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Does Health Insurance Decrease Health Expenditure Risk in Developing Countries? The Case of China

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Author Info

  • Juergen Jung

    ()
    (Department of Economics, Towson University)

  • Jialu Liu

    ()
    (Department of Economics, Allegheny College)

Abstract

We make use of panel data from the China Health and Nutrition Survey between 1991 and 2006 to investigate whether health insurance increases out-of-pocket (OOP) health expenditure risk. We find that health insurance increases the probability of catastrophic OOP health expenditures using a series of Probit models. We then use two-part as well as sample selection models to account for selection on unobservable variables and find that although the probability of positive OOP health expenditures increases with the availability of health insurance, the actual level of OOP health expenditures decreases. More specifically, we find that for a per- son with positive OOP health expenditures, having health insurance reduces the level of OOP expenses by 12.56 percent while controlling for selection effects.

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File URL: http://www.towson.edu/cbe/economics/workingpapers/2011-04.pdf
File Function: First version, 2011
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Bibliographic Info

Paper provided by Towson University, Department of Economics in its series Working Papers with number 2011-04.

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Length: 36 pages
Date of creation: Apr 2011
Date of revision: Apr 2014
Handle: RePEc:tow:wpaper:2011-04

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Postal: Towson, Maryland 21252-0001
Phone: 410-704-2959
Fax: 410-704-3424
Web page: http://www.towson.edu/cbe/economics/
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Related research

Keywords: health insurance; exposure to health risk; health care in China; out-of-pocket health expenditure in China; two-part model; bivariate sample selection model; Heckman two- step estimator; China Health and Nutrition Survey (CHNS).;

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  1. Wagstaff, Adam & Lindelow, Magnus & Jun, Gao & Ling, Xu & Juncheng, Qian, 2009. "Extending health insurance to the rural population: An impact evaluation of China's new cooperative medical scheme," Journal of Health Economics, Elsevier, vol. 28(1), pages 1-19, January.
  2. Marcos Chamon & Eswar Prasad, 2008. "Why Are Saving Rates of Urban Households in China Rising?," IMF Working Papers 08/145, International Monetary Fund.
  3. Jens Leth Hougaard & Lars Peter Østerdal & Yi Yu, 2008. "The Chinese Health Care System: Structure, Problems and Challenges," Discussion Papers 08-01, University of Copenhagen. Department of Economics.
  4. Colin Vance, 2006. "Marginal Effects and Significance Testing with Heckman’s Sample Selection Model: A Methodological Note," RWI Discussion Papers 0039, Rheinisch-Westfälisches Institut für Wirtschaftsforschung.
  5. Wagstaff, Adam & Lindelow, Magnus, 2008. "Can insurance increase financial risk?: The curious case of health insurance in China," Journal of Health Economics, Elsevier, vol. 27(4), pages 990-1005, July.
  6. Akin, John S. & Dow, William H. & Lance, Peter M., 2004. "Did the distribution of health insurance in China continue to grow less equitable in the nineties? Results from a longitudinal survey," Social Science & Medicine, Elsevier, vol. 58(2), pages 293-304, January.
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