Beyond Medical Care: Assessing the Impact of Health Insurance Premium Subsidy Policy on Calorie Consumption and Physical Productivity in China

Abstract

Natural Resource Economics Discussion Papers are preliminary research reports by members of the GSA-NRE Kyoto University circulated for comments and suggestions. They have not been externally peer-reviewed or been subject to the review by the editorial board.Research on the effectiveness of health insurance premium subsidy policies on human capital primarily focuses on the direct pathways of increased medical utilization and subsequent improvements in health capital. However, such policies can also increase the budget for nonmedical expenditures, some of which can be converted into labor productivity, thereby forming an indirect pathway. This study used the New Rural Cooperative Medical Scheme (NRCMS) in China to investigate an indirect pathway through which the health insurance subsidy policy enhances labor productivity by increasing food consumption and caloric intake. The NRCMS, launched in 2003, provides health insurance subsidies to rural residents to alleviate the financial burden of health issues and improve nonmedical consumption. Using unbalanced panel data from 2009 and 2011 of the China Health and Nutrition Survey, this study tested two hypotheses. First, participating in the NRCMS increases individuals’ caloric intake. Second, increased caloric intake enhances productivity, as measured by earnings per working day. We used propensity score matching for the first hypothesis to handle the endogeneity of program participation and the inverse probability weighting regression for the second hypothesis to control for the unbalanced structure of the panel dataset. We found that the NRCMS significantly increased caloric intake by approximately 255 kcal, subsequently enhancing labor productivity by around 2.58%–3.39% in rural China in the late 2000s. This study contributes to our understanding of the impact of health insurance policies on poverty alleviation