copyright © 2013 John Wiley & Sons, Ltd.