King's College London

In 2003, the New Rural Cooperative Medical Scheme (NCMS) was initiated in China to provide rural inhabitants with financial protection against health risks. The benefit package was extended to outpatient care in 2007. Using the China Health and Nutrition Survey of 2009, this paper examines the relationship between the households participating in the NCMS and the level and distribution of catastrophic health payments and health payment-induced poverty resulting from outpatient care. The study finds no significant difference in terms of catastrophic health payments and health payment-induced poverty before and after NCMS reimbursement. The out-of-pocket payments (OOP) are concentrated disproportionately among the poor even after the insurance reimbursement. This heavy burden of OOP payments has become a poverty trap for the poor. This study calls for a more comprehensive insurance and effective insurance package.