The effect of medical insurance on catastrophic health expenditure: evidence from China

BACKGROUND: The Chinese government has established a nationwide multiple-level medical insurance system. However, catastrophic health expenditure (CHE) causes great harm to the quality of life of households and pushes them into poverty. The objective of this paper is to assess the effect of medical insurance on CHE in China and compare the financial protection effects of different medical insurances. METHODS: Panel data were obtained from China Family Panel Studies (CFPS) conducted in the years of 2012, 2014, and 2016. CHE incidence was measured by performing a headcount, and its intensity was estimated using overshoot and mean positive overshoot (MPO). In addition, concentration index (CI) was used to measure the degree of socioeconomic inequality of CHE occurrence. Furthermore, random effects panel Probit regression model was employed to assess the effect of medical insurance on CHE. Lastly, random effects panel Logit regression model was adopted to perform a robustness check. RESULTS: From 2012 to 2016, the total CHE incidence jumped from 15.05% to 15.24%, and the CI in CHE changed from − 0.0076 to − 0.1512. Moreover, the total overshoot increased from 0.0333 to 0.0344, while the total MPO grew from 0.2213 to 0.2257. Furthermore, the global regression results show that residents covered by Supplementary Medical Insurance (SMI) were linked to a decreased probability of experiencing CHE. In addition, the regression results by gender indicate that SMI coverage for male residents had a significant effect on the prevention of CHE, while the effect was not significant for female residents. The regression results by health status show that SMI had a significant impact on reducing the likelihood of CHE occurrence for healthy residents, whilst the impact was not significant for unhealthy residents. Lastly, the robustness check results were consistent with those of previous findings. CONCLUSION: The results of this study suggest that CHE incidence and intensity became relatively higher among households. In addition, CHE occurrence was concentrated among the poorer households and the equality status worsened. Moreover, financial protection effects of the four medical insurance schemes against CHE varied significantly. Furthermore, the protection effect of SMI against CHE shows significant gender and health status disparities.