The Relationship Between Health Insurance and Out-of-Pocket Medical Expenditure in China

Health issue has aroused wide public concern in China. To some extent, insurance may decrease the cost of medical service. However, due to moral hazard (such as pianbao), people are more likely to use their health insurance. Both situations are possible in daily life. After running the regression using Stata and the data from China Health and Nutrition Survey, it comes to a conclusion that people may use more healthcare if they have health insurance. This paper provides a new idea about the relationship between insurance and expenditure. It ends by noting how Chinese government would deal with this kind of problem. Regulations and laws need to improve based on current legal system in the pharmaceutical industry.