| Since1990s, it has been an increasingly serious issue for patients that seeing a doctor has become more difficult and expensive, which has great social circumstances. Therefore, the medical and health system reform has become a socially focused issue in which whether or not the market-oriented reform should be launched. The Consultation Paper on new medical and health system published by Ministry of Health in2008has proposed clear direction and goal for China’s health care payment system reform:strengthen the monitoring role of medical insurance for medical services, perfect the mechanism for payment, actively explore paying patterns such as paying on head, pay on disease and total paying and establish the effective mechanism of incentive and punishments. With this background, Shanghai initially adopted the Pre-paid Global Medical Insurance Budget (hereinafter referred to as the PGMIB) in2009.To further investigate the practical effect of the PGMIB, especially using the hard-won micro data to evaluate the direction and level of the impact of the PGMIB on the patients’ number in hospital, the fee of various checks and tests that doctors had for patients of different symptoms and, at the same time, to discuss the policy implications from the impact of the application of the policy for China’s medical and health system reform, the thesis intends to study on3aspects:1. Comparative AnalysisOn the basis of the reform process of the medical security system in China before the1990s, we make comparative studies on foreign medical fee system and in-depth analysis of the advantages and disadvantages of the different fee systems, as well as influence of different systems on the quality of medical services and the health care budget expenses of government. This international comparative study helps us to make an in-depth analysis of China’s problem and pilot program, along with scientific policy adjustment.2. Theoretical Analysis from Perspective of Segregated Medical MarketBased on status and characteristics of China’s medical market, we believe that China’s medical market is a tiered competitive market:the supply includes public and private hospitals and the demand includes private patients and public patients. Since only public hospitals provide medical services to the public patients, this market is both hierarchical and competitive. Implementation of the PGMIB in this market would have different effects on the behavior of different types of hospitals and doctors, and then have different effects on prices and quality of medical services faced by different types of patients, therefore, it’s necessary to analyze, in the circumstances of general equilibrium, the effects of the PGMIB on prices and quality of medical services in the hierarchically competitive market, with further analysis of the impact of the benefits of the different types of patients. Such theoretical analysis will help guide the government to optimize the public policies of medical management.On the characteristics of the hierarchical market, private patients can "vote with their feet" to choose to go to a public hospital or a private hospital to purchase medical services, in contrast to public patients who can only go to public hospitals to purchase medical services. And the PGMIB gives a tight budget constraint on hospitals. Therefore, the PGMIB on the one hand enhances the monopoly position of public hospital to public patients; on the other hand, increases the competition for private patients between public and private hospitals. It further has different effects on prices and quality of medical services offered by public and private hospitals to public and private patients, which, as a result, will improve or worsen welfare of different types of patients. In order to facilitate the analysis, we take the following strategies: we analyze the effect of the PGMIB on prices of medical services in the hierarchical medical market by assuming that the quality of medical services given; symmetrically, we analyze the effect of the PGMIB on the quality of medical services in the hierarchical medical market by assuming that the quality of medical services given.3. Empirical AnalysisOnly to analyze the hierarchical medical market by general equilibrium cannot directly reveal the core purpose whether pilot program of the PGMIB can achieve to reduce the price of medical services, or reveal more detailed on behavior change of the doctors and hospitals under the circumstance of hard budget constraints brought by the PGMIB. Therefore, this dissertation will take an advantage of a number of panel data from several hospitals in Shanghai and outpatient data and single diseases patients’detailed data from Changhai Hospital to carry out comprehensive empirical study on the effect of the PGMIB on the number of patients received by hospitals, the number of tests to patients and the number of a variety of medical expenses. The empirical research can answer the following empirical propositions:first, whether the PGMIB can make the hospital significantly reduce public patient received, thereby significantly reducing the number of patients offered medical services in the hospital as a whole? Second, whether the PGMIB can reduce the patient expenses or other indicators of the hospital, among which, for instance, patient’s average hospital stay, as well as medical expenses or hospitalization expenses? Third, whether the pilot program of the PGMIB can effectively reduce outpatient medical expenses? Fourth, whether the pilot program of the PGMIB can effectively reduce the inpatient medical expenses? Fifth, whether the PGMIB will push hospitals and doctors to take strategic behavior-in the first half of year, continuing to relax constraints while in the second half of year, making greater efforts to save the budget expenditure? Or whether they will save budget expenditure by using fewer drugs, shuffling severe public patients? Sixth, whether the PGMIB will make different effects on the number of hospital days among patients in PGMIB, patients out of PGMIB, private patients, the number of tests to patients as well as a variety of medical payment levels?The theoretical and empirical research of the dissertation has the following conclusions:First, if there is no PGMIB and the public and private hospitals carry on price competition in the case of the same quality of medical services, as a result of the general equilibrium, public and private hospitals will provide the same quality of medical services and they will provide socially optimal service price, the lowest price levels for private patients, which maximizes patient’s welfare. In this case, public and private hospitals will sell medical services and achieve zero profits. However in contrast to public patients, public hospitals will charge higher than the price of private patients. Therefore, public hospitals may get positive economic profits, which is not socially optimal as public hospitals get economic profit greater than zero from government by charging higher fees to the public; the medical price of private patients is determinated by a free and competitive market and the equilibrium price will achieve social optimization; As to public patients, public hospitals is a monopoly provider of medical services, public hospitals have no incentive to lower prices for public patient, who can claim payment from government. Therefore in the case of the same services, public hospitals will use monopoly power to charge higher to the public patients.Second, if there is no PGMIB and public and private hospitals carry on quality competition in the case of same medical prices, the public hospitals will provide higher quality of the service to get more private patients. As public hospitals have monopoly power over the public patient, the quality of service provided to a public patient will be lower than the quality of services provided to private patients. The highest quality of services to private patients will be provided by private hospitals, which is also socially optimization; By contrast, the quality of service to public patients provided by public hospitals is the lowest. In short, private patients will receive the highest quality of service from private hospitals and slightly lower quality of service from public hospitals, which, however, is higher than the quality of services offered to public patient from public hospitals.Third, the PGMIB may bring the following positive effects:the price and quality of services of public hospitals and private hospitals for private patients are likely to rise, and therefore benefit private patients because private patients can "vote with their feet" and become hot cakes as the PGMIB reduce public patient’s "attraction" for public hospitals. Therefore, with the same price, the public hospitals will provide private patients higher quality; with the same quality, public hospitals will charge lower prices to private patients.Fourth, the PGMIB may bring the following negative effects:Medicare patients experience the decline in the quality of public hospital services. For example, hospitals may shuffle critically ill patients, use fewer necessary drugs or services to reduce budget expenditures. In addition, public hospitals and doctors might take the "beggar thy neighbor" strategy-use more medicine-at-patients-expense and less medicine-at-PGMIB-expense.Fifth, based on panel data of seven single diseases in six third-grade class-A hospitals of Shanghai, the dissertation found that the PGMIB decreased the average hospital costs by20%. However, total amount of every hospital received patients declined by30%. Sixth, based on18,175outpatient observations from2008to2010in Changhai Hospital, without implement of the PGMIB, outpatient doctors’ behavior doesn’t change significantly in the first half and the second half of year. However, with implement of the PGMIB, outpatient doctors’ behavior changes significantly in the first half and the second half of year:In contrast with the first half of the year, doctors adopted the strategy of tightening medical expenses in the second half, which include all checks, laboratory tests and medical expenditures except "medical expense","treatment expenses,""radiography expenses","Chinese patent drug expenses","Chinese herbal medicine expenses" and "other expenses".Seventh, based on the12,750cases of17single diseases inpatient sample in Changhai Hospital from2008to2010, we found that for patients with medical insurance, the PGMIB can significantly reduce their ordinary inspection expenses, self-funded medical expenses, surgical materials expenses, check expenses, Chinese herbal medicine expenses and other expenses; However, after the implementation of the PGMIB, their drug expenses of medical insurance, hospitalization expenses, examine expenses, treatment expenses, nurse expenses, laboratory expenses, oxygen expenses, western medicine expenses, Chinese patent drug expenses, Chinese herbal medicine expenses, other expenses and total expenses, have significantly increased. In general, the latter rising amplitude exceeds the former falling amplitude, which leads to the total cost increased by6.6%; after the implementation of the prepaid system, compared with the private patients, patients-in-PGMIB’s number of large checks, number of laboratory tests, large check expenses, drug expenses of medical insurance, hospitalization expenses, treatment expenses, nurse expenses, the surgical materials expenses, laboratory expenses, radiography expenses, western medicine expenses, Chinese patent drug expenses, Chinese herbal medicine expenses, other expenses and the total expenses, have obviously reduced. In all, keeping other conditions consistent with the case, their total cost is lower than the private patients by4.6%.Eighth, comparing the previous empirical results, we found that the PGMIB obviously lowers the cost of outpatient, but its effect on the cost of inpatient is not obvious. This paper argues that as for inpatients, compressing their cost will affect patient treatment policy and trigger disputes and accidents, which may bring more negative consequences than excess budget. Therefore, in the face of this contradiction, the physician should pay more attention to the safety and quality of inpatient’s medical services.In general, this dissertation makes an innovative contribution to the existing literatures and the policy evaluation of the PGMIB from the following five aspects: First, this dissertation firstly demonstrates the quality of services and price competition between public and private hospitals from a hierarchical medical market point, and theoretically analyzes the change of hospital service efficiency before and after the implementation of the PGMIB; secondly, this dissertation firstly apply panel data of seven single diseases in six third-grade class-A hospitals of Shanghai from2000-2010to make an empirical analysis on the change of expenses before and after the PGMIB; third, this dissertation firstly apply17single diseases inpatient sample and outpatient sample in Changhai Hospital from2008to2010to make an empirical analysis on the change of expenses before and after the PGMIB; fourth, this dissertation firstly analyze and test doctor’s control strategy on health insurance expense in the first half and the second half of year; fifth, this dissertation has firstly attempted to use100representative antibiotics to create the medical supplies price index, which helps to make intertemporal comparisons on medical expenditure’s uncontrollable factors which cause price rising.Certainly, the dissertation also has the following two deficiencies:first, due to the limitations of the research data, this dissertation doesn’t provide evidence on the result of market equilibrium; second, this dissertation doesn’t fully solve the endogenous problem in empirical study. However, these limitations constitute the key issues that need to be solved in the Future.
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