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

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.

[1]  Björn Ekman,et al.  Community-based health insurance in low-income countries: a systematic review of the evidence. , 2004, Health policy and planning.

[2]  Marco Caliendo,et al.  Some Practical Guidance for the Implementation of Propensity Score Matching , 2005, SSRN Electronic Journal.

[3]  Sascha O. Becker,et al.  Sensitivity Analysis for Average Treatment Effects , 2007 .

[4]  A. Mills,et al.  Evaluating payment mechanisms: how can we measure unnecessary care? , 1999, Health policy and planning.

[5]  C. Murray,et al.  Household catastrophic health expenditure: a multicountry analysis , 2003, The Lancet.

[6]  S. Bennett.  The role of community-based health insurance within the health care financing system: a framework for analysis. , 2004, Health policy and planning.

[7]  Kenneth J. Arrow,et al.  The theory of risk-bearing: Small and great risks , 1996 .

[8]  James P. Smith,et al.  Healthy bodies and thick wallets: the dual relation between health and economic status. , 1999, The journal of economic perspectives : a journal of the American Economic Association.

[9]  Adam Wagstaff,et al.  Catastrophe and impoverishment in paying for health care: with applications to Vietnam 1993-1998. , 2003, Health economics.

[10]  Sascha O. Becker,et al.  Mhbounds - Sensitivity Analysis for Average Treatment Effects , 2007 .

[11]  X. Scheil-Adlung.  Building social security : the challenge of privatization , 2001 .

[12]  C. Murray,et al.  Assessing the effect of the 2001–06 Mexican health reform: an interim report card , 2006, The Lancet.

[13]  S. Khandker,et al.  Handbook on Impact Evaluation: Quantitative Methods and Practices , 2009 .

[14]  G. Carrin,et al.  Community‐based health insurance in developing countries: a study of its contribution to the performance of health financing systems , 2005, Tropical medicine & international health : TM & IH.

[15]  Magnus Lindelow,et al.  Analyzing Health Equity Using Household Survey Data: A Guide to Techniques and Their Implementation , 2007 .

[16]  M. Ranson.  Reduction of catastrophic health care expenditures by a community-based health insurance scheme in Gujarat, India: current experiences and challenges. , 2002, Bulletin of the World Health Organization.

[17]  G. Carrin,et al.  What is the Impact of Social Health Protection on Access to Health Care, Health Expenditure and Impoverishment? A Comparative Analysis of Three African Countries , 2006 .

[18]  D. Rubin,et al.  The central role of the propensity score in observational studies for causal effects , 1983 .

[19]  Zheren Wu.  Self-selection and Earnings of Migrants: Evidence from Rural China , 2008 .

[20]  Donald B. Rubin,et al.  Formal modes of statistical inference for causal effects , 1990 .

[21]  Adam Wagstaff,et al.  Can Insurance Increase Financial Risk? The Curious Case of Health Insurance in China , 2005, Journal of health economics.

[22]  T. DiPrete,et al.  7. Assessing Bias in the Estimation of Causal Effects: Rosenbaum Bounds on Matching Estimators and Instrumental Variables Estimation with Imperfect Instruments , 2004 .

[23]  Adam Wagstaff,et al.  Extending Health Insurance to the Rural Population: An Impact Evaluation of China's New Cooperative Medical Scheme , 2007, Journal of health economics.

[24]  Yuanli Liu,et al.  Providing health insurance in rural china: from research to policy. , 2006, Journal of health politics, policy and law.

[25]  W. Hsiao,et al.  The Chinese health system at a crossroads. , 2008, Health affairs.

[26]  J. Vernon,et al.  The Impact of Subsidized Health Insurance for the Poor: Evaluating the Colombian Experience Using Propensity Score Matching , 2005, International Journal of Health Care Finance and Economics.

[27]  J. Jütting.  Do Community-based Health Insurance Schemes Improve Poor People’s Access to Health Care? Evidence From Rural Senegal , 2004 .

[28]  E. Doorslaer,et al.  Measurement and explanation of inequality in health and health care in low-income settings , 2008 .

[29]  S. Lanka.,et al.  Explaining the incidence of catastrophic expenditures on health care: Comparative evidence from Asia , 2005 .

[30]  M. Pradhan,et al.  Social risk management options for medical care in Indonesia. , 2002, Health economics.

[31]  Jeffrey A. Smith,et al.  Does Matching Overcome Lalonde's Critique of Nonexperimental Estimators? , 2000 .

[32]  Petra E. Todd,et al.  Reconciling Conflicting Evidence on the Performance of Propensity-Score Matching Methods , 2001 .

[33]  W. Haenszel,et al.  Statistical aspects of the analysis of data from retrospective studies of disease. , 1959, Journal of the National Cancer Institute.

[34]  Xiaoyan Lei,et al.  The New Cooperative Medical Scheme in rural China: does more coverage mean more service and better health? , 2009, Health economics.

[35]  Meliyanni Johar.  The impact of the Indonesian health card program: a matching estimator approach. , 2009, Journal of health economics.

[36]  J. Jütting,et al.  Private Health Insurance for the Poor in Developing Countries , 2005 .

[37]  A. Aakvik,et al.  Bounding a Matching Estimator: The Case of a Norwegian Training Program , 2001 .

[38]  William C. Hsiao,et al.  China's health care reform: A tentative assessment , 2009 .

[39]  Aparnaa Somanathan,et al.  Effect of payments for health care on poverty estimates in 11 countries in Asia: an analysis of household survey data , 2006, The Lancet.

[40]  J. JohannesP.,et al.  Do Community-based Health Insurance Schemes Improve Poor People’s Access to Health Care? Evidence From Rural Senegal , 2004 .

[41]  M. Ravallion,et al.  Estimating the Benefit Incidence of an Antipoverty Program by Propensity-Score Matching , 2003 .

[42]  E. Duflo,et al.  How Much Should We Trust Differences-in-Differences Estimates? , 2001 .

[43]  J. Heckman,et al.  The Economics and Econometrics of Active Labor Market Programs , 1999 .

[44]  A. Wagstaff.  The Economic Consequences of Health Shocks , 2005 .

[45]  Han Bleichrodt,et al.  Handbook of Health Economics , 2001 .

[46]  Fadia Saadah,et al.  Did the health card program ensure access to medical care for the poor during Indonesia's economic crisis , 2003 .

[47]  Fadia Saadah,et al.  Did the Healthcard Program Ensure Access to Medical Care for the Poor During Indonesia's Economic Crisis? , 2004 .

[48]  Sascha O. Becker,et al.  Estimation of Average Treatment Effects Based on Propensity Scores , 2002 .

[49]  W. Simpson,et al.  The influence of health insurance on hospital admission and length of stay--the case of Vietnam. , 2006, Social science & medicine.

[50]  S. Purdon,et al.  The use of propensity score matching in the evaluation of active labour market policies , 2002 .

[51]  R. Tolhurst,et al.  How effectively can the New Cooperative Medical Scheme reduce catastrophic health expenditure for the poor and non‐poor in rural China? , 2010, Tropical medicine & international health : TM & IH.

[52]  Yuanli Liu,et al.  Development of the rural health insurance system in China. , 2004, Health policy and planning.

[53]  Jeremiah Hurley,et al.  An Overview of the Normative Economics of the Health Sector , 2000 .

[54]  J. Hammer,et al.  Weak Links in the Chain II , 2002 .

[55]  Lilani Kumaranayake,et al.  Constructing socio-economic status indices: how to use principal components analysis. , 2006, Health policy and planning.

[56]  Richard J. Zeckhauser,et al.  Medical insurance: A case study of the tradeoff between risk spreading and appropriate incentives☆ , 1970 .

[58]  P. Contoyannis,et al.  The impact of public voluntary health insurance on private health expenditures in Vietnam. , 2003, Social science & medicine.

[59]  Petra E. Todd,et al.  Matching As An Econometric Evaluation Estimator: Evidence from Evaluating a Job Training Programme , 1997 .