Can rural health insurance coverage improve educational attainment? Evidence from new cooperative medical scheme in China

This paper bridges health policy with education outcomes through eight waves of a nationally-representative health survey in China. We construct an index of health poverty with CHNS (1991-2011) data, and find health poverty in period (t-1) is significantly detrimental to education outcomes in period t. We further treat the expansion of New Cooperative Medical Scheme (NCMS) in rural China as a quasi-natural experiment and evaluate the effect of the publicly provided health insurance on education attainment. We find that NCMS participation can increase individual's schooling by 0.54, 0.75 and 0.83 years in east, central and west regions, respectively. The effect is larger for those at lower education levels, i.e. for individuals at 15% percentile schooling level, the schooling increases by 1.12, 1.43 and 1.72 years in the east, central and west. The effect is larger for women than men, for the unhealthy, risk-avoiding group relative to healthy group, and sustains longer in the central than other regions. Among different insurance clauses in NCMS, the outpatient medical service compensation generates stronger effect on education outcomes.