The effect living arrangements and intergenerational support have on the incidence of catastrophic health expenditure: A microeconomic analysis for China

This paper uses data from the China Health and Retirement Longitudinal Study (CHARLS) conducted in 2011, 2013, 2015 and 2018 to examine the effect recent health and societal changes have had on the ability of households to manage the financial burden of disease. Although health insurance in China has undergone significant reforms over the past decade, out-of-pocket health spending is still widespread. In light of these gaps in the provision of health insurance, households are forced to rely on their adult children for support. We find that the type of support matters, with the incidence of catastrophic health expenditure being the lowest for parents who live in multigenerational households, where it is easier for children to provide directly accessible instrumental and emotional support. For households where there is no co-residence, local support (of the type provided by children who live in the same village/neighbourhood as their parents) is no substitute for the type of assistance (usually financial) that households receive when all their children live beyond the village/neighbourhood.