The Policy Effect Of The Medical Insurance Prepayment System

Health insurance is of vital importance to the welfare of all the citizens.The basic social health insurance system has already been established and consists of Urban Employees’ Basic Medical Insurance,Urban Residents’ Basic Medical Insurance and New Rural Cooperative Medical Insurance.According to the report released by National Healthcare Security Administration of China,95 percent of the population is covered by social health insurance system and thus the largest social health insurance net in the world is founded.Social health insurance directly enhances affordability of the citizens and reduce the risk of family catastrophic health expenditure.However,continuous and rapid growth of health expenditure lays great burden on patients as well as threatens the safety of the medical insurance funds.Chinese government was dedicated to contain health expenditure by measures like separation between revenue and expenditure,medical consortium,global budget,separating medical treatment and drug sales,but resulting in vain.Under this background,medical insurance,the largest payer of health expenditure draws attention of the public and experiences across the world reflect the critical role of health insurance prospective payment in reducing health expenditure.On contrary,a combination of health insurance payment and traditional retrospective payment are “inherently inflationary”.Health insurance not only increases affordability of patients but also means the providers can get paid more generously because all the medical fees would be covered by patients and health insurance.As a result,the providers are motivated to increase medical expenditures and the tendency of increase in medical fees is doomed.Since the new campaign of medical and health system reform in 2009,health insurance prospective payment has caught more and more attention but still moves slowly.Low willing to reform,costs of the reform,difficulties in policy designing and uncertain policy effects all frustrates the motion of health insurance prospective reform.Nevertheless,health insurance prospective payment instead of regulations to lead providers contain medical expenditure voluntarily is necessary to improve efficiency of insurance payment and protect citizens from confronting too expensive medical fees.Analysis based on theory,case study and empirical study is applied to answer key questions of health insurance prospective payment in this dissertation: first,the roles and interactive relationships among health insurance,patients and providers,especially the mechanism of prospective payments on providers’ behavior and incentives;second,how prospective payment is designed and implemented in practice,and its impacts;third,conclusions and suggestions on health insurance reform.The discussion is arranged in seven chapters as follows:Chapter One is the introduction.Starting from the history of health insurance reform and problems of the development of health insurance in China,this chapter explains the theoretical and practical meanings of prospective payment reform in China.Also the research framework,methods and data source are described in this chapter.Chapter Two is literature review of health insurance prospective payment.Two main parts are discussed: the first is asymmetric information theory to explain nature of medical services and healthcare markets and supply-side costs sharing theory in prospective payment;the second is categories of prospective payment and their effects of certain cases.Chapter Three is the mechanism discussion of prospective payment and its analysis framework.This chapter establishes a Neo-public Finance mechanism analysis framework including pricing,decision,costs sharing,supply-side motivation and relationship between patients and doctors.Also,theory of social common demand and theory of agent is applied in this chapter.Chapter Four is the introduction of the prospective payment policy in S county.The prospective payment reform in S county is a diagnosis-based per diem payment with double-tier incentive policy.In this chapter,calculation examples are shown to compare the difference between retrospective and prospective payment.Chapter Five is the empirical study of the impacts of prospective payment reform in S county.This chapter takes the data of inpatients records(2012-2015)in township hospitals from New Rural Cooperative Medical Insurance.Statistic analysis is first constructed to compare difference between control and treatment group.Then Differencein-differences is applied to estimate impacts on supply-side behavior,patients burden and insurance payment.Chapter Six is the empirical study of mechanisms of the reform in S county.Dynamic effects test is used to reflect how policy effects change with time.Heterogeneity test applies Quantile-DID to elaborate the distributional change of policy effects.Chapter Seven contains main conclusions and policy implications.The conclusions drawn in this dissertation are as follows:First,the necessity of the combination of health insurance reimbursement and prospective payment.Providers of the medical services can take advantage of asymmetric information to be dominant in pricing and decision so that it requires effective motivations to the providers to contain the healthcare fees,which is prospective payment based on supply-side costs sharing.Also,it is proved that prospective payment cuts down the health expenditure better than regulation in practice.Second,there are several essential elements of prospective payment design.A well implemented prospective payment system demands not only the payment standard but also several fundamental elements or supporting policies.Reasonable payment standard,internal contract and new mode of health insurance supervision are some of the examples.Apart from that,adjustment of patient burdens should be regarded as well.Third,the impacts of prospective payment reform in S county are very significant.Medical expenses of inpatients drop 17.59 percent and bonus to providers increases by 173.01 yuan.Patients burdens decrease by 87.26 percent and happen to equals to the cut of medical expenses.Insurance payment increases by 16.52 percent which implies that compensation to medical services and the supplier has been strengthened.The last conclusion is about the mechanism of prospective payment system in S county.With regards to time trends,there is a half-year peak and remains long-lasting policy effects.What’s more,the standard inpatient day and standard payment exhibits strong impact on the outcome: patients’ inpatient duration or expenses that exceed the standard tend to decrease to the standard level and vice versa.The concentration of the outcome means providers are seeking a new pattern of profit maximization instead of simply lowering medical expenses.And there are several policy implications for prospective payment reform in China:(1)A diagnosis-based prospective payment reform is suggested,selecting pay for single disease,DRG payment,per-diem payment,capitation and a mix of them to create powerful supply-side motivation to contain healthcare expenses;(2)Setting two-tier contracts to providers: external motivation from health insurance to the suppliers and internal motivation from hospitals to medical professions;(3)The health insurance administration should apply market mechanism to lead providers to perform well and monitor them in a new way.In summary,marginal contributions of this dissertation may exist in three aspects: first,the paper specially focuses on the diagnosis-base per-diem payment case and exposes its motivation mechanism;and it may fill the blanks of study on township hospitals’ welldesigned prospective payment reform.Second,a theoretical analysis framework of asymmetric information and supply-side costs sharing is established to explain participants’ behaviors and motivation mechanisms.Third,the empirical study further detects treatment heterogeneity of time and groups,which makes deeper comprehension of prospective payment mechanism and its design direction.