Study On The Determinants Of Health Care Expenditure In China

The overspeed increase in health care expenditure (HCE) in China ismore and more becoming social concerns which, if cannot be controlled,will burden the society and the families within, inhibiting effective healthcare services demand. Therefore, probing into the question what cause thehealth care expenditure to increase so fast concern to the behalf for crowdpeople and , to the development of harmonious society. This dissertationapproached this question in both theoretical and empirical perspectives.The main findings are as follows:1．The health care expenditures affected by many kinds of factorsmutually. These factors mainly include the demand such as economicdevelopment, aging, health insurance as well as the supplies such asphysician-induced demand, the advancement of medical technology andthe government's health care expenditures.2．Health is a kind of human capital, the most obvious economic gainfor health investments (medical health care) are the improvement oflaborer's production efficiency and the extension of working time. Health care Expenditure is normal, and will increase with the economicdevelopment.3．Population aging affects health care expenditures in two aspects.On the one hand, the high disease rate, debility rate as well as the disa-bility rate will increase health care expenditure; On the other hand, popu-lation aging is the result of the health improvement, it is also possible thatthe enhancement of the old age population proportion will reduce healthcare expenditure. More importantly, regarding to an individual, the mosthealth care expenditure occurred by the time before death.4．Health insurance have changed the playoff way of health care ex-penditure, the moral hazard may bring about consumers' excessive use ofhealth care and the providers' excessive supplies. Experience result hasalso supported this view. Both the excessive use and the excessive supplyare health care resource's abuse and extravagant.5．The health care market is a monopoly competitive market, The in-formation asymmetric between the doctor and the patient brings aboutphysician-induced demand. But what the doctor pursues is the combina-tion of the induce and the quality to maximize its profit. On the one hand,the increasing of the doctor's population can make the doctor's medicalservice quality improve. On the other hand, it can also increase physician-induced demand. Although patient's medical demand increases, physici-an's profit often reduces. On the one hand, increasing of physician- induced demand marginal disutility may causes physician's quality to beimproved, which can cause physician-induced demand drop, althoughpatient's health care demand is increasing, physician's profit may drop.The insurance premium compensation is bigger (slightly), then thephysician-induced demand as well as the motive to improve the medicalservice quality is lower (high); Otherwise, physician-induced demandmarginal productivity is lower, then physician-induced demand and thequality are higher. Moreover, improving the patient's understanding ofthe physician's behavior is helpful to limit the physician-induced demand.6．Medical technology advancement affects health care expenditure bychanging the specific medical service supplies. The medical technologyprogress may have different influences to health care expenditure. Themodel simulation indicated that, since the reform development, there is atleast 1/6, or very possibly 1/5 for the increasement of Tota HealthExpenditure in China, caused by the science development and themedical technology advancement. the medical technology advancementcaused our country treatment cost probably to reduce 1 to 2 percentagepoints each year, every 7 years our country's population life expectancyenhanced 1 year old.7．Government health expenditure has great exterior nature, it'sincreasement has the function that suppresses the health care expendituresincreasing. Since the reform and open policy, the Total Government Health Expenditure in China has been insufficient; moreover, there isconstitutive deviation in the disbursement. A primary reason is that thesystem design is unreasonable. The public health investment should beundertaken by the central authorities.8．Empirical Analysis indicate that, economic development,population aging, supply-induced demand, and proportion change inChina government input in health care industry is a long-tern relationship.And economic development is the most influential factor. HCE's incomeelasticity is about 1．In China, health care service is necessity and normalgoods as well. HCE in China has inertia, and it's affected only byeconomic growth in short term. All the other variables have little impactin short run. About 19% of the residual between acturally occurred HCEand long-term equilibrium is modified. supply-induced demand is also aninfluential factor, and hospital-induced demand has greater impact onHCE than doctor-induced demand does. population aging andgovernment public input have relatively little impact. Medical technologyand basic health care insurance implemented by 1994 has no significantinfluence yet. The estimate of Granger causality test is constistent withthat of suppose of econometric analysis.