New Rural Cooperative Medical System And Consumption Of Rural Residents In China

In recent years, the saving rate of Chinese residents has been relatively high. In early 1990 s, the saving rate was 30%, while this figure had risen to 51%, which is much higher than the other countries. The normal reason of this phenomenon is the collapse of traditional social security system, which can motivate the residents to increase their precautionary saving. As a social stabilizer and economic shock absorber, medicare significantly affect the spending decision of residents. This paper shows the research on the influence on the consumption of rural people from the New Rural Cooperative Medical System(NCMS) which started in 2003.Firstly, this paper describes the impact of social health insurance for precautionary savings of residents. Social health insurance can reduce precautionary saving by reducing the uncertainty about the future income, thereby reducing the saving rate. Besides, it also can increase the demand for medical services by reducing the medical expense, thereby increasing the spending on health care.Secondly, this paper shows the empirical analysis on the Chinese Family Financial Survey(CHFS) in 2011 about the factor of the impact on the rural consumption, based on the OSL model and two-step model. The research shows that NCMS positively promoted both sum-consumption, non-medical consumption and medical consumption. NCMS has positive influence on reducing saving rate and promoting consumption.At last, this paper proposes policy suggestions to optimize the New Rural Cooperative Medical System. Firstly, the compensation scheme should be adjust, which means the compensation on minor ailment treatment should be increased. Secondly, the operation mechanism should be optimized to promote management efficiency. Namely, the program factor of the restriction should be reduced to expand the beneficiaries. Thirdly, in the aspect of outside element, the treatment cost should be reduced.