New Cooperative Medical Scheme and Medical Expenditure in Rural China

Abstract

The New Cooperative Medical Scheme (NCMS) was launched in rural China in 2003, aiming to safeguard rural households against catastrophic medical expenditure. The implementation of the programme has been surrounded by the concern for the potential uncontrollable growth in medical expenditure due to moral hazard. Direct evidence on the relationship between the NCMS and total medical expenditure is still scant. Using a panel data set, the Rural Fixed-point Survey (RFPS) 2003–2006 and a supplementary NCMS survey conducted in 2007, we find that joining the NCMS does not affect household medical expenditure.