Abstract: Social basic medical insurance is a major component of social security system in China. It mitigates residents' difficulties of receiving medical treatment and improves their welfare. As one of the most important parts of social basic medical insurance programs, the New Cooperative Medical Scheme has been launched for more than ten years. Evaluating the impacts of this program on Chinese rural residents is very necessary. This paper studies the long-term impacts of the New Rural Cooperative Medical Insurance on consumption smoothing and ex ante moral hazard behaviors of Chinese rural residents. By employing a Difference-in-Differences design and the China Health and Retirement Longitudinal Study (2011, 2013, 2015) data set, this paper identifies the long-term effects of exposure to the New Rural Cooperative Medical Insurance on individual consumption growth, ex-ante moral hazard behaviors, health status and medical expenditures. The results show that, firstly, the long-term consumption smoothing effect is stronger on individuals who live in areas with higher insurance contribution levels and who enjoy longer enrollment periods. Secondly, as a basic insurance program, the New Rural Cooperative Medical Insurance has little ex-ante moral hazard effects, and it also has an insignificant impact on household financial growth. Thirdly, the New Rural Cooperative Medical Insurance decreases medical expenditures in the long run.

Key words: New Rural Cooperative Medical Insurance, consumption smoothing effects, ex-ante moral hazard, health, long-term effects