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Critical Illness Insurance to alleviate catastrophic health expenditures: new evidence from China

Author

Listed:
  • Ying Zhang

    (Southeast University)

  • Jacques Vanneste

    (University of Antwerp)

  • Jiaxin Xu

    (Tsinghua University)

  • Xiaoxing Liu

    (Southeast University)

Abstract

Currently, a high percentage of China’s households face financial catastrophe as a direct result of excessive out-of-pocket (OOP) health expenditures. To alleviate this, China has set up the Critical Illness Insurance (CII) program since 2012. However, the current CII is still in an experimental phase and tested in 8 (out of 34) provinces, which has not been proved to be effective. This paper develops a health financing system for reducing catastrophic medical spending using a two-layer model for CII. This model partly compensates expenses exceeding the cap line of the Social Resident Basic Medical Insurance scheme to maintain the ratio of OOP expenses to total medical expenditure approximately at 20%. Adjustment coefficients based on individual net income across different regions are applied to increase fairness. The financial sustainability of the model is tested using a fund balance calculation. Finally, the two-layer model of the CII is empirically simulated with the latest provincial data from China Family Panel Studies. The results demonstrate that the model can effectively alleviate the incidence and severity of catastrophic health expenditures.

Suggested Citation

  • Ying Zhang & Jacques Vanneste & Jiaxin Xu & Xiaoxing Liu, 2019. "Critical Illness Insurance to alleviate catastrophic health expenditures: new evidence from China," International Journal of Health Economics and Management, Springer, vol. 19(2), pages 193-212, June.
    • Handle: RePEc:kap:ijhcfe:v:19:y:2019:i:2:d:10.1007_s10754-018-9252-1
    DOI: 10.1007/s10754-018-9252-1
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    References listed on IDEAS

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    Cited by:

    1. Guangsheng Wan & Zixuan Peng & Yufeng Shi & Peter C. Coyte, 2020. "What Are the Determinants of the Decision to Purchase Private Health Insurance in China?," IJERPH, MDPI, vol. 17(15), pages 1-15, July.
    2. Lu Li & Junnan Jiang & Li Xiang & Xuefeng Wang & Li Zeng & Zhengdong Zhong, 2019. "Impact of Critical Illness Insurance on the Burden of High-Cost Rural Residents in Central China: An Interrupted Time Series Study," IJERPH, MDPI, vol. 16(19), pages 1-11, September.
    3. Hongmei Cao & Xinpeng Xu & Hua You & Jinghong Gu & Hongyan Hu & Shan Jiang, 2022. "Healthcare Expenditures among the Elderly in China: The Role of Catastrophic Medical Insurance," IJERPH, MDPI, vol. 19(21), pages 1-20, November.

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    More about this item

    Keywords

    Critical Illness Insurance (CII); Catastrophic health expenditures; Insurance pricing; Fund balance; Chinese data;
    All these keywords.

    JEL classification:

    • I13 - Health, Education, and Welfare - - Health - - - Health Insurance, Public and Private
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
    • G22 - Financial Economics - - Financial Institutions and Services - - - Insurance; Insurance Companies; Actuarial Studies

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