نیاز درک شده و تقاضای واقعی برای بیمه سلامت در میان ساکنان روستایی چینی

One would expect that an individual perceives a need for health insurance before making a purchase. However, simply perceiving a need for insurance is not sufficient for making a purchase. When insurance is “lumpy” individuals perceiving a need may not make a purchase if financial resources are lacking. In this paper we develop a theoretical model which differentiates need from demand for health insurance. We then empirically investigate rural health insurance demand in China. We find that factors like children, education and wealth affect perceived need differently from the way they affect demand.

Insurance is an effective tool to mitigate financial risk. Sporadically incurred health care costs are often very high compared to monthly or even annual personal income and because they are induced by risky occurrence of sickness or accidents, health insurance is a popular tool today in both developed and developing countries. During the past half century in China, health insurance was mostly available only to enterprise employees in cities (Hu, Ong, Lin, & Li, 1999). For the rural population of 1.1 billion, essentially no health insurance was available. Although small scale rural cooperative medical plans existed in some areas in the past, these plans provided a very low coverage and the number of people able to avail themselves of such plans was insignificant (Liu, Wu, Peng, & Fu, 2003). More recently, the insurance industry in China has developed rapidly, especially since the 1990s. Improved income and living standard in rural areas, increased health care cost, and reduced family size with fewer children all contributed to the newly emerged need and demand of health insurance in rural China. The increased gap between urban and rural incomes in recent years raises a serious question on whether rural residents have the means and willingness to pay for newly emerging insurance products. Recent data reveal that less than 12% of rural residents are covered under some form of health insurance programs in China (People's Daily Online, 2006). Low coverage exposes rural Chinese residents to health and financial risks, and may have enduring effects on economic development when uninsured individuals cannot receive medical care because of the cost. Latest statistics from the Chinese Health Ministry show that one third of poor rural patients in China choose not to go to hospitals and 45% of the hospitalized farmers ask to be discharged before they have recovered. Rural residents find illness a significant deterrent to moving out of poverty (China Ministry of Health, 1996). Thus, understanding why rural residents do not take advantage of available coverage is important. 1 In this paper, we investigate the factors affecting demand of health insurance in rural China. 2 Qualitative and descriptive studies and discussions about Chinese health insurance issues have been disseminated widely in the popular presses and on the internet as well as in academic journals. These studies have focused on explaining the alternative premium structures, supporting policies from governments, insurance administration, and risk pooling (Chen and Wang, 2004, China Youth Daily, 2004 and People's Daily Online, 2006). Rigorous economics studies on the demand of rural insurance products in China, however, are very few. Liu et al. (2003) investigated urbanization impact on health care and health insurance for rural Chinese. One problem with the existing literature on health insurance demand is that it usually does not separate rural from urban demands. In developing countries like China urban and rural demands for health insurance can be quite different (Dushi and Honig, 2003 and Vanness, 2003). One of the key differences between urban and rural populations in developing countries is income levels, which impact greatly on the affordability of insurance. Besides the difference in affordability, rural and urban residents may differ in their perceptions of whether there is a need for insurance. Theoretical research on insurance demand in general is abundant. The methodology of such analysis has been established under the expected utility maximization framework when the wealth level at risk is the only argument of the univariate Von Neumann and Morgenstern utility function (Anderson, Dillon, & Hardaker, 1977). It is well established theoretically that a risk averse agent should buy full coverage if the insurance is actuarially fair (Ahsan, Ali, & Kurian, 1982). The theory was first suggested by Arrow's seminal study of health insurance (Arrow, 1963). Although subsequent work, for example, Pauly's comment (1968), discussed the welfare decreasing effect of insurance, the general consensus was that the income effect of purchasing health insurance is negligible (Newhous, 1978, especially page 9). More recently, however, Nyman (2002) has argued that the primary impact of health insurance lies in an income rather than price effect. To some extent this last result would argue that health insurance would be even more valuable to low income people than high income people, since the marginal value of income should be larger. However, it is widely observed that low income people have no insurance or little insurance, especially in less developed areas. Imposing a fixed income constraint, and including a regular consumption good, risky or certain, in a consumer's utility in addition to the risky health good helps explain why. For example, Cameron, Trivedi, Milne, and Piggott (1988) and Koc (2004) included a health production function in the utility representing the health status of the consumer. This separation is especially necessary when studying the demand of insurance for the poor in developing countries, where subsistence levels of regular consumption goods may play an important role in income allocation decisions. When the cost of both health care and insurance is high compared to income, insurance may be so unaffordable that the need of insurance does not translate into an effective demand. The goal of this paper is to examine the factors that affect the need and purchase of insurance products in Chinese rural areas. Specific objectives include (1) to develop a theoretical model that allows the need and purchase of insurance to be differentiated; (2) to specify an empirical socioeconomic model explaining both the need and purchase of insurance; (3) to identify the major factors that determine the purchase for health insurance and to identify the major factors that prevent the need from becoming an effective demand; and (4) to derive policy implications on the development of rural insurance in China.

In this paper, we develop a theoretical model that can differentiate health insurance need and demand by introducing subsistence consumption, and analyze survey data from Ningxia and Zhejiang rural areas using a Simultaneous Logit model to explore the insurance need and demand by Chinese rural residents. We find that the need and demand are different and that the two regions are also different. Important factors affecting the Need for health insurance include the education level of the family head, the location, and diversification of income sources. Location and predisposition towards Need affect actual purchase. We believe that the Location variable largely represents differences in income between the two provinces, and shows that affordability of insurance (relative to income) greatly mitigates the ability to turn Need to Purchase. The difference between need and demand is greater in the lower income region; only about a quarter of those who feel Need actually buy in Ningxia, while about 50% of those who feel Need actually purchase in Zhejiang. Separately estimating the model by province indicated that the two provinces are different, and provided some additional support to our income-constraint conjecture in Ningxia. We have attributed the Location effects primarily to income, but other factors may be contributing. Zhejiang has a higher degree of urbanization, and the possible sophistication in insurance markets that comes with more cosmopolitan environments may spill over into the rural population that comprises our sample. If insurance markets are less developed in Ningxia we would expect the lower purchases that show up in the estimation. While we believe our results provide evidence that income constraints lower the ability of households in rural areas to transform a perceived need for health insurance into actually purchasing insurance, our results are nonetheless limited by using the location as an indicator of average income. Most specifically, future research should pursue specific data on household income to verify our results. Several policy implications come out of this work. The lumpiness of insurance program may push some potential participants into the non-participant group. Therefore, insurance programs with partial coverage or several levels of coverage will contribute to a more efficient insurance market. The differences between need and demand suggest that there is a real problem in affordability. This evidence supports the introduction of the government subsidized New Rural Cooperative Medical System. However, because the coverage of this new program is very low, the results of this paper suggest that there is still a need for higher coverage provided either by private insurance or by additional options offered through the government program. While improving insurance services may increase the actual rural health demand, increasing rural incomes may be the best strategy to increase actual participation in rural health insurance markets. Moreover, increasing education will increase how people view the need for health insurance, also expanding the market. Overall, only less than half of the rural residents realize the need of health insurance and only one fifth of them actually purchase it. There is significant room in risk and insurance education to improve the need perception, as well as ways to increase the demand.