PHP37 SOCIAL HEALTH INSURANCE, PREVENTIVE CARE AND HEALTH CARE EXPENDITURE

Abstract

OBJECTIVES: Social Health Insurance (SHI) and National Health Service (NHS) are two main choices for health reform. China's health reform during last decade is basi-cally SHI-oriented, especially after the implementation of "Basic health Insurance of Urban Workers" since 1998. Theoretically speaking, a NHS system will invest more on preventive care than an SHI system. This research investigates the effect of increasing health insurance coverage on health expenditure in China, especially through the specific channel of preventive care. METHODS: We estimates the health care expenditure function with province-level panel data from 1991-2007 of China. The key determinates we examined are social health insurance policy implication (the increaseing coverage of health insurance) and the share of preventive care in health disbursement. Other determinants are those usually in literatures including GDP, doctor and beds supply, population, aging. The independent variables of interests are per capita health expenditure, hospitalization expenses, inspecting commission and medical expenses. A generalized difference-in-difference method is used to assess the effect of adoption of social health insurance. IV methods are used to control the possible endogeneity problems. RESULTS: The increasing coverage of health insurance is expected to contribute to health care expenditure increasing. The more is the spending of preventive health care, the lower the health expenditure is. More-over, we find social health insurance coverage has a crowding-out effect on preventive care expenditure. Other variables' effects are similar to the results from literatures. CONCLUSIONS: "Low accessibility and high costs in health care service" is key problem of China's health care system right now. The SHI oriented health reform is a driver of health care expenditure increasing. China has just stated of a new comprehensive heath care system reform. The move to SHI may be politically correct, but is not the best option for China. It will lead to long-term and deep crisis in the health sector.