Wealth, Education and Demand for Medical Care: Evidence from Rural China
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Since 1980s' health system reform in rural china, the coverage of public health insurance has been considerably diminished and the price of medical service keeps going up. In order to understand how this reform would affect country people, it is important to study the rural resident's demand for medical care. Employing 1991 and 1997 China Health and Nutrition Survey data, this paper investigates the medical expenditure decision of rural residents. Our study reveals the positive relationship between education and health status, while negative effect of education on medical expenditure. At the same time, the income effect of medical care is inelastic (0.31), which means people with lower income are burdened with higher medical expenditure. Moreover, price inelasticity (-0.71) is found and indicates the worsen situation of sick people in low-income groups. Taking account of the health inequality and the higher medical expenditure of poor people, the general inequality is enlarged under the reform since many peasants, usually the poorer group, are excluded from the public insurance system. In addition, our findings match well with the theory that emphasizes substitution among wealth, education and health capitals (Muurinen, 1982). The use-related depreciation of health is the main reason that incurs poor people of unbearable medical expenditure. To control for the selection problem and the unobserved region effects, we apply the two-part model combined with cluster-specific random effect model.
CONF
Feng, Jin
Qin, Bei
Yu, Yangyang
2007
1742