Demand For Health Services And Health Insurance Research In The New Urbanized Townships

1. BackgroundUrbanization is an inevitable process along with China's industrialization. Thesuperfluous rural labor force will swarm into urban areas when China is transformingfrom agricultural to industrial society. The urban areas include cities and towns inChina. In "Low of Chinese City Layout", town is defined as the area where people areliving between city and rural areas, and have the similar function to cities. It includestown permitted by government and areas with relatively high-density population.China is accelerating its urbanization through industrialization and economicdevelopment. As there were strict restriction to move to Chinese cities, more andmore superfluous rural labor force migrated from rural areas to townships. Most ofmigrants were employed by private sector in second industry or third industry.Compared to' rapid development in urbanization in developed countries, Chineseurbanization is experienced a boomtown. Then, Chinese urbanization is called"urbanization and boomtown" by some researchers.There was about increased 81 million populations who lived in Chinese urban areasfrom 2000 to 2005. The level of urbanization is raised by 8%. However, populationmigrated to cities and towns are 1 and 80 million, respectively. It seems that towns aremain living areas for migrants from rural areas.Cities and towns are experiencing the changes in many factors in urbanization, such as population, population-density, scale, region, and economic level, etc. Township istransferring from small scale living area to city. It is a boomtown-type city.Chinese health security system is composed of urban employee's basic healthinsurance system and rural new cooperative system (NCMS). The beneficiaries ofurban employee's health insurance were employees and retirees. It is financed mainlyfrom employers. NCMS covers the population living in rural areas. As citizens intownships are employed by private sectors with small scale, most of them can not beinvolved in urban social health insurance. Moreover, NCMS can not cover migrantsfrom rural areas to townships. Then, most of the citizens in townships didn't coveredby any health insurance. The low coverage of health insurance lows the risk-pooling,and decreases the utilization of health services,This study aims to: estimate the need and demand of health services and healthinsurance in Chinese townships; explore the determinants for health care and healthinsurance; make the health security model for citizens in townships.2. MethodologyFour-part model applied in "national household study" in 1998 and 2003 will be usedto estimating health care need and demand for health care. This model will also beused to explore the determinants. To identify the factors affecting health insurancecoverage, multinomial logistic model will be applied. The contingent valuationmethod (CVM) was used to estimate the willingness-to-pay (WTP) for healthinsurance program. Take-it-or-leave-it was used in questionnaire survey.3. Data sourceData used in this study came from field survey and second-hand data. Firstly, data abouthealth care need, health care utilization, and health insurance coverage from national household study in 2003 was collected. The study is also based on the data obtained from a household surveyconducted in four townships in two provinces-Sichuan in the southwest and Shandong in thenortheast. One district was sampled in each city. Within each district, about 550 households wererandomly selected to interview. Approximately 9,478 individuals from 2,671 households wereresponded.4. Results4.1 Economic burden of disease in township citizens.The average expenditure per clinical visit in township was aboutï¿¥163.2, which is lowerthan that in urban, but as 1.79 times higher than that in rural. An inpatient expenditure in townshiplevel was aboutï¿¥3,800, which is also lower than that in urban, but as 1.43 times higher thanthat in rural. The reimbursement ratio for ambulatory and inpatient services expenditure are lessthan 3%, and 22%, respectively. Each citizen should pay aboutï¿¥316.8 for health care servicesper year, accounting for about 6.2% of annual income. It is proved that the economic burden ofdiseases for township citizen was rather heavy.4.2 Poor risk-pooling is one of the reasons on higher economic burden of diseaseAn estimated, 72% of sample individuals aged over 14 years old did not have any healthinsurance. The economic burden of diseases at household level is accounted for more than onethird of household income, if any member suffered from disease in the past year. When health careexpenditure contributed to 45% total household expenditure is regard as catastrophic expenditurehousehold by WHO. One possible reason for those catastrophic expenditure household was poorrisk-pooling and risk-sharing system. The co-payment rate for outpatient services and inpatientservices were over 97% and 78%, respectively. The out-of-pocket ratio is about 88% to totalhealth care expenditure.4.3 Demand for health insurance in townshipsThis study surveys willingness-to-pay for different health insurance programs: major catastrophicdisease insurance (MCDI), inpatient expense insurance (IEI), and outpatient expense insurance (OEI). The median annual premium for these three programs was estimated through modeling. Asestimated,ï¿¥110.1 will be paid for one year MCDI, compared toï¿¥110.2 for IEI andï¿¥72.4 forOEI. The expected premium of MCDI is accounted for about 2.2% annual income, which is higherthan that of IEI and OEI (2.0% vs. 1.4% respectively). The individual's willingness-to-pay forinpatient expense insurance program and major catastrophic illness insurance program was about4.2% annual incomes. The financing potential for health insurance may be higher than 4.2% ofincome if the employee's financing level is considered.People are willing to pay more money for MCDI (ï¿¥141 per year) then for IEl (ï¿¥125 per year)and OEI (ï¿¥88). As the average expenditure for inpatient services and outpatients services wereï¿¥140.8 andï¿¥185.5, respectively. If insured provided IEI and OEI should pay aboutï¿¥140.8andï¿¥111.3 per year, respectively. So insurance companies will prefer IEI but deny OEI in orderto get net profit.4.4 Inpatient services are the priority setting in health insurance benefit package for townshipcitizen. From health insurance theory, the medical insurance benefit package should includeinpatient health services instead of outpatient services. In this study, the price elasticity to demandfor OEI program is higher than that for OEI. In addition, about 13% of more people want to buyIEI than OEI. The annual average premium for IEI is 2 times higher than that for OEI. It seemsthat health insurance program should be covered inpatient services at first.4.5 Family health insurance is preferred to individual health insuranceThere are two possible health insurance models for township citizens: individual health insurancemodel and household health insurance model. In this study, demand for individual health.insurance programs and family health insurance programs were surveyed respectively. Morepeople are willingness-to-buy individual program rather than household programs. Thewillingness-to-pay for family health insurance program is 2.3- 3.0 times higher than that forindividual health insurance program. Even if the willingness-to-buy ratio of household programs are 2%-4% higher than that of individual programs. Family insurance programs will cover moreinsured than individual programs. Compared to family health insurance program, individual healthinsurance programs will be more difficult to control the adverse-selection.As the family health insurance scheme will cover some vulnerable population, such as children,unemployed, etc. government should provide financial support for this program.4.6 Government-oriented model is preferred in health insurance administration in townshipsAs the different social-economic characteristics between urban and township, current urbanemployee's basic health insurance system can not cover most population who are living in town inthe near future. Township needs to establish a new health insurance system based on its economiclevel and development level. There are three possible models for township health insurance: Thefirst is government oriented; the second is non-government organizations (NGOs) oriented; thethird is private health insurance. In this study, more than half of sample individuals would preferto government-oriented model.