Health insurance and consumption: Evidence from China’s New Cooperative Medical Scheme
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| Title | Health insurance and consumption: Evidence from China’s New Cooperative Medical Scheme
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| Author | Bai Chongen, Li Hongbin and Wu Binzhen |
| Organization | School of Economics and Management, Tsinghua University |
| Email | wubzh@sem.tsinghua.edu.cn |
| Key Words | Precautionary savings; Health insurance; Consumption; New Cooperative Medical Scheme; Chinese savings |
| Abstract | We exploit a quasi-natural experiment arising from the introduction of a health insurance program in rural China, to examine how the insurance coverage affects household consumption. The results show that on average, the health insurance coverage increases non-healthcare related consumption by more than 5 percent. This insurance effect exists even for households with no out-of-pocket medical spending. In addition, the insurance effect is stronger for poorer households and households with worse self-reported health status. It also gets stronger when the insurance for households’ expenditure at the county-level hospitals gets more generous. These results are all consistent with the precautionary savings argument. We also find that the insurance effect varies by household experience with the program. Particularly, the effect is significant only in villages where at least some households in the village have actually obtained reimbursement from the insurance program. Within these villages, the program stimulates less consumption among the new participants than among households that have participated in the program for more than one year. |
| Serial Number | WP180 |
| Time | 2012-02-14 |
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