| Sumario: | Disease has been one of the top reasons accounting for impoverishment in rural China. The government subsidizes health care through the New Cooperative Medical System since 2003 (NCMS). The paper studies the effectiveness of various reimbursement arrangements in reducing the financial burden caused by health care in rural China. Using data from China Health and Nutrition Survey(CHNS), it finds that the severity of illness, the type of illness, medical cost and other costs of the treatment are significantly influencing the choice of a type of treatment. Based on the estimated demand function, the paper concludes that the reimbursement for inmpatient care only has little effect on reducing the financial burden and the incidence of catastrophic expenditure and that expending subsidies to outpatient care is a more effective policy. Reprinted by permission of the publisher.
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