Health insurance and catastrophic illness: a report on the New Cooperative Medical System in rural China

Abstract

The overall goal of the paper is to understand the progress of the design and implementation of China's New Cooperative Medical System (NCMS) program between 2004 (the second year of the program) and 2007. In the paper we seek to assess some of the strengths and weaknesses of the program using a panel of national-representative, household survey data that were collected in 2005 and early 2008. According to our data, we confirm the recent reports by the Ministry of Health that there have been substantial improvements to the NCMS program in terms of coverage and participation. We also show that rural individuals also perceive an improvement in service by 2007. While the progress of the NCMS program is clear, there are still weaknesses. Most importantly, the program clearly does not meet one of its key goals of providing insurance against catastrophic illnesses. On average, individuals that required inpatient treatment in 2007 were reimbursed for 15% of their expenditures. Although this is higher than in 2004, on average, as the severity of the illness (in terms of expenditures on health care) rose, the real reimbursement rate (reimbursement amount/total expenditure on medical care) fell. The real reimbursement rate for illnesses that required expenditures between 4000 and 10,000 yuan (over 10,000 yuan) was only 11% (8%). Our analysis shows that one of the limiting factors is constrained funding.

China's Health Reform Update

“…Currently, policies related to the Urban Employee, Urban Resident, and Rural Resident Insurance programs operate in isolation of each other, creating inequalities in the system across insurance programs. Institutional barriers, such as the household registration system, sort individuals into different insurance types with varying levels of coverage, reducing the equity of the system, and migrant workers, defined as individuals outside of their place of registration, continue to face barriers to using their existing coverage (28,30,81,89,94,96,97). First, recently announced reforms (48) will begin the process of minimizing the differences in funding and functioning of the various insurance schemes, integrating the residence programs, and diminishing urban and rural differences.…”

Catastrophic spending on health care in Brazil: private health insurance does not seem to be the solution

“…Regardless of the fact that excessive health expenditure and catastrophic health spending have been inconsistently defined and measured across a number of international studies, there is increasing evidence that both stand as factors that can negatively impact the achievement of health equity and may contribute to the impoverishment of population groups, especially those lower down the social scale 2,3,4,5,6 .…”

Does the New Rural Cooperative Medical System with higher reimbursement rates reduce catastrophic health expenditures in rural China?

“…Most of the previous studies on financial protection associated with the NRCMS relied on data generated during the early phase of the system and was not nationally representative. [4,5] The key finding from this literature was that the NRCMS did not reduce the incidence of catastrophic health care expenditures due to the low reimbursement arrangement associated with the NRCMS. However, there were important changes to the NRCMS in recent years, and therefore, it would be timely to re-assess the impact of the NRCMS for the whole country.…”