Welfare effects of public health insurance reform: The case of urban China

Abstract

This paper evaluates Chinese public health insurance reform enforced since 1998 in terms of its welfare effects. We evaluate China health insurance reform since 1998 using the China Health and Nutrition Surveys (CHNS) data with relevant econometric models. The results of empirical studies show that the public health insurance status has significant impact on medical service utilization and expenditure. The reform reduces the positive effect of public health insurance on medical service utilization, meaning the utilization gap is narrowed after the reform. However, the empirical studies find that the medical expenditure growth of the sample individuals in urban China has not been controlled after the Basic Medical Insurance (BMI) program even if a new co-payment is enforced. Two main reasons for this failure might be the rising cost of medical service and physician's severe moral hazard, while both of them come from no managed care mechanism for medical service providers in China.

The Impacts of China's Urban Employee Basic Medical Insurance on Healthcare Expenditures and Health Outcomes

“…Following the literature (Chen et al, 2007;Ding and Zhu, 2007;Chang, 2012;Liu and Zhao, 2014), we also control for a set of demographic, socioeconomic, and health characteristics in the model. The demographic characteristics that we consider are age, gender, marital status, and residential area; the socioeconomic characteristics that we control for are education and household income level.…”

“…Patients from low-income and middle-income households or with less severe medical conditions are more sensitive to prices. To our knowledge, this study is the first to investigate how increased patient cost sharing in the UEBMI affects utilization, expenditures, and health among urban employees.Few empirical studies have focused on the UEBMI reform since its inception in 1998 (Yip and Hsiao, 1997;Liu et al, 2002;Dong, 2003;Liu and Zhao, 2006;Ding and Zhu, 2007). Subsequent works seek to utilize quasi-experiments to draw causal inferences on the effect of cost sharing (Chandra et al, 2010;Skipper, 2013;Shigeoka, 2014;Chandra et al, 2014).…”

“…Therefore, the UEBMI reform provides a unique opportunity to examine the price sensitivity of healthcare consumption behavior in China. To our knowledge, this study is the first to investigate how increased patient cost sharing in the UEBMI affects utilization, expenditures, and health among urban employees.Few empirical studies have focused on the UEBMI reform since its inception in 1998 (Yip and Hsiao, 1997;Liu et al, 2002;Dong, 2003;Liu and Zhao, 2006;Ding and Zhu, 2007). The existing studies have limitations that must be considered.…”

“…Few empirical studies have focused on the UEBMI reform since its inception in 1998 (Yip and Hsiao, 1997;Liu et al, 2002;Dong, 2003;Liu and Zhao, 2006;Ding and Zhu, 2007). The existing studies have limitations that must be considered.…”

Ethnic Minorities and Regional Development in Asia : Reality and Challenges

“…Since only part of total health expenses is covered by insurance, people might prefer to use less expensive facilities, thus lowering the overall expenditures. While health insurance is often cited in access literature as a policy instrument with a capacity to improve the use of health services rendering the access to health care more equitable (Ding and Zhu 2007), we should keep in mind that insurance schemes vary. Health insurance schemes in rural areas are largely (80 per cent) funded by personal contributions, while urban residents are required to contribute considerably smaller shares ranging from 0 to 25 per cent depending on the type of sector in which they are employed (Gao et al 2002).…”