Impacts Of The New Cooperative Medical Scheme On Labor Supply And Poverty Alleviation

For the purpose of reducing farmers' economic burden on medical expense and improving their health,the Chinese government in 2003 launched a new rural health financing policy to provide public health insurance(the New Cooperative Medical Scheme,NCMS)for its rural population.After the implementation of NCMS,it has experienced a rapid development.There is a large increase in the take-up of NCMS coverage,reimbursement levels and benefiting populations.Accordingly,participants achieve more access to healthcare services and also provide more benefits for their health improvement,suggesting that the NCMS has realized its fundamental objectives.However,as the Chinese economic economy reaches the Lewisian Turning Point appear in its dual economic structure,the rural labor force has appear a large structural shortage because a large number of younger people migrate into urban while those middle-aged and elderly just stay in rural for farming activities.Therefore,the health problems,especially for the elderly patients with chronic diseases,become a challenge to the rural labor force supply in farming production and agricultural development.At the same time,due to the high cost of healthcare,most rural residents still bear heavy economic burden in medical expense,which may cause them falling into poverty.In this context,an interesting research question is that whether the NCMS health insurance has an effect on the labor force supply that might be promoted by the health benefits from this program expansion.Furthermore,what is the effect of NCMS on the poverty alleviation?For the poor families,what is the impact of chronic diseases on one's own labor supply and how their labor behaviors change in response to the spouses who suffered chronic diseases?Examine these questions have important implications for the further development of NCMS,and also provide valuable information for improving the labor force market in rural areas,promoting the progress of anti-poverty program on health and the future long-term agricultural economic development.Based on the theory of health demand,labor supply,welfare economics and poverty,this study use data from the China Health and Nutrition Survey(CHNS)to empirically analyze following contents:(1)the Difference-in-differences approach is employed to estimate the effects of NCMS health insurance on hours of worked in agriculture,off-farm labor force participation,not working and the weeks off due to illness,further analyses are conducted to examine this program's labor supply effects varied by gender,age,health status and household income;(2)By the survival analysis,the Kaplan-Meier survival function is used to describe the trend and distribution of the risk of falling into poverty,and then the discrete time complementary log-log regressions are conducted to estimate the impact of NCMS on the hazard ratio alleviation for the risk of falling into poverty due to a health shock,and also identify whether this impact on poverty reduction is limited by the poor traffic condition in village or the shortage of medical services resources;(3)Among the poor families,this paper use simultaneous equations to estimate the effect of spousal chronic diseases such as hypertension on husband and wives'labor force supply,and further examine the pathway of household work through which the hypertension experienced by spouses affect their partners' hours of worked in agriculture,and also investigate the healthcare utilization for those patients with hypertension.The conclusions of this study are following:First,the NCMS significantly increases the hours of worked in agriculture and the probability of off-farm labor force participation while reduce the probability of not working and the weeks off due to illness.Second,the effects of NCMS expansions on labor supply vary across gender,age,health status and income.Results show that effect on farm work is larger for male than female,and also significantly increase the hours of farm work for the elderly aged 50 or above.For those with "fair" or "poor" health status,participants' probability of off-farm labor force participation increase 8.1%and the hours of agricultural labor also increase though it is insignificant.In terms of individuals from low income families,the NCMS has significantly positive effects on hours of farm work and off-farm work while reduce the week off due to illness.Third,the NCMS significantly reduce the hazard ratio of falling into poverty due to a health shock,suggesting that the NCMS plays an important role in poverty alleviation.However,results indicate that the poor traffic condition in village or the shortage of medical services resources will lowers the performance of NCMS on poverty alleviation.Fourth,women's hours of farm work significantly decrease in response to spouse who were diagnosed with hypertension.This study finds that the housework has a substitution effects on farm work for female when husbands having hypertension.This suggests that spousal hypertension increase so many housework or home care provided by women that they have to reduce hours of working on farm activities.Finally,Compared to the non-NCMS participants,chronic diseases patients with NCMS coverage have higher proportion of healthcare utilization in terms of health check-up,hypertension medicines,outpatient services and inpatient services.To some extent,the implementation of NCMS improves the access to medical resources for those chronic diseases patients living in the poor families.However,the proportion of health check-up and inpatient services are still very low for the patients with NCMS.These conclusions have important implications for policy makers:(1)enhance the security level of NCMS for the elderly and low income families in rural areas;(2)improve the rural traffic conditions and healthcare services;(3)set up a rural hypertension management based on the household unit and expand the coverage of NCMS on patients with hypertension;(4)Improve the benefits of NCMS on the access to primary health services especially for the health check-up.