The New Cooperative Medical Scheme (NCMS) and its Implications for Access to Health Care and Medical Expenditure: Evidence from Rural China

ZEF- Discussion Papers on Development Policy No. 155

46 Pages Posted: 17 Oct 2011

See all articles by Dan Liu

Dan Liu

Center for Development Research

Daniel W. Tsegai

University of Bonn - Department of Economic and Technological Change

Date Written: October 1, 2011

Abstract

The New Cooperative Medical Scheme (NCMS) program was implemented in response to ‘illness-led poverty’ and poor state of healthcare in rural China. Supported by government subsidy, more and more poor rural households are now enrolled in the NCMS. This paper investigates the impact of the NCMS program on improving health care utilization and reducing medical expenditure with a specific focus on the endeavors to unravel the heterogeneous effects of the program for the different regions and income groups. We utilize the China Health and Nutrition Survey data (CHNS) to provide prolific cross section and longitudinal information. A total sample of 6,293 individuals and 2,058 households are included in the analysis. Propensity score matching method and bounding approach are used to infer the causal effect of NCMS and examine the influence of unobservable factors respectively. Major findings indicate that there is a systematic adverse selection in the NCMS program, both in health- and economic-related aspects. Especially in western regions, households with high ratio of migrant workers are less attracted to the NCMS program. The NCMS program improved medical care utilization for the poor and regionally, western regions benefitted more from the program. The NCMS program also induces a moral hazard problem in western regions.

Keywords: rural China, health insurance, impact evaluation, propensity score matching

Suggested Citation

Liu, Dan and Tsegai, Daniel W., The New Cooperative Medical Scheme (NCMS) and its Implications for Access to Health Care and Medical Expenditure: Evidence from Rural China (October 1, 2011). ZEF- Discussion Papers on Development Policy No. 155, Available at SSRN: https://ssrn.com/abstract=1945173

Dan Liu (Contact Author)

Center for Development Research ( email )

Walter-Flex-Str. 3
Bonn, 53113
Germany

Daniel W. Tsegai

University of Bonn - Department of Economic and Technological Change ( email )

Center for Development Research (ZEF)
Walter-Flex-Str. 3
Bonn, 53113
Germany

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