The impact of health insurance on healthcare service use and costs: evidence from rural China

Purpose - The purpose of this paper is to study the effects of introducing a health insurance program in rural China between 2004 and 2006, the New Cooperative Medical Scheme (NCMS). Design/methodology/approach - The authors apply difference in difference and propensity score matching methods (PSM-DID) to a widely used panel dataset, the China Health and Nutrition Survey (CHNS). Findings are robust across several treatment and comparison groups used in previous NCMS studies. Findings - Households who participated in NCMS increased the use of preventive services and western medicine, while lowering the use of traditional Chinese medicine. NCMS also reduced hospital use, out of pocket payments, travel time to healthcare facilities and waiting time to see doctors. The authors estimate that reductions in travel and waiting time saved roughly 52m U.S. dollars in 2006. Research limitations/implications - Previously divergent findings on health insurance effects may be due to researchers studying health insurance across different healthcare delivery systems. In addition, in estimating how health insurance access affects healthcare costs, the authors should consider economic costs related to the time needed to access health services. Originality/value - The authors study how health insurance access affects patients' choice of providers and economic costs to accessing health care services, outcomes that have not received much attention previously. The authors depart from previous NCMS studies by comparing several different approaches to identifying treatment and control groups when applying PSM-DID.