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

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...

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Bibliographic Details
Published in:Frontiers of economics in China 2007-07, Vol.2 (3), p.289-323
Main Authors: Jihong, DING, Minglai, ZHU
Format: Article
Language:English
Subjects:
Expenditures
Health insurance
health insurance reform
medical service expenditure
medical service utilization
Public health
Studies
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Summary: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.
ISSN:1673-3444
1673-3568
DOI:10.1007/s11459-007-0016-y