China's new cooperative medical scheme improved finances of township health centers but not the number of patients served.

China's New Cooperative Medical Scheme, launched in 2003, was designed to protect rural households from the financial risk posed by health care costs and to increase the use of health care services. This article reports on findings from a longitudinal study of how the program affected the use of health care services, out-of-pocket spending on medical care, and the operations and financial viability of China's township health centers, which constitute a middle tier of care in between village clinics and county hospitals. We found that between 2005 and 2008 the program provided some risk protection and increased the intensity of inpatient care at township health centers. Importantly, the program appears to have improved the centers' financial status. At the same time, the program did not increase the overall number of patients served or the likelihood that a sick person would seek care at a township center. These findings serve as a benchmark of the program's early impact. The results also suggest that the composition of health care use in China has changed, with people increasingly seeking outpatient care at village clinics and inpatient care at township health centers.