Does health insurance coverage lead to better health and educational outcomes? Evidence from rural China

Using the 2006 China Agricultural Census (CAC), we examine whether the introduction of the New Cooperative Medical System (NCMS) has affected child mortality, maternal mortality, and school enrollment of 6-16 year olds. Our data cover 5.9 million people living in eight low-income rural counties, of which four adopted the NCMS by 2006 and four did not adopt it until 2007. Raw data suggest that enrolling in the 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 that most of the differences are driven by endogenous introduction and take-up of the NCMS, and our method overcomes classical propensity score matching's failure to address selection bias. While the NCMS does not affect child morality and maternal mortality, it does help improve the school enrollment of six-year-olds. (C) 2011 Elsevier B.V. All rights reserved.