Summary:
The Resident Basic Medical Insurance (RBMI) plan, as the largest social medical insurance plan in the world, delivers protective health coverage to all non-working groups in China, with the goal of ensuring the affordability of medical services. As a basic medical insurance program designed to cover the entire population, RBMI initially charged residents extremely low premiums and was maintained by high financial subsidies. Nonetheless, in recent years, rising medical expenses and mounting financial strain have resulted in an increase in RBMI premiums, and its average growth rate has exceeded China's high-speed per capita GDP growth rate. Due to the voluntary enrollment principle and the quota contribution model, which means that residents in the same region pay the same premium regardless of their family's income and wealth, rising premiums may lead to more and more people not being covered by the program. Recent decreases in RBMI enrolment underscore this worsening predicament. Therefore, the accurate estimation of RBMI demand price elasticity has become an increasingly important prerequisite for the reasonable formulation of individual premium standards and the improvement of the medical insurance financing model. Analyzing data from the China Health and Retirement Longitudinal Survey, a two-way fixed-effect model is used to estimate the price elasticity of RBMI demand. The results show that at the national level in 2022, a 10% upsurge in RBMI's individual premium standard significantly reduces enrolment probability by 0.15%, potentially leaving millions uninsured. The results of the heterogeneity analysis of groups with different characteristics show that compared with high-income groups, the demand price elasticity of middle-income groups is significantly higher. Furthermore, due to the original lower participation rate of low-income groups, the increase in premium standards is expected to crowd out the basic medical insurance needs of people with lower socioeconomic status. We note an adverse selection issue where fewer healthy individuals exhibit higher demand price elasticity, opting to stay in the program and thereby potentially escalating per capita healthcare costs and thwarting RBMI's goal of balancing income and expenditure via premium increases. Compared with residents in urban areas, residents in rural areas, which lack formal jobs, are more likely to be the target population of RBMI. As a result, the insurance needs of rural residents' families are higher. This paper demonstrates that the enrollment decisions of rural residents make them more susceptible to the impact of increasing premium standards. Our subsequent analyses provide empirical evidence that linking payment standards to local residents' per capita disposable income can ameliorate the decline in RBMI coverage. Through a comparative analysis of different types of financing models, this paper outlines the policy implications for the development of RBMI financing models. First, in the process of premium adjustment, the price elasticity of the demand of the insured group should be considered. Furthermore, to increase coverage and balance out one's contribution burden, differentiated premium standards should be set according to the difference in the demand price elasticity. Second, the subsidy scope of low-income people who participate in RBMI should be expanded under the existing quota contribution model. In addition, the low-income subsidy model, which has a lower requirement for income accounting, should be improved. Third, the financing model should be gradually reformed from a quota contribution model to a rate model (i.e., based on family income and property), given that a more powerful and effective household income and property accounting system has been established. This paper makes three contributions to the literature. First, it provides evidence that premium standards play a fundamental role in enabling the national social medical insurance system to perform the required safeguarding function in developing countries. Second, this paper shows that welfare inequality induced by medical insurance can occur at the early enrollment stage. Finally, it offers an initial rationale for discrepancies in the demand price elasticity of medical insurance across different populations, thereby laying the groundwork for more comprehensive research in the future.
张川川, 刘来泽. 城乡居民医保需求价格弹性的估计——兼论城乡居民医保筹资模式改革[J]. 金融研究, 2023, 522(12): 94-112.
ZHANG Chuanchuan, LIU Laize. Estimating Demand Price Elasticity for the Resident Basic Medical Insurance Plan: A Discussion on Reforming the Financing Model. Journal of Financial Research, 2023, 522(12): 94-112.
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