Health insurance and catastrophic illness: a report on the New Cooperative Medical System in rural China

Hongmei Yi, Linxiu Zhang, Kim Singer, Scott Rozelle and Scott Atlas
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Linxiu Zhang: Center for Chinese Agricultural Policy, Institute of Geographical Sciences and Natural Resources Research, Chinese Academy of Sciences, Beijing, China, Postal: Center for Chinese Agricultural Policy, Institute of Geographical Sciences and Natural Resources Research, Chinese Academy of Sciences, Beijing, China
Kim Singer: Department of Agricultural and Resource Economics, University of California, Davis, CA, USA, Postal: Department of Agricultural and Resource Economics, University of California, Davis, CA, USA
Scott Rozelle: Freeman Spogli Institute, Stanford University, Stanford, CA, USA, Postal: Freeman Spogli Institute, Stanford University, Stanford, CA, USA
Scott Atlas: School of Medicine and Hoover Institution, Stanford University, Stanford, CA, USA, Postal: School of Medicine and Hoover Institution, Stanford University, Stanford, CA, USA

Health Economics, 2009, vol. 18, issue S2, pages S119-S127

Abstract: The overall goal of the paper is to understand the progress of the design and implementation of China's New Cooperative Medical System (NCMS) program between 2004 (the second year of the program) and 2007. In the paper we seek to assess some of the strengths and weaknesses of the program using a panel of national-representative, household survey data that were collected in 2005 and early 2008. According to our data, we confirm the recent reports by the Ministry of Health that there have been substantial improvements to the NCMS program in terms of coverage and participation. We also show that rural individuals also perceive an improvement in service by 2007. While the progress of the NCMS program is clear, there are still weaknesses. Most importantly, the program clearly does not meet one of its key goals of providing insurance against catastrophic illnesses. On average, individuals that required inpatient treatment in 2007 were reimbursed for 15% of their expenditures. Although this is higher than in 2004, on average, as the severity of the illness (in terms of expenditures on health care) rose, the real reimbursement rate (reimbursement amount|total expenditure on medical care) fell. The real reimbursement rate for illnesses that required expenditures between 4000 and 10 000 yuan (over 10 000 yuan) was only 11% (8%). Our analysis shows that one of the limiting factors is constrained funding. Copyright © 2009 John Wiley & Sons, Ltd.

Date: 2009
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