Can insurance increase financial risk?: The curious case of health insurance in China
AbstractWe analyze the effect of insurance on the probability of an individual incurring 'high' annual health expenses using data from three household surveys. All come from China, a country where providers are paid fee-for-service according to a schedule that encourages the overprovision of high-tech care and who are only lightly regulated. We define annual spending as 'high' if it exceeds a threshold of local average income and as 'catastrophic' if it exceeds a threshold of the household's own per capita income. Our estimates allow for different thresholds and for the possible endogeneity of health insurance (we use instrumental variables and fixed effects). Our main results suggest that in all three surveys health insurance increases the risk of high and catastrophic spending. Further analysis suggests that this is due to insurance encouraging people to seek care when sick and to seek care from higher-level providers.
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Bibliographic InfoArticle provided by Elsevier in its journal Journal of Health Economics.
Volume (Year): 27 (2008)
Issue (Month): 4 (July)
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Web page: http://www.elsevier.com/locate/inca/505560
Other versions of this item:
- Wagstaff, Adam & Lindelow, Magnus, 2005. "Can insurance increase financial risk ? The curious case of health insurance in China," Policy Research Working Paper Series 3741, The World Bank.
- C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
- D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
- L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation
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