The Impact of the New Cooperative Medical Scheme in Rural China

Since the first pilot NCMS''s in 2003, the New Cooperative Medical Scheme has offered catastrophic illness and other medical coverage to rural residents in China. Yet few studies have examined whether the scheme actually improves health status, utilization of health care services, and the burden of health care expenditures. This study employs non-pooled and pooled Ordinary-Least-Squares regression and linear probability models to further examine this issue. I also include an interaction term between the NCMS and distance from a medical facility to determine whether the effect of the NCMS differs by distance. I find that participating in the NCMS reduces sickness and injury at most distances from a medical facility, and that as distance increases after about 8.6 minutes, so does the negative effect of NCMS participation on sickness or injury. The NCMS appears to increase preventive care utilization but not more formal medical care, and there is mixed indication that the NCMS reduces costs. This study should inform policymakers of the shortcomings of the NCMS as well as anyone else who is interested in the varied effect of insurance based on distance from a medical facility.