Objectives To determine whether China’s New Rural Cooperative Medical Scheme (NCMS), which aims to provide health insurance to 800 million rural citizens and to correct distortions in rural primary care, and the individual policy attributes have affected the operation and use of village health clinics.Design We performed a difference-in-difference analysis using multivariate linear regressions, controlling for clinic and individual attributes as well as village and year effects.Setting 100 villages within 25 rural counties across five Chinese provinces in 2004 and 2007. Participants 160 village primary care clinics and 8339 individuals. Main outcome measures Clinic outcomes were log average weekly patient flow, log average monthly gross income, log total annual net income, and the proportion of monthly gross income from medicine sales. Individual outcomes were probability of seeking medical care, log annual “out of pocket” health expenditure, and two measures of exposure to financial risk (probability of incurring out of pocket health expenditure above the 90th percentile of spending among the uninsured and probability of financing medical care by borrowing or selling assets).Results For village clinics, we found that NCMS was associated with a 26% increase in weekly patient flow and a 29% increase in monthly gross income, but no change in annual net revenue or the proportion of monthly income from drug revenue. For individuals, participation in NCMS was associated with a 5% increase in village clinic use, but no change in overall medical care use. Also, out of pocket medical spending fell by 19% and the two measures of exposure to financial risk declined by 24-63%. These changes occurred across heterogeneous county programmes, even in those with minimal benefit packages.Conclusions NCMS provides some financial risk protection for individuals in rural China and has partly corrected distortions in Chinese rural healthcare (reducing the oversupply of specialty services and prescription drugs). However, the scheme may have also shifted uncompensated new responsibilities to village clinics. Given renewed interest among Chinese policy makers in strengthening primary care, the effect of NCMS deserves greater attention.
for helpful discussions and comments. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research. NBER working papers are circulated for discussion and comment purposes. They have not been peerreviewed or been subject to the review by the NBER Board of Directors that accompanies official NBER publications.
China's New Cooperative Medical Scheme, launched in 2003, was designed to protect rural households from the financial risk posed by health care costs and to increase the use of health care services. This article reports on findings from a longitudinal study of how the program affected the use of health care services, out-of-pocket spending on medical care, and the operations and financial viability of China's township health centers, which constitute a middle tier of care in between village clinics and county hospitals. We found that between 2005 and 2008 the program provided some risk protection and increased the intensity of inpatient care at township health centers. Importantly, the program appears to have improved the centers' financial status. At the same time, the program did not increase the overall number of patients served or the likelihood that a sick person would seek care at a township center. These findings serve as a benchmark of the program's early impact. The results also suggest that the composition of health care use in China has changed, with people increasingly seeking outpatient care at village clinics and inpatient care at township health centers.
for helpful discussions and comments. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.NBER working papers are circulated for discussion and comment purposes. They have not been peerreviewed or been subject to the review by the NBER Board of Directors that accompanies official NBER publications.
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