The major source of income of Chinese farmers is non-farm income, especially wages and salaries. Based on the economics theory of health and healthcare, their non-farm labor supply behavior could be affected by health insurance policies. The work presented in this paper focuses on the impact of the New Rural Cooperative Medical Scheme (NRCMS) on farmers’ non-farm labor supply behavior in China. A four-part model regression approach was used to examine the relationship. Our dataset comprised of 8273 people, aged 45 or above, from the China Health and Retirement Longitudinal Study (CHARLS) conducted in 2011 and 2013. The empirical results showed that NRCMS significantly reduced non-farm labor force participation and employment. Compared to non-participants of the NRCMS, the non-farmer labor time of these participants reduced, but the supplementary medical insurance and immediate reimbursement of the NRCMS increased the participants’ non-farm labor time. Our results have contributed to the reform of China’s public health insurance and farms’ income growth, and it would be necessary to actively promote immediate reimbursement, gradually simplify reimbursement procedures for medical treatment in non-registered places, and eliminate the non-portability of NRCMS.

A large body of literature has shown that the burden of healthcare can push individuals and households into the burden of medical care and income loss. This makes it difficult for rural or low-income households to obtain and use safe and affordable formal credit services. In 2003, China’s government implemented a new rural public health insurance, which was called the New Rural Cooperative Medical Scheme (NRCMS). This study provides evidence of the impact of NRCMS on household credit availability using the China Family Panel Studies (CFPS) for 2010. The tobit regression approach and mediator model are used. The results show that, as a public health insurance system sustained by the participation of government investment, the NRCMS provides good “collateral” and significantly enhances rural households’ formal credit availability level. Furthermore, this positive effect is mainly reflected in the economic effect of NRCMS. Our results are robust to alternative statistical methods. Our findings suggest that expanding access, fulfilling the NRCMS mortgage function, and providing more financial services for rural households would have big benefits with regard to easing credit constraints for rural residents.