The Impact of Health Insurance on Health Outcomes and Spending of the Elderly: Evidence From China’s New Cooperative Medical Scheme

Abstract

This paper investigates the effects of China’s New Cooperative Medical Scheme (NCMS) on health outcomes and health care expenditure of the elderly in rural China, using panel data from the 2005 and 2008 waves of the Chinese Longitudinal Healthy Longevity Survey. We employ a strategy that combines propensity score matching with a difference-in-differences approach to address selection bias. We show for the first time in the literature that the NCMS has significantly improved the health status of the elderly enrollees. The beneficial health effects of the NCMS can be attributed to more adequate health care utilization among the insured. However, there is no evidence that the NCMS has reduced their out-of-pocket spending. Furthermore, the effects of the NCMS on elderly health are differentiated by socioeconomic status and by gender. In particular, we consistently find that the NCMS has had a significant positive impact on health outcomes for the elderly at the bottom of the income distribution, or in the relatively poor western region, which suggests that the NCMS helps reduce health inequalities among the rural elderly.