Can insurance increase financial risk?: The curious case of health insurance in China
We 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.
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Marianne Bertrand & Esther Duflo & Sendhil Mullainathan, 2002.
"How Much Should We Trust Differences-in-Differences Estimates?,"
NBER Working Papers
8841, National Bureau of Economic Research, Inc.
- Marianne Bertrand & Esther Duflo & Sendhil Mullainathan, 2004. "How Much Should We Trust Differences-in-Differences Estimates?," The Quarterly Journal of Economics, MIT Press, vol. 119(1), pages 249-275, February.
- Christopher F Baum & Mark E. Schaffer & Steven Stillman, 2007.
"Enhanced routines for instrumental variables/GMM estimation and testing,"
CERT Discussion Papers
0706, Centre for Economic Reform and Transformation, Heriot Watt University.
- Christopher F Baum & Mark E. Schaffer & Steven Stillman, 2007. "Enhanced routines for instrumental variables/GMM estimation and testing," Boston College Working Papers in Economics 667, Boston College Department of Economics, revised 05 Sep 2007.
- Joseph J. Doyle, 2005. "Health Insurance, Treatment and Outcomes: Using Auto Accidents as Health Shocks," The Review of Economics and Statistics, MIT Press, vol. 87(2), pages 256-270, May.
- Buntin, Melinda Beeuwkes & Zaslavsky, Alan M., 2004. "Too much ado about two-part models and transformation?: Comparing methods of modeling Medicare expenditures," Journal of Health Economics, Elsevier, vol. 23(3), pages 525-542, May.
- Thomas G. McGuire & Mark V. Pauly, 1991. "Physician Response to Fee Changes with Multiple Payers," Papers 0015, Boston University - Industry Studies Programme.
- McGuire, Thomas G., 2000. "Physician agency," Handbook of Health Economics, in: A. J. Culyer & J. P. Newhouse (ed.), Handbook of Health Economics, edition 1, volume 1, chapter 9, pages 461-536 Elsevier.
- John Mullahy, 1997. "Instrumental-Variable Estimation Of Count Data Models: Applications To Models Of Cigarette Smoking Behavior," The Review of Economics and Statistics, MIT Press, vol. 79(4), pages 586-593, November.
- Mullahy, John, 1998. "Much ado about two: reconsidering retransformation and the two-part model in health econometrics," Journal of Health Economics, Elsevier, vol. 17(3), pages 247-281, June.
- Eddy van Doorslaer & Owen O'Donnell & Ravindra P. Rannan-Eliya & Aparnaa Somanathan & Shiva Raj Adhikari & Charu C. Garg & Deni Harbianto & Alejandro N. Herrin & Mohammed Nazmul Huq & Shamsia Ibragimo, 2007. "Catastrophic payments for health care in Asia," Health Economics, John Wiley & Sons, Ltd., vol. 16(11), pages 1159-1184.
- Feldstein, Martin S, 1973. "The Welfare Loss of Excess Health Insurance," Journal of Political Economy, University of Chicago Press, vol. 81(2), pages 251-80, Part I, M.
- Joseph J. Doyle Jr., 2005. "Health Insurance, Treatment and Outcomes: Using Auto Accidents as Health Shocks," NBER Working Papers 11099, National Bureau of Economic Research, Inc.
- James W. Hardin & Henrik Schmeidiche & Raymond J. Carroll, 2003. "Instrumental variables, bootstrapping, and generalized linear models," Stata Journal, StataCorp LP, vol. 3(4), pages 351-360, December.
- Gordon G. Liu & Xiaodong Wu & Chaoyang Peng & Alex Z. Fu, 2003. "Urbanization And Health Care In Rural China," Contemporary Economic Policy, Western Economic Association International, vol. 21(1), pages 11-24, 01.
- Culyer, A J, 1989. "The Normative Economics of Health Care Finance and Provision," Oxford Review of Economic Policy, Oxford University Press, vol. 5(1), pages 34-58, Spring.
- Owen O'Donnell & Eddy van Doorslaer & Ravi P. Rannan-Eliya & Aparnaa Somanathan & Shiva Raj Adhikari & Deni Harbianto & Charu C. Garg & Piya Hanvoravongchai & Mohammed N. Huq & Anup Karan & Gabriel M., 2007. "The Incidence of Public Spending on Healthcare: Comparative Evidence from Asia," World Bank Economic Review, World Bank Group, vol. 21(1), pages 93-123.
- Waters, Hugh R. & Anderson, Gerard F. & Mays, Jim, 2004. "Measuring financial protection in health in the United States," Health Policy, Elsevier, vol. 69(3), pages 339-349, September.
- Amy Finkelstein & Robin McKnight, 2005. "What Did Medicare Do (And Was It Worth It)?," NBER Working Papers 11609, National Bureau of Economic Research, Inc.
- Henderson, Gail & Shuigao, Jin & Akin, John & Zhiming, Li & Jianmin, Wang & Haijiang, Ma & Yunan, He & Xiping, Zhang & Ying, Chang & Keyou, Ge, 1995. "Distribution of medical insurance in China," Social Science & Medicine, Elsevier, vol. 41(8), pages 1119-1130, October.
- McGuire, Thomas G. & Pauly, Mark V., 1991. "Physician response to fee changes with multiple payers," Journal of Health Economics, Elsevier, vol. 10(4), pages 385-410.
- Nyman, John A., 1999. "The value of health insurance: the access motive," Journal of Health Economics, Elsevier, vol. 18(2), pages 141-152, April.
- Ardeshir Sepehri & Sisira Sarma & Wayne Simpson, 2006. "Does non-profit health insurance reduce financial burden? Evidence from the Vietnam living standards survey panel," Health Economics, John Wiley & Sons, Ltd., vol. 15(6), pages 603-616.
When requesting a correction, please mention this item's handle: RePEc:eee:jhecon:v:27:y:2008:i:4:p:990-1005. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Zhang, Lei)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.