A Chinese conundrum: does higher insurance coverage for hospitalization reduce financial protection for the patients who most need it?

This paper evaluates the relationship between the degree of cost-sharing and the utilization of outpatient and inpatient health services in China. Using data from the 2015 China Health and Retirement Longitudinal Study (CHARLS), we estimated the association between outpatient and inpatient service utilization and cost-sharing levels associated with outpatient and inpatient services, as well as a comparative metric that quantifies the relative cost-sharing burden between the two. We found that patients in areas with higher levels of cost-sharing for outpatient services exhibit a lower propensity to use outpatient care and a higher inclination to utilize costly hospitalization services. Conversely, as the ratio of cost-sharing for outpatient services to that for inpatient services increases, the likelihood of patients forgoing doctor-initiated hospitalization correspondingly increases. This suggests that when cost-sharing for outpatient care rises relative to inpatient care, observed increases in inpatient care utilization reflect an escalation in moral hazard rather than a correction for the underutilization of inpatient services. We conclude that both substitution and complementary roles exist between outpatient and inpatient services. Our findings suggest that a more effective design of cost-sharing is needed to enhance the equity and efficiency of China's health system.

Duke Scholars

Author Shenglan Tang Population Health Sciences