Narrow Results

In this paper, we first briefly review the changes that the Chinese health care system has undergone since the early 1980s. We then describe the major current health policy initiatives in urban and rural areas and discuss likely scenarios for their evolution over time. Using comparisons with international experience regarding different institutional arrangements in the health care sector, we also discuss whether the approaches taken in China are likely to strengthen the health care system in terms of efficiency and equity. Our conclusion is that in order to predict how effectively China's future health care system will perform in the future, one must have more information about what role the state (central government) will play, as regulator, partial funder and direct provider in the system. We believe that the best strategy at present is to allow the development of a mixed model with significant roles for both the state and the private sector, in both the supply of health care services and the provision of health insurance.

This paper uses special features of Vietnam's health insurance system to separately estimate the effects of moral hazard and adverse selection. Traditionally, the estimation of those effects is ad hoc due to the endogeneity of insurance status. Due to a special fact in Vietnam that there exist a great deal of people who are under the compulsory scheme but get no insurances, we are able to estimate the effects of moral hazard and adverse selection using a matching estimator technique. Our results show that with outpatient services, moral hazard and adverse selection are very severe in Vietnam for old people, and not for young people; and that for inpatient service, the effects are insignificant. The results can be used in the construction of the health insurance policy for Vietnam toward universal insurance as stated in the Law of Health Insurance 2008.

We analyze the effects of the New Rural Cooperative Medical Scheme (NCMS) on poverty, using micro-level household data from 17 villages in a poor area of China’s Guizhou province. A four-wave panel dataset allows us to follow NCMS through its reforms. First-order impact assessments suggest NCMS helps reduce the poverty rate by up to 3 percentage points, and the poverty gap by up to 15 percentage points. It also reduces the contribution of health expenditures to inequality as measured by Gini coefficient. The benefits of NCMS in terms of poverty and inequality appear considerably larger after major reforms in 2009, which expanded benefits and coverage.

Unlike prior studies of the impact of health insurance on entrepreneurship, this paper uses primary data from a representative recent survey of entrepreneurs. First, we report the characteristics and socio-economic backgrounds of entrepreneurs. Second, we document that the lack of health insurance has a significant inhibiting impact on entrepreneurs. This paper also documents that the importance of health insurance availability increases for entrepreneurs who are self-funded, married, have children, are from less privileged backgrounds and are in advanced stages of their lives as indicated by having advanced degrees or long work experience when they become entrepreneurs. These results should be of much interest to scholars, managers and policymakers.

The Fifth Plenary Session of the 18th CPC Central Committee passed the resolution to build a healthy China, which was then upgraded to a national strategy in the Outline of the Healthy China 2030 Plan issued by the CPC Central Committee and the State Council in October 2016. This paper begins with describing health development in China and then argues that despite the good foundation that has been laid for building a healthy China, the country still faces serious problems, such as healthcare services falling short of demand, people’s health and quality of life yet to be improved, the wide gap between the rich and poor and structural imbalances, serious environmental pollution, and increasing security risks. In the end, suggestions are provided from the perspectives of creating a healthy environment, improving health services, developing a healthy population, building a healthy society, and increasing support for health development to advance the Healthy China initiative.

The healthcare industry in India provides an essential service to everyone in society yet the costs involved have deterred access to the public. This is driven by the incompetent use of healthcare technology, an incomplete system of payments, additional medical services, and limited involvement by patients in the decision-making process of the healthcare system. The spread of COVID-19 vividly demonstrated these weaknesses associated with India’s healthcare system. Given this situation, this chapter identifies the causes of unsustainable healthcare expenditure in India and discusses how to curtail healthcare costs while contributing toward improving the environmental and social impacts of this sector. We conducted research by exploring how the healthcare companies can curtail costs by implementing new practices such as improving the efficiency of utilizing technology. In doing so, this study reveals that only limited efforts in research and development are taking place. The findings of this chapter signify that India’s healthcare is in a weak shape and requires massive transformation. Other developing countries should take India as an example of how to progress and improve their own healthcare sector.

Good practices in health care financing are an application of useful economic theories, models, and empirical evidence about what does and does not work under different circumstances. It underpins the behavior of patients, doctors, and hospitals, as well as the analytical techniques developed to facilitate resource allocation decisions related to health care. This chapter explores the underlying economic principles of financing health care. We cover the importance of understanding the economics behind health care financing; the global health care spending structure; economic variations in health care financing at the national level; the origins of third-party payments in health care; the economics of health insurance and government interventions; and major controversies related to the economics of health care financing. Three illustrative case studies are provided as examples of health care financing principles in the US, Netherlands, and Singapore.

New regulation of health insurance markets creates multiple levels of health plans, with designations like “Gold” and “Silver.” The underlying rationale for the heavy-metal approach to insurance regulation is that heterogeneity in demand for health care is not only due to health status (sick demand more than the healthy) but also to other, “taste” related factors (rich demand more than the poor). This paper models managed competition with demand heterogeneity to consider plan payment and enrollee premium policies in relation to efficiency (net consumer benefit) and fairness (the European concept of “solidarity”). Specifically, this paper studies how to implement a “Silver” and “Gold” health plan efficiently and fairly in a managed competition context. We show that there are sharp tradeoffs between efficiency and fairness. When health plans cannot or may not (because of regulation) base premiums on any factors affecting demand, enrollees do not choose the efficient plan. When taste (e.g., income) can be used as a basis of payment, a simple tax can achieve both efficiency and fairness. When only health status (and not taste) can be used as a basis of payment, health status-based taxes and subsidies are required and efficiency can only be achieved with a modified version of fairness we refer to as “weak solidarity.” An overriding conclusion is that the regulation of premiums for both the basic and the higher level plans is necessary for efficiency.

This paper studies the role of Medicare’s premium policy in sorting beneficiaries between traditional Medicare (TM) and managed care plans in the Medicare advantage (MA) program. Beneficiaries vary in their demand for care. TM fully accommodates demand but creates a moral hazard inefficiency. MA rations care but disregards some elements of the demand. We describe an efficient assignment of beneficiaries to these two options, and argue that efficiency requires an MA program oriented to serve the large middle part of the distribution of demand: the “middle class.” Current Medicare policy of a “single premium” for MA plans cannot achieve efficient sorting. We characterize the demand-based premium policy that can implement the efficient assignment of enrollees to plans. If only a single premium is feasible, the second-best policy involves too many of the low-demand individuals in MA and a too low level of services relative to the first best. We identify approaches to using premium policy to revitalize MA and improve the efficiency of Medicare.

China’s recent and ambitious health care reform involves a shift from the reliance on markets to the reaffirmation of the central role of the state in the financing and provision of services. In collaboration with the Government of the Ningxia province, we examined the impact of two key features of the reform on health care utilization using panel household data. The first policy change was a redesign of the rural insurance benefit package, with an emphasis on reorientating incentives away from inpatient toward outpatient care. The second policy change involved a shift from a fee-for-service payment method to a capitation budget with pay-for-performance amongst primary care providers. We find that the insurance intervention, in isolation, led to a 47% increase in the use of outpatient care at village clinics and greater intensity of treatment (e.g. injections). By contrast, the two interventions in combination showed no effect on health care use over and above that generated by the redesign of the insurance benefit package.

Public policy makers around the world are concerned with the cost and quality of healthcare. I argue that competition-policy economics can make valuable contributions to solving the healthcare crisis by addressing four fundamental questions:

• Why don't insurance companies offer policies that generate greater consumer incentives to seek low-cost providers and generate increased price competition?
• How can consumers be provided with information that will induce stronger quality competition?
• What organizational structures promote the most efficient coordination among complementary care providers and between insurers and care providers?
• How do structure and conduct in markets for healthcare insurance and healthcare services affect the incentives to create and adopt new healthcare goods and services?