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

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  • Juergen Jung
  • Jialu Liu Streeter

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.

Suggested Citation

  • Juergen Jung & Jialu Liu Streeter, 2015. "Does health insurance decrease health expenditure risk in developing countries? The case of China," Southern Economic Journal, John Wiley & Sons, vol. 82(2), pages 361-384, October.
    • Handle: RePEc:wly:soecon:v:82:y:2015:i:2:p:361-384
    DOI: 10.1002/soej.12101
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    2. Beyene, Abebe D. & Jeuland, Marc & Sebsibie, Samuel & Hassen, Sied & Mekonnen, Alemu & Meles, Tensay H. & Pattanayak, Subhrendu K. & Klug, Thomas, 2022. "Pre-paid meters and household electricity use behaviors: Evidence from Addis Ababa, Ethiopia," Energy Policy, Elsevier, vol. 170(C).
    3. Macinko, James & Seixas, Brayan V. & de Oliveira, Cesar & Lima-Costa, Maria Fernanda, 2022. "Private health insurance, healthcare spending and utilization among older adults: Results from the Brazilian Longitudinal Study of Aging," The Journal of the Economics of Ageing, Elsevier, vol. 23(C).
    4. Guangsheng Wan & Zixuan Peng & Yufeng Shi & Peter C. Coyte, 2020. "What Are the Determinants of the Decision to Purchase Private Health Insurance in China?," IJERPH, MDPI, vol. 17(15), pages 1-15, July.

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    More about this item

    JEL classification:

    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • C34 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Truncated and Censored Models; Switching Regression Models

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