Does health insurance decrease health expenditure risk in developing countries? The case of China

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Issue Date
2015-09-30
Authors
Jung, Juergen
Streeter, Jialu Liu
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This version of the article is available for viewing to the public after September 30, 2017.
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Keywords
Health insurance , medical spending , two-part model , bivariate sample selection model , China Health and Nutrition Survey (CHNS)
Abstract
This article studies the impact of health insurance on individual out-of-pocket health expenditures in China. Using China Health and Nutrition Survey data between 1991 and 2006, we apply two-part and sample selection models to address issues caused by censored data and selection on unobservables. We find that, although the probability of accessing health care increases with the availability of health insurance, the level of out-of-pocket health expenditure decreases. Our results from a selection model with instrumental variables suggest that having health insurance reduces the expected out-of-pocket health expenditure of an individual by 29.42% unconditionally. Meanwhile, conditional on being subjected to positive health expenditure, health insurance helps reduce out-of-pocket spending by 44.38%. This beneficial effect of health insurance weakens over time, which may be attributable to increases in the coinsurance rates of health insurances in China.
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Economics
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This is the peer reviewed version of the following article: Jung, J. and Liu Streeter, J. (2015), Does health insurance decrease health expenditure risk in developing countries? The case of China. Southern Economic Journal, 82: 361–384. doi: 10.1002/soej.12101, which has been published in final form at http://dx.doi.org/10.1002/soej.12101. This article may be used for non-commercial purposes in accordance with Wiley Terms and Conditions for Self-Archiving.
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Jung, J. and Liu Streeter, J. (2015), Does health insurance decrease health expenditure risk in developing countries? The case of China. Southern Economic Journal, 82: 361–384. doi: 10.1002/soej.12101
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