IDEAS home Printed from
   My bibliography  Save this paper

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


  • Juergen Jung

    () (Department of Economics, Towson University)

  • Jialu Liu

    () (Department of Economics, Allegheny College)


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

    Download full text from publisher

    File URL:
    File Function: First version, 2011
    Download Restriction: no

    Other versions of this item:

    References listed on IDEAS

    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. Du, Juan, 2009. "Economic reforms and health insurance in China," Social Science & Medicine, Elsevier, vol. 69(3), pages 387-395, August.
    3. Marcos D. Chamon & Eswar S. Prasad, 2010. "Why Are Saving Rates of Urban Households in China Rising?," American Economic Journal: Macroeconomics, American Economic Association, vol. 2(1), pages 93-130, January.
    4. 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.
    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 Ă˜sterdal & 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)


    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.

    Cited by:

    1. repec:eee:socmed:v:190:y:2017:i:c:p:11-19 is not listed on IDEAS

    More about this item


    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).;

    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

    NEP fields

    This paper has been announced in the following NEP Reports:


    Access and download statistics


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:tow:wpaper:2011-04. 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: (Juergen Jung). General contact details of provider: .

    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 CitEc recognized a reference but did not link an item in RePEc 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 RePEc Author Service 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.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.