Ex-ante moral hazard and health insurance: Evidence from China's urban residence basic medical insurance scheme.

This study examines whether implementing Urban Residents Medical Insurance Scheme decreased an individual's risky lifestyle behavior before illness, termed ex-ante moral hazard. Ex-ante moral hazard is predicted by the classical economic theory suggesting that health insurance coverage reduces an individual's incentive to take preventive efforts to remain healthy. Studies have provided mixed evidence for this prediction. China's 2006 nationwide social experiment of implementing the Urban Residents Basic Medical Insurance Scheme offers an excellent opportunity for examining the effect of the transition from uninsured to insured on an individual's health behaviors. We exploit the longitudinal dimension of a representative survey data for 2007-2010 and employ the instrumental variable technique, thereby addressing the issue of self-selection into voluntary health insurance schemes. The results do not provide evidence for and contrast the prediction of the ex-ante moral hazard. Significant differences exist between insured and uninsured groups with respect to smoking, drinking habits, and being overweight. People with insurance care more about their health than people without insurance do. The main results still hold if we use alternative estimation methods and other robustness tests.

Preferences for private health insurance in China: A discrete choice experiment.

Introduction: There is limited evidence on the sustainability and optimal design of China's private health insurance market, especially from the demand-side. With the increasing medical cost burden on both patients and the social security system, policy makers need data on potential clients' demand for private health insurance. Methods: A discrete choice experiment was conducted to explore potential clients' preferences for a type of government-involved private supplementary health insurance, Huimin Insurance, in China. A mixed logit model was used to evaluated participants' preferences for six attributes. Willingness to pay, subgroup analysis and interaction effects were estimated based on the initial model. Results: Among the 947 participants, 883 (93.2%) were aged 18 to 59 years and 578 (61.0%) were female. Participants had a strong preference for government involvement, extensive benefit packages, high reimbursement ratio and compensation for pre-existing conditions. With respect to the attribute of deductible, participants were indifferent between the level of CNY15,000 and CNY18,000 but had strong and significant preference for the level of CNY15,000 than CNY20,000. The premium was significantly correlated with a decline in the utility of PHI. Conclusions: All attributes had a significant impact on participants' preference for Huimin Insurance. Providing a reference point for the development of private health insurance in China, our results inform the optimal design of PHI, especially Huimin Insurance's products.