The Impact of the New Rural Cooperative Medical Scheme on Activities and Financing of Township Hospitals in Weifang, China

Since 2003, the New Rural Cooperative Medical Scheme, a community-based health insurance, is gradually implemented in China, in order to increase the access of the poor to healthcare services, reduce out-of-pocket expenditures and avoid catastrophic health expenditures. The paper estimates the impact of the New Rural Cooperative Medical Scheme on a sample of 24 randomly selected township hospitals of Weifang prefecture (Shandong province, China), using a generalized form of differences-in-differences model on longitudinal data over the period 2000-2008. Estimations highlight three main results. First, the New Rural Cooperative Medical Scheme has a positive impact on the utilization of township hospitals, mainly on inpatient services, but none effect on their financial structure. In addition, the positive impact on the volume of discharged patients is higher in poor areas rather than the non-poor, reflecting a decrease of the burden of hospitalization costs. Lastly, the marginal impact of the reform is decreasing over time.