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Fiscal Decentralization, Local Competitions and Sustainability of Medical Insurance Funds: Evidence from China

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  • Wenqiang Qian

    (The Co-Innovation Center for Social Governance of Urban and Rural Communities in Hubei Province, Zhongnan University of Economics and Law, Wuhan 430073, China
    School of Public Administration, Zhongnan University of Economics and Law, Wuhan 430073, China)

  • Xiangyu Cheng

    (The Co-Innovation Center for Social Governance of Urban and Rural Communities in Hubei Province, Zhongnan University of Economics and Law, Wuhan 430073, China)

  • Guoying Lu

    (The Co-Innovation Center for Social Governance of Urban and Rural Communities in Hubei Province, Zhongnan University of Economics and Law, Wuhan 430073, China
    School of Public Administration, Zhongnan University of Economics and Law, Wuhan 430073, China)

  • Lijun Zhu

    (The Co-Innovation Center for Social Governance of Urban and Rural Communities in Hubei Province, Zhongnan University of Economics and Law, Wuhan 430073, China
    School of Public Administration, Zhongnan University of Economics and Law, Wuhan 430073, China)

  • Fei Li

    (Research Center for Environment and Health, Zhongnan University of Economics and Law, Wuhan 430073, China)

Abstract

Local governments are responsible for the management of social medical insurance for urban and rural residents in China. Under the background of fiscal decentralization between the central government and local governments, the strengthening of supervision on medical insurance funds by local governments leads to a reduction in the expenditure of the medical insurance fund, which contributes to its sustainability. By employing the provincial level panel data during 2004–2014, we used a fixed effect model and a spatial autoregression model to investigate whether fiscal decentralization has had a negative influence on the expenditure of China’s new rural cooperative medical system (NCMS) fund. We found that fiscal decentralization has had a significant influence over its per capita expenditure. Our results also indicate that higher fiscal decentralization leads to higher financial aid in the NCMS provided by local governments. Additionally, the expenditure of the NCMS and the local financial aid are influenced by nearby governments. Our results suggest that appropriate fiscal decentralization, which helps to maintain the sustainability of social medical insurance funds, should be encouraged.

Suggested Citation

  • Wenqiang Qian & Xiangyu Cheng & Guoying Lu & Lijun Zhu & Fei Li, 2019. "Fiscal Decentralization, Local Competitions and Sustainability of Medical Insurance Funds: Evidence from China," Sustainability, MDPI, vol. 11(8), pages 1-21, April.
    • Handle: RePEc:gam:jsusta:v:11:y:2019:i:8:p:2437-:d:225631
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    1. Haoran Ge & Changbiao Zhong & Hanwen Zhang & Dameng Hu, 2022. "The Effect of Environmental Regulation on Marine Economic Transformation under the Decentralized System: Evidence from Coastal Provinces in China," Sustainability, MDPI, vol. 14(24), pages 1-24, December.
    2. Jing Xu & Dong Chen & Rongrong Liu & Maoxian Zhou & Yunxiao Kong, 2021. "Environmental Regulation, Technological Innovation, and Industrial Transformation: An Empirical Study Based on City Function in China," Sustainability, MDPI, vol. 13(22), pages 1-23, November.
    3. Feng, Suling & Sui, Bo & Liu, Huimin & Li, Guoxiang, 2020. "Environmental decentralization and innovation in China," Economic Modelling, Elsevier, vol. 93(C), pages 660-674.

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