Title: The Power of Public Insurance for the Poor: Evidence from China's New Cooperative Medical Scheme

Venue: Zhonghui Building, 106， Jinan University 

About the Speaker:

林琳，美国俄亥俄州立大学经济学博士，现为华东师范大学经济与管理学部公共管理学院助理教授。主要研究方向为卫生经济学、应用微观。

Abstract:

Low-income people, especially the rural poor in low- and middle-income countries (LMICs), have limited access to healthcare when they are sick. To address this issue, the governments of LMICs have initiated health insurance programs that target these poor populations. However, the health benefits these programs provide are often limited due to resource constraints in LMICs. In this paper, we study the New Cooperative Medical Scheme (NCMS), a limited coverage insurance program for rural residents in China, to explore its effectiveness, and the mechanisms that contribute to its successes, if any. We exploit a plausibly random design to identify the causal effects using data on NCMS enrollment and detailed information extracted from China's yearbooks on healthcare and mortality. Our identification relies on the within-province variation in NCMS enrollment over the 2004-2011 period in a province-year panel. We find that although the insurance coverage the NCMS offered is limited, inpatient care use increases significantly over the study period, and that this increase is mainly driven by the use of inpatient care delivered through primary care providers, for which the reimbursement rates are the most generous. In addition, we show that half of the increase in outpatient use is attributable to the NCMS' investment in the healthcare supply in rural areas. We also find that rural residents substitute the healthcare services and providers they use in response to the differential payment design of the NCMS, largely by using more primary care services that are reimbursed at higher rates. Lastly, our results indicate that the introduction of the NCMS does not lead to increases in out-of-pocket medical expense and does not reduce mortality rates among rural residents.