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The effect of public insurance policy on the private insurance market: New evidence from a quasi-experiment in China

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  • Chen, Hua
  • Ding, Yugang
  • Wang, Xiangnan
  • Yang, Yifei

Abstract

Analyzing the net social welfare of a public health insurance policy necessitates an accurate estimation of its impact on the private health insurance market. This paper presents new evidence of the effect of public health insurance on private health insurance market by exploiting a quasi-experiment of Urban Resident Basic Medical Insurance (URBMI) in China. Our findings indicate that the implementation of URBMI has no significant effect on the aggregated private health insurance market. However, upon dividing the private health insurance market into medical and illness insurance markets, we observe a significant crowding-out effect of URBMI on the former but not the latter. This finding may help explain the mixed results in the literature, which typically lumps all segments of private health insurance markets together. In terms of the possible channels, we find that the crowding-out effect of public health insurance on private health insurance is through lowering the cost of health services, raising the accessibility to health services or reducing health risks.

Suggested Citation

  • Chen, Hua & Ding, Yugang & Wang, Xiangnan & Yang, Yifei, 2023. "The effect of public insurance policy on the private insurance market: New evidence from a quasi-experiment in China," Economic Analysis and Policy, Elsevier, vol. 78(C), pages 937-953.
    • Handle: RePEc:eee:ecanpo:v:78:y:2023:i:c:p:937-953
    DOI: 10.1016/j.eap.2023.04.031
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    More about this item

    Keywords

    Health insurance; Crowding-out effect; Quasi experiment; Staggered difference-in-differences; China;
    All these keywords.

    JEL classification:

    • H43 - Public Economics - - Publicly Provided Goods - - - Project Evaluation; Social Discount Rate
    • I13 - Health, Education, and Welfare - - Health - - - Health Insurance, Public and Private
    • G22 - Financial Economics - - Financial Institutions and Services - - - Insurance; Insurance Companies; Actuarial Studies

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