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

Author

Listed:
  • 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.

Suggested Citation

  • Juergen Jung & Jialu Liu, 2011. "Does Health Insurance Decrease Health Expenditure Risk in Developing Countries? The Case of China," Working Papers 2011-04, Towson University, Department of Economics, revised Apr 2014.
  • Handle: RePEc:tow:wpaper:2011-04
    as

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    References listed on IDEAS

    as
    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.
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    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. 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.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    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).;
    All these keywords.

    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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