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Do Different Health Insurance Plans in China Create Disparities in Health Utilization and Expenditures?
Hai Fang, PhD Assistant Professor
Department of Health System, Management, and Policy University of Colorado Denver, USA
Qingyue Meng, PhD
Professor China Center for Health Development Studies
Peking University, China
John A Rizzo, PhD Professor
Department of Economics and Department of Preventive Medicine State University of New York at Stony Brook, USA
February 23, 2012
Presentation for Shorenstein APARC Seminar, Stanford University
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Introduction China has achieved significant economic growth since the Reform and Opening Policy in
1978.
- The annual GDP growth rate on average had been more than 10% for the past 20 years.
- In 2010 China had been the second largest economy in the world with a GDP of US $5.8 trillion
after the United States.
However, China’s health care system did not match this rapid economic development
during the same period.
- It is hard to receive health care services.
- The health care is relatively expensive.
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Introduction (continued) To bridge this gap, China has substantially reformed its health care system in recent years.
The ultimate goal is to provide universal coverage for basic health care to every Chinese
citizen.
Three major health insurance plans have recently been created to achieve this objective.
- Rural newly cooperative medical scheme.
- Urban employee-based health insurance.
- Urban resident health insurance.
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Introduction (continued) By the end of 2009, these three major health insurance plans covered approximately 90
percent of the Chinese population (1.2 billion Chinese citizens).
The three major health insurance plans differ substantially in terms of insurers, the insured
population, premiums, and benefits offered.
One concern is that individuals under the different health insurance plans may vary their
health seeking behaviors.
The present study is trying to investigate whether three different health insurance plans
create disparities in terms of health care utilization and expenditures.
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Presentation Outline Introduction
Three major health insurance plans in China
Data and variables
Methods
Results
Conclusions
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Rural newly cooperative medical scheme The cooperative medical scheme was initially implemented in rural China in the 1950s.
The old cooperative medical scheme was financed by the rural collective economy, and one
village clinic provided health care services to all the residents in the village.
Due to collapse of the rural collective economy, the old cooperative medical scheme was
nearly bankrupted in the 1980s.
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Rural newly cooperative medical scheme (continued) In 2003, the rural newly cooperative medical scheme was launched.
- Participation is voluntary but at the household level.
- County-level administration is required.
- Its coverage focuses on catastrophic illness for inpatient and outpatient services.
- Some general outpatient health care services and basic preventive care are not included, such as
annual physical exam.
Government subsidies are the major financial contributions to this plan, and individual
premiums are very low.
In 2012, the rural newly cooperative medical scheme covered nearly every rural resident in
China.
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Urban employee-based health insurance
With the rapid growth of foreign investment enterprises and bankruptcies of state-owned
and collective economies in urban China, employee-based health insurance was needed in
the early 1990s.
In 1998, urban employee-based health insurance was officially launched to insure urban
working population.
This plan intended to replace the so called “free health insurance” provided by the
state-owned and collective enterprises.
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Urban employee-based health insurance (continued) Both employers and employees need to contribute approximately 6 percent and 2 percent,
respectively, of employees’ annual wages to the plan.
Government subsides are limited.
Its coverage is more comprehensive than the other two major health insurance plans due to
its higher premium contributions.
The coverage is only for employees, and other family members in urban China are not
insured.
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Urban resident health insurance In 2007, China launched a new health insurance plan to insure non-employed urban
residents.
Young children, students, and other non-employed residents in urban China were covered.
Prior to 2007, health care costs were paid for completely out-of-pocket.
Government subsidies are also the major financial contributions to this plan, and individual
premiums are very low.
It is similar to the rural newly cooperative medical scheme in terms of coverage benefits.
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A summary of three major health insurance plans in China
Three major health insurance plans
Rural newly
cooperative medical scheme
Urban employee-based
health insurance
Urban resident health
insurance
Initiating year 2003 1998 2007
Administration level county city city
Insured population rural residents
urban employed residents
urban non-employed
residents
Insured population number (2011) 830 million 430 million
Annual premium contributions (2011)
Government 200 Chinese Yuan none 200 Chinese
Yuan
Individual varied by locations 2% of wages varied by
locations
Employer none 6% of wages none
Annual maximum reimbursement cap (2011)
at least 50000 Chinese Yuan
6 times of disposable
personal income (at least 50000 Chinese Yuan)
6 times of disposable
personal income (at least 50000 Chinese Yuan)
Inpatient and outpatient services for catastrophic illness yes yes yes
General outpatient services limited and varied by locations
comprehensive limited and varied by locations
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Data This study uses data from the China Health and Nutrition Survey (CHNS) 2009 maintained
at the Carolina Population Center in the United States.
The CHNS covers nine provinces (Heilongjiang, Liaoning, Jiangsu, Shandong, Henan,
Hubei, Hunan, Guangxi, and Guizhou) in China that differ substantially in terms of
economic development, public resources, and health care indicators.
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A map of China Health and Nutrition Survey provinces
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Data (continued) Key variables in the study:
- Health insurance plans.
- Health utilization.
- Health expenditures.
Control variables in the multivariate regression include provinces, gender, age, race
minority, marital status, education levels, employment status, occupations if currently be
working, household income, household size, urban location, chronic/acute diseases
previously diagnosed, and survey months.
After omitting some respondents with missing values for above key variables, our final
study sample includes 9429 adult respondents aged 18 and above.
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Health insurance variables Each adult in the CHNS 2009 is asked whether he or she has health insurance at the survey
time.
If the answer is yes, he or she is asked to report the specific health insurance plan.
Three binary variables are created to represent each major health insurance plan with the
rural newly cooperative medical scheme as the reference group (the most common health
insurance plan).
We also add a binary variable indicating no health insurance.
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Health utilization variables Preventive health care services (a binary measure).
- Each adult in the CHNS 2009 is asked “During the past 4 weeks, did you receive any preventive
health care services, such as health examination, eye examination, blood test, blood pressure
screening, tumor screening?
- The first health utilization variable measures whether the respondent receives preventive health
care services.
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Health utilization variables (continued)
Seeing a doctor for illness (a binary measure).
- Each adult in the CHNS 2009 is also asked “During the past 4 weeks, have you been sick/ injured?
Have you suffered from a chronic or acute disease?”
- If the answer to above question is yes, the respondent is further asked “What did you do when
you felt illness?” The potential answers include 1) seeing a doctor, 2) self care, and 3) doing
nothing.
- The second health utilization variable measures whether the respondent saw a doctor for illness.
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Health expenditure variables Total health expenditures (a continuous measure).
- If the respondent saw a doctor for illness during the past 4 weeks, he or she was asked to report
the total health expenditures for this treatment.
Reimbursement percentage (a continuous measure).
- Then the respondent was further queried as to what percentage of these health expenditures had
been paid or might be paid by insurance if he or she had health insurance.
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Descriptive statistics
Variables Sample
Size Mean
Std.
Dev. Min Max
Health insurance 9429 0.90 0.29 0 1
Health utilization and expenditures (during the past
4 weeks)
Preventive health services 9429 0.04 0.19 0 1
See a doctor for illness 2070 0.44 0.50 0 1
Medical expenditure (Chinese Yuan) 847 1644 5856 0 90500
Reimbursement percentage 755 22.65 32.99 0 100
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Health insurance plans
Health insurance plans Frequency Percent
Rural newly cooperative medical scheme 5541 64.98 %
Urban resident health insurance 939 11.01 %
Urban employee-based health insurance 2047 24.01 %
Total 8527 100.00 %
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Reasons for having no health insurance
No health insurance (reasons) Frequency Percent
I do not need health insurance because I am healthy 186 20.62 %
It is not worth because insurance reimburses only
small amount of total medical costs 100 11.09 %
The premium is too high for me to afford 246 27.27 %
Other reasons for no health insurance 343 38.03 %
Reasons not reported 27 2.99 %
Total 902 100.00 %
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Methods Bivariate analysis:
- We compare health care utilization and expenditures among people with different health
insurance schemes using the Chi-square test for binary health utilization variables and the
Student’s t test for continuous health expenditure variables.
Multivariate analysis:
- Health utilization or expenditures are hypothesized to a function of health insurance plans,
provinces, and other control variables:
XPIH 3210
- Logistic regression for the binary measures of health utilization.
- Ordinary least squared regression for the continuous measures of health expenditures.
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Bivariate analysis of health utilization and expenditures by health insurance schemes
Health insurance plans1 Preventive health services
See a doctor for illness
Medical expenditures
Reimbursement percentage
Rural newly cooperative medical scheme 0.03 0.45 1338.05 15.89 ( 0.17 ) ( 0.50 ) ( 5677.73 ) ( 27.40 ) Urban resident health insurance 0.05 *** 0.45 1247.24 20.14 ( 0.21 ) ( 0.50 ) ( 4093.50 ) ( 30.80 ) Urban employee-based health insurance 0.06 *** 0.41 * 2839.28 *** 46.43 *** ( 0.24 ) ( 0.50 ) ( 7641.10 ) ( 39.70 ) No health insurance 0.02 0.47 1140.67 N/A ( 0.14 ) ( 0.50 ) ( 2530.10 ) 1 Compare rural newly cooperative health insurance with other health insurance plans respectively by the Chi-square test for binary variables and the Student's t test for continuous variables. * significant at the 10% level; ** significant at the 5% level; *** significant at the 1% level. N/A: not applicable.
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Logistic regressions of health utilization
Variables Logistic regression (odds ratio)
Preventive
health
services
See a doctor
for illness
Sample size 9429 2070
Health insurance schemes
Rural newly cooperative medical scheme (reference)
Urban resident health insurance 1.26 (0.25) 0.90 (0.16)
Urban employee-based health insurance 1.73 (0.30)*** 0.93 (0.15)
No health insurance 0.62 (0.16)* 1.00 (0.18)
* significant at the 10% level; ** significant at the 5% level; *** significant at the 1% level.
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Ordinary least squared regressions of health expenditures
Variables OLS regression (coefficient)
Health
expenditures
in natural log
Reimbursement
percentage
Sample size 847 755
Health insurance schemes
Rural newly cooperative medical scheme (reference)
Urban resident health insurance 0.09 (0.32) 1.64 (4.29)
Urban employee-based health insurance 0.38 (0.28) 24.76 (3.83)***
No health insurance 0.14 (0.28) N/A
* significant at the 10% level; ** significant at the 5% level; *** significant at the 1% level.
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Conclusions We find substantial disparities in terms of receiving preventive health care services for the
different health insurance plans, but no evidence supports the existence of disparities when
people need to see a doctor for illness.
- One potential explanation is that the rural newly cooperative medical scheme and urban resident
health insurance may not cover all the general outpatient services and/or annual physical exams,
which often provide most preventive health care services.
Health insurance plans do not affect total medical expenditures, but urban employee-based
health insurance is significantly more generous in terms of reimbursement percentage.
- This disparity in reimbursement percentage may reflect more comprehensive benefits packages
in urban employee-based health insurance.
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Conclusions (continued) Preventive health services have been shown to enhance health and reduce future medical
expenditures, so providing more preventive health services to people with the rural newly
cooperative medical scheme and urban resident health insurance are policy changes that
warrant serious consideration.
The ultimate goal in China’s health care reform is to provide universal coverage for basic
health care to every Chinese citizen, and policy makers may consider how to increase the
reimbursement percentages for those under the rural newly cooperative medical scheme
and urban resident health insurance.
