New Evidence on the Impact of China’s New Cooperative Medical Scheme and Its Implications for Rural Primary Health Care

Context: China’s New Rural Cooperative Medical Scheme (NCMS) aims to provide health insurance to 800 million rural citizens and to correct distortions in rural Chinese health care. However, little is known about the effects of its individual policy features or its impact on village clinics (the primary care backbone of rural China). Objective: The objective of this study is to determine whether the NCMS program and it’s individual policy features have impacted village clinic operations and clinic user rates. Design: We collected detailed data from 160 village clinics and 8,339 individuals in 100 villages across 5 Chinese provinces in 2004 and 2007. Using multivariate linear regressions that control for a set of clinic and individual attributes as well as village and year effects, we estimate the effect of individual NCMS policy features on clinic and individual outcomes. Main Outcome Measures: Clinic outcomes: log weekly patient flow, log annual income, revenue from medicine sales; Patient outcomes: patient probability of seeking care, patient log annual health expenditure, patient probability of catastrophic medical spending Results: For village clinics, we find that NCMS programs are associated with a 26% increase in patient caseload and a 29% increase in gross revenue – but no change in net revenue or drug revenue. For individuals, NCMS participation is associated with a 6% increase in village clinic use but no change in overall medical care use. Out-of-pocket medical spending falls by 19% and catastrophic spending declines by 36% with participation as well. Across heterogeneous county programs, these changes occur even with minimal benefit packages. Conclusions: Although the NCMS provides financial risk protection and has partly corrected distortions in rural Chinese health care (reducing specialty services and drug sale rates), it may have also shifted uncompensated burdens to village clinics. Given renewed interest among Chinese policymakers in emphasizing primary care, this phenomenon deserves greater attention. New Evidence on the Impact of China’s New Cooperative Medical Scheme