Does Health Insurance Coverage Lead to Better Health and Educational Outcomes? Evidence from Rural China. NBER Working Paper No. 16417

Many governments advocate nationwide health insurance coverage but the effects of such a program are less known in developing countries. We use part of the 2006 China Agricultural Census (CAC) to examine whether the recent health insurance coverage in rural China has affected children mortality, pregnancy mortality, and the school enrollment of the 6-16 year old. Our data represent a census of 5.9 million people living in eight low-income rural counties, four of which have adopted the New Cooperative Medical System (NCMS) by 2006 and the other four did not adopt NCMS until 2007. In the counties that offer NCMS, a household may take or not take the insurance. A first look of the data suggests that enrolling in NCMS is associated with better school enrollment and lower mortality of young children and pregnant women. However, using a difference-in-difference propensity score method, we find most of these differences are driven by the endogenous introduction and take up of NCMS, and classical propensity score matching fails to address the selection bias. While NCMS does not show beneficial impacts on the average population, we find some evidence that NCMS helps improve the school enrollment of six-year-olds.