Abstract

In 2003, China introduced a heavily subsidized voluntary health insurance programme, the New Rural Cooperative Medical Scheme (NRCMS). The program aimed to increase access to health care and reduce the financial burden of health expenditure faced by 800 million people living in rural China. This paper evaluates the effectiveness of the NRCMS by assessing its impact on health care utilization and the use of different levels of health facilities. As the program is a non-random policy initiative rolled out nationally, various matching methods with difference-in-difference (DID) models are employed based on data from the China Health and Nutrition Survey (CHNS). The results show that the introduction of the NRCMS was not clearly related to the overall use of medical care, but it may have directed patients from town hospitals towards village clinics and county hospitals. On one hand, the NRCMS appears to partly rationalise the use of health services, with some increase in the use of primary care. On the other hand, the insurance may also alleviate financial barriers to accessing higher levels of medical facilities and help patients to obtain better quality health care.