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Under regional characteristics of rural China: a clearer view on the performance of the New Rural Cooperative Medical Scheme

International Journal of Health Economics and Management volume 15, pages 407–431 (2015)Cite this article

Abstract

The New Cooperative Medical Scheme (NCMS) was implemented in 2003 in response to the poor state of health care in rural China. Considering the substantial differences in regional socioeconomics, preferences for health care needs, and concurrent implementation of other health-related policies, the extent to which the impact of the NCMS differs in rural communities across China is unclear. The objective of this paper, therefore, was to explore the variation in the determinants of household enrolment and the impact of enrolment on health care utilization and medical expenditures in three large geographic regions in China. A quasi-experiment study was designed based on the panel data of the China Health and Nutrition Survey. The bounding approach was used to conduct a robust check of impact estimation under the assumption of unobserved bias. A major finding is that household income plays no significant role for enrolment, which indicates the equity of program coverage in income terms. However, regional circumstances matter. In the generally poorer western regions, households with a high ratio of migrant workers are less attracted to the NCMS program, and adoption of the program is related to the regional infrastructure environment variables in the eastern and western regions. The NCMS has improved medical care utilization for poor income groups and regions (western regions). The NCMS’s impact on reducing the incidence of catastrophic expenditures is not shown for all regions.

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Fig. 1

Notes

  1. Here, formal medical services are contrasted with services that are provided by traditional folk doctors. Chinese folk doctors refer to individuals who work in private clinics, are not officially licensed and have only limited medical training.

  2. The 2002 State Council Policy Document No. 13, Decisions of the State Council on Strengthen Rural Healthcare (State Council, 2002).

  3. County-level governments in China include urban districts (suburbs), county-level cities and counties. The new program is targeted at rural residents. Most (but not all) rural residents reside in counties; urban districts and county-level cities that contain rural residents also receive the program. In China, most rural counties have a population that ranges from 200,000 to 300,000 people.

  4. 1US$ = 6,38 Yuan (September, 2011).

  5. Each household has its own medical savings account, with household members who deposit their contributions (a very small ratio of the premium) into this account and then spend money from it only to offset minor expenditures. This account has no risk-sharing function; instead, it only plays a role in stimulating the enthusiasm of rural people to enroll in the NCMS.

  6. China is composed of 23 provinces, 5 autonomous regions, 4 municipalities and 2 special administrative regions for a total of 34 distinct provincial administrative regions.

  7. According to the interpretation of China’s National Development and Reform Mission in 2003, the division of regions in China is based on policy criteria rather than an administrative or geographical concept.

  8. Rural residents are identified through formal registration in the “hukou” systems in China. Residents of county-town neighborhoods are categorized as urban dwellers and are therefore not eligible for enrolment in the NCMS.

  9. ‘Unconfoundedness’, a term coined by Rubin (1990), refers to circumstances in which adjusting for differences in a fixed set of covariates reduces selection bias and balances the differences between treated and untreated units, which enables the researcher to draw causal inferences that are independent of these differences.

  10. Common support region ensures that the individuals with similar covariates have a positive probability of being either participants or non-participants (Heckman et al. 1999). Implementing the common support condition ensures that any combination of characteristics that are observed in the treatment group can also be observed in the control group (Bryson et al. 2002).

  11. The insurance period for the NCMS is one year. In the last quarter of every year, individuals may choose whether they will remain enrolled in the coming year.

  12. Here, outpatient care is medical care that is provided on an outpatient basis, including diagnosis, observation, consultation, treatment, intervention, and some rehabilitation services.

  13. Preventive care involves measures that are taken for disease prevention instead of disease treatment, such as a physical check-up (once per year), family planning instruction, psychological counseling, and immunity services.

  14. Considering only 4-week references, we do not go in-depth here to detect inpatient utilization.

  15. Here, we do not use “ability-to-pay” as a denominator because this number can be zero or negative in rural households. In the case where “ability-to-pay” is zero, the ratio of health care spending to income is undefined, and households with negative values of “ability-to-pay” will result in smaller (in numerical size) values of the ratio than the households with small health care spending and/or large incomes.

  16. The CHNS survey collected income information for each interviewee (except children) from all sources, including income from agriculture, animal husbandry, sales, earnings and pensions. The household per capita income is calculated by dividing total household income by household size.

  17. Both medical expenditures and household income were expressed in Yuan and adjusted to 2006 values. The consumer price index from the Liaoning province was the reference that was used by the CHNS.

  18. The Passing Balancing test means that observations with the same propensity score must have the same distribution of observable (and unobservable) characteristics independent of treatment status. For a given propensity score, the exposure to treatment is random and, therefore, the treated and control units should be on average observationally identical (Becker and Ichino 2002). The results are available on request.

  19. For the poorest households, the local government will provide special financial assistant and cover their premium.

  20. The private doctor in China is different than in western countries and does not always have a doctor’s license.

  21. Please see Appendix to see the common support areas for the three regions.

  22. In our estimation, the only statistically significant impact of a continuous variable is found in inpatient expenditure for centile 4; otherwise, we do not have significant impacts. For continuous outcome variables, we did not check sensitivity in our paper, but we propose to use “bounds” by  DiPrete and Gangl (2004).

  23. As indicated in the paper of Becker and Caliendo (2007), the test is suitable for k-nearest neighbor matching without replacement and for stratification matching.

  24. The results are available on request.

  25. In China, the rural three-tier health system includes county-hospitals, township hospitals (THC) and village clinics. The county hospitals have overall responsibility for managing the county’s health services delivery, and they provide both health care directly to people and technical support to the THC. The THC provide preventive and curative care and supervise health staff in the village clinics. The village clinics provide people with essential clinical services and organize preventive care programs.

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Author information

Affiliations

  1. Institute of Regional Economics and Finance, Sichuan Agricultural University, No. 211 Huiming Rd. Wenjiang District, Chengdu, 611130, China

    Dan Liu

  2. Center for Development Research (ZEF), University of Bonn, Walter-Flex-Str.3, 53113, Bonn, Germany

    Dan Liu, Daniel Tsegai & Joachim von Braun

  3. Department of Medicine, Epidemiology and Biostatistics, Case Comprehensive Cancer Center, Case Western Reserve University, Cleveland, OH, USA

    David Litaker

  4. UN-Water Decade Programme on Capacity Development (UNW-DPC), United Nation University, UN Campus, Platz der Vereinten Nationen 1, 53113, Bonn, Germany

    Daniel Tsegai

  5. Mannheim Institute of Public Health, Social and Preventive Medicine, University of Heidelberg, Ludolf-Krehl-Strasse 7-11, 68167, Mannheim, Germany

    Dan Liu & David Litaker

Authors
  1. Dan Liu
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  2. Daniel Tsegai
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  3. David Litaker
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  4. Joachim von Braun
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Correspondence to Dan Liu.

Appendix: Histogram of estimated propensity score: common areas

Appendix: Histogram of estimated propensity score: common areas

See Figs. 2, 3 and 4.

Fig. 2
figure 2

Histogram of estimated propensity score for eastern regions

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Fig. 3
figure 3

Histogram of estimated propensity score for central regions

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Fig. 4
figure 4

Histogram of estimated propensity score for western regions

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Liu, D., Tsegai, D., Litaker, D. et al. Under regional characteristics of rural China: a clearer view on the performance of the New Rural Cooperative Medical Scheme. Int J Health Econ Manag. 15, 407–431 (2015). https://doi.org/10.1007/s10754-015-9175-z

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  • DOI: https://doi.org/10.1007/s10754-015-9175-z

Keywords

  • Regional characteristics of rural China
  • Health care access
  • Health care expenditure
  • Propensity score matching
  • Bounding approach

JEL Classification

  • D12
  • H55
  • C23
  • C14
  • I18