Top

International Journal of Health Economics and Management

Published in:

01-12-2015 | Research Article

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

Authors: Dan Liu, Daniel Tsegai, David Litaker, Joachim von Braun

Published in: International Journal of Health Economics and Management | Issue 4/2015

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.

Available only for authorised users

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.

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

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.

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

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.

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.

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.

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.

‘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.

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).

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.

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

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.

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

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.

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.

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.

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.

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

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

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

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).

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.

The results are available on request.

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.

Aakvik, A. (2008). Bounding a matching estimator: The case of a Norwegian training program. Oxford Bulletin of Economics and Statistics, 63(1), 115–143.CrossRef

Arrow, K. J. (1963). Uncertainty and the welfare economics of medical care. American Economics Review, 53(3), 941–973.

Becker, S. O., & Caliendo, M. (2007). Sensitivity analysis for average treatment effect. The Stata Journal, 7(1), 71–83.

Becker, S. O., & Ichino, A. (2002). Estimation of average treatment effects based on propensity score. The Stata Journal, 2(4), 358–377.

Bryson, A., et al. (2002). The use of propensity score matching in the evaluation of labor market policies. Working Paper No.4, Department for Work and Pensions.

Caliendo, M., & Kopenig, S. (2008). Some practical guidance for the implementation of propensity score matching. Journal of Economic Surveys, 22(1), 31–72.CrossRef

Culyer, A. J., & Newhouse, J. P. (2000). Handbook of health economics. Amsterdam: Elsevier.

DiPrete, T., & Gangl, M. (2004). Assessing Bias in the Estimation of Causal Effects: Rosenbaum Bounds on Matching Estimators and Instrumental Variables Estimation with Imperfect Instruments. Sociological Methodology, 34(1), 271–310.CrossRef

Dor, A., et al. (1988). Non-price rationing and the choice of medical care providers in rural Cote D’Ivoire. Journal of Health Economics, 6(4), 291–304.CrossRef

Du, S. F., et al. (2002). A new stage of the nutrition transition in China. Public Health Nutrition, 5, 169–174.CrossRefPubMed

Entwisle, B., & Chen, F. (2002). Work pattern following a birth in urban and rural China: A longitudinal study. European Journal of Population-Revue Europeenne De Demographie, 18, 99–119.CrossRef

Gakidou, E., et al. (2006). Assessing the effect of the 2001–2006 Mexican health reform: An interim report card. The Lancet, 368, 1920–1935.CrossRef

Gertler, P., et al. (1987). Are user fees regressive? The welfare implications of health care financing proposals in Peru. Journal of Econometrics, 36(1–2), 67–80.CrossRef

Gu, X., & Fang, L. M. (2007). Cost control and sustainable development of the New Rural Cooperative Medical Scheme. Study & Exploration, 168(1), 137–141. In Chinese.

Heckman, J., et al. (1997). Matching as an econometric evaluation estimator: Evidence from evaluating a job training program. Review of Economic Studies, 64(4), 605–654.CrossRef

Heckman, J., et al. (1998). Matching as an econometrics of active labor market programs. Review of Economic Studies, 65(2), 261–294.CrossRef

Heckman, J., et al. (1999). The economics and econometrics of active labor market programs. In O. Ashenfelter & D. Card (Eds.), Handbook of Labor Economics (Vol. III, pp. 1865–2097). Amsterdam: Elsevier.

Jalan, J., & Ravallion, M. (2003). Estimating the benefit incidence of an antipoverty program by propensity-score matching. Journal of Business & Economic Statistics, 21(1), 19–30.CrossRef

Jia, L. E. (2008). Issues on the enrollment of the New Cooperative Medical Scheme for migrant workers. Population & Economics, 4(S), 209–210. In Chinese.

Johar, M. (2009). The impact of the Indonesian health card program: A matching estimator approach. Journal of Health Economics, 28(1), 35–53.CrossRefPubMed

Jütting, J. (2003). Health Insurance for the poor? Determinants of participation in community-based health insurance schemes in rural Senegal. Technical Paper No. 204. Paris: OECD Development Center.

Khandker, S., et al. (2010). The poverty impacts of rural roads: Evidence from Bangladesh. Economic Development and Cultural Change, 57(4), 685–722.CrossRef

Krause, P. (2000). The non-profit health insurance schemes in unorganized sectors in India [M]. Deutscher gesellschaft fuer Technische Zusammerarbeit (GTZ) GmbH.

Lei, X., & Lin, W. (2009). The new cooperative medical scheme in rural China: Does more coverage mean more service and better health? Health Economics, 18, S25–S46.CrossRefPubMed

Lindelow, M., & Wagstaff, A. (2005). Health shocks in China: Are the poor and uninsured less protected? World bank policy research working paper 3740.

Liu, X., & Mills, A. (1999). Evaluation payment mechanisms: How can we measure unnecessary care? Health Policy and Planning, 14(4), 409–413.CrossRefPubMed

Liu, Y. L., & Rao, K. (2006). Providing health insurance in rural China: From research to policy. Journal of Health Policies, Policy and Law, 31(1), 71–92.CrossRef

Mantel, N., & Haenszel, W. (1959). Statistical aspects of the analysis of data from retrospective studies of disease. Journal of the National Cancer Institute, 22(4), 719–748.PubMed

Mao, Z., & Jiang, J. (2004). Comparative research on the New Rural Cooperative Medical Scheme. Journal of Chinese Health Service Management, 7, 426–428.

Popkin, B., et al. (2010). Cohort profile: The China Health and Nutrition Survey—Monitoring and understanding socio-economic and health change in China, 1989–2011. International Journal of Epidemiology, 39, 1435–1440.PubMedCentralCrossRefPubMed

Rosenbaum, P. R. (2002). Observational studies (2nd ed.). New York: Springer.CrossRef

Rosenbaum, P. R., & Rubin, D. (1983). Central role of the propensity score in observational studies for causal effects. Biometrika, 70(1), 41–55.CrossRef

Rubin, D. (1990). Formal models of statistical inference for causal effects. Journal of Statistical Planning and Inference, 25(3), 279–292.CrossRef

Sepehri, A., et al. (2006). The influence of health insurance on hospital admission and length of stay—The case of Vietnam. Social Science and Medicine, 63(7), 1757–1770.CrossRefPubMed

Smith, J., & Todd, P. (2005). Does matching overcome Lalonde’s critique of nonexperimental estimators? Journal of Econometrics, 125(1–2), 305–53.CrossRef

Trujillo, A. J., et al. (2005). The impact of subsidized health insurance for the poor: Evaluation the Colombian experience using propensity score matching. International Journal of Health Care Finance and Economics, 5(3), 211–239.CrossRefPubMed

Ursula, G. (2005). Health and Poverty Linkages: Perspectives of the chronically poor. Background paper for the chronic poverty report 2008-09, the UK.

Wagstaff, A. M., et al. (2007). Extending health insurance to the rural population: An impact evaluation of China’s new cooperative medical scheme. World Bank Policy Research Working Paper No. 4150.

Wagstaff, A., & van Doorslaer, E. (2003). Catastrophe and impoverishment in paying for health care: With applications to Vietnam 1993–1998. Health Economics, 12(11), 921–934.CrossRefPubMed

WHO. (2006). What is the impact of social health protection on access to health care, health expenditure and impoverishment? A comparative analysis of three African countries. Discussion paper. Department “Health System Financing”, cluster “Evidence and information for policy” (EIP).

Wu, Z. (2010). Self-selection and Earning of Migrants: Evidence from Rural China. Journal of the East Asian Economic Association, 24(1), 23–44.CrossRef

Yip, W., & Hsiao, W. C. (2008). The Chinese health system at a crossroads. Health Affairs, 27(2), 460–468.CrossRefPubMed

Zeckhauser, R. (1970). Medical Insurance: A case study of the tradeoff between risk spreading and appropriate incentives. Journal of Economic Theory, 2(1), 10–26.CrossRef

Title: Under regional characteristics of rural China: a clearer view on the performance of the New Rural Cooperative Medical Scheme
Authors: Dan Liu
Daniel Tsegai
David Litaker
Joachim von Braun
Publication date: 01-12-2015
Publisher: Springer US
Published in: International Journal of Health Economics and Management / Issue 4/2015
Print ISSN: 2199-9023
Electronic ISSN: 2199-9031
DOI: https://doi.org/10.1007/s10754-015-9175-z

Keynote webinar | Spotlight on sleep in brain health

Springer Medicine

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

Abstract

Keynote webinar | Spotlight on sleep in brain health

Springer Medicine

Abstract

Please log in to get access to this content