Abstract

Since the dissolution of Rural Cooperative Medical System at the end of the commune period, illness has emerged as a leading cause of poverty in rural China. To address the poor state of healthcare, the Chinese government unveiled the New Cooperative Medical System in 2002. Because local governments have been given significant control over program design, fundamental characteristics of the program vary from one county to the next. These differences may influence the decision to seek healthcare as well as the choice of hospital conditional on that initial decision. In this paper, we use a nested logit model to analyze household survey data from 25 counties to analyze the determinants of such health-seeking behavior. We find that age, the share of household expenditures allocated to food consumption (a measure of relative income), and the presence of other sick people in the household negatively affect the decision to seek healthcare while disability has a positive influence. Further, conditional on seeking treatment, the reimbursement scheme and average daily costs strongly influence hospital choice.

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