The Impact of the New Rural Cooperative Medical Scheme on Township Hospitals' Utilization and Income Structure in Weifang Prefecture, China

The New Rural Cooperative Medical Scheme was gradually introduced from 2003 in China. This paper is based on a representative survey of 24 randomly selected township hospitals in Weifang prefecture over the period 2000-2008. Using a generalized form of differences-in-differences model, it aims to assess the effect of the reform on the utilization and income structure of the township hospitals. The estimations provide three main results linked to the effects of the New Rural Cooperative Medical Scheme on the behavior of the key stakeholders (households, health care providers and Health Bureau). Firstly, the reform had positive impacts on the utilization of township hospitals, particularly on the inpatient activity, but no significant impact on their income structure. Secondly, a decrease in the burden of hospitalization costs for households is suggested by the higher positive impact of the reform on the volume of inpatients in poor areas than in the other ones. Lastly, the marginal impact of the reform decreases over time.