Farm Household Risk Management Of Major Illness In Poverty-Stricken Areas

Rural China is currently under socioeconomic transition. Farm households have been increasingly exposed to various types of risks when producing and consuming. Risk of illness becomes more important and great concern on the influence of illness in rural China has been raised. The pattern of illness emergence in rural areas of China is now at the transitional stage of shifting from infectious disease prevalence to chronic disease prevalence. The concurrence of both chronic diseases and infectious diseases leads to the dual illness risks for the farm households. Illness has great impact on their livelihoods. The growth of medical expense per capita in rural areas exceeds that of the income per capita, which results in the economic difficulties for households who can not afford the medical fee. Ill health, especially major illness, may lead to the decrease of working time of both sufferers and caregivers, and therefore, the decrease of household income. In case of illness, heavy economic burden may be brought to both the patient and his/her family, especially to those who are poor. Major illness may engender much more serious impact on farm households, which has become an important factor for poverty dilemma.In order to reduce losses caused by illness risk and mitigate health-related poverty, Chinese government has implemented in rural areas New Cooperative Medical Service system and Medical Financial Assistance system, which, to a certain extent, have released the impact of major illness on farm households' livelihood. However, with the limited support of government resources, rural medical care system is inadequate and rural medical insurance market is less developed. Farm households become the key payer for the losses caused by major illness.In the long course of struggle against major illness risk, households have formed a series of risk management strategies, which are rational; and the strategies of risk prevention and coping employed by small farmers are effective. The study on risk management of major illness, with farm households as the subjects of risk management, is helpful for the deep understanding of the influence of major illness, and survey into, the process of how farm households cope with risks of major illness. It is of practical significance for improving the rural medical care system and reducing health-related poverty.By means of comprehending the concept and connotation of major illness, surveying into the financial costs for major illness, analyzing risk management strategies of major illness and probing the influencing factors of different risk management strategies farm households adopted, the objective of this study is to provide optional schemes for the policy-making and system-building for alleviating the financial impact of major illness on farm households, especially on the poor.The dissertation is divided into seven chapters. Chapter 1: Introduction, which puts forward issues, objectives and contents of research; as well as introduces research method, data sources, innovation points and weakness of the research. Chapter 2: Theoretical basis and literature review of the research on major illness risk management of farm households, which analyzes the behavioral theories of farm households represented by those of limited ration and risk aversion, expounds on social protection, sustainable livelihood framework and social risk management analysis framework, conducting literature review and make brief comments on such three aspects as illness risk and losses, impact of illnesses on farm households and their risk management strategies. Chapter 3: Analysis on the occurrence of serious diseases and treatment-seeking behavior in poverty-stricken areas, which surveys into the perception and identification of farm households on major illness, conducting analysis from such three aspects as health self-rating condition, prevalence rate in two weeks and treatment-seeking behavior as well as occurrence of major illness and treatment-seeking etc. Chapter 4: Surveying into economic costs of major illness, which, by making use of the estimating method, surveys into economic costs of major illness from such two aspects as farm households and labor force. By categorizing economic conditions, labor ages and treatment methods, it surveys into the economic losses of different types of farm households and groups suffered from major illness. The relative economic risks of farm households in terms of household income, medical expense and types of medical providers, and measurements of risk degree of major illness related poverty, are also investigated. Chapter 5: Analysis on major illness risk management strategies of farm households, which puts forward analysis framework for farm households risk management, based on which, strategies of risk prevention, risk mitigation and risk coping for farm households and the comments are summed up. It also analyzes the precedence order of farm household strategies and the source hierarchy of the strategies. Chapter 6: Discussion on the influencing factors of major illness risk management behavior of households, which sums up the possible factors that may influence medical security needs of farm households, through theoretical analysis and literature review. Two-optional Logit model, which enables households to participate the New Cooperative Medical Service scheme, is established, so as to deeply investigate into the significance and influencing manners of each factor that influence on the scheme participation of farm households; Chapter 7: Conclusion and policy suggestions.Based on the household survey data in rural areas, this dissertation explores the household major illness risk management behavior by applying both the quantitative and qualitative research methods. The research enjoys new headway or innovation in the following aspects.Firstly, with the selection of research issues. This research elaborates on major illness risk management of farm households, including the perception of farm households on major illness, the occurrence of major illness, the estimation of risk losses as well as households' measures of risk management, with those households suffered from major illness as the research objectives and the subject of risk management. Among past related researches of China and foreign countries, some investigated into the risk management behavior of households against agricultural risks in general and drought risk in particular, and some analyzed the financial losses of ill health. This dissertation studies on risk management behavior of households in terms of major illness risk, which is of innovation to an extent.Secondly, with the research methods. Social study tools like structured questionnaire, focus group interview, oral narratives, intensive interview and direct observation, are used in household surveys to collect quantitative and qualitative data. In the course of analysis, the combined methods of statistical description and econometrics model are frequently applied. In addition, case study approach is also applied to research decision-making process of major illness risk management of households and explore the risk management mechanism of households.Thirdly, with the research contents. This dissertation researches about major illness risk measurement, the estimation of economic costs of major illness, strategies of major illness risk management and so on. These are on the basis of farm households suffered from major illness as the research subjects, being differ from existing researches which based on individual patients. In the dissertation, study on the definition of "major illness" will help to enrich and supplement existing knowledge. Through summarizing and analysis, it finds out that farm households recognize and understand "major illness" by dimension of the five-level including the severity of illness, types of treatment, fee-for-service, types of disease and grades of hospitals patients visiting. They think that the illness which is fatal, resulting in the loss of patients' ability to work up to a certain extent, the need for long-term treatment or hospital treatment in a certain period of time, medical expenses over the afford ability of the family and the need to be diagnosed and treated by township-level hospitals and above, may probably be "major illness".At present, existing researches pay more attention to "ex post strategies" of coping with medical treatment expense of major illness. However, this dissertation not only makes an in-depth study of farm households suffered from major illness on how to cope with medical expenses and work time loss caused by major illness, but also pays special attention to prevention strategies and mitigation strategies, that is "ex ante strategies". In addition, this research also tries to establish the ordered probability model about the selection of major illness risk strategies, and to search out risk management factors that affect farm households to make decisions. The research has found that major illness risk management strategies of households are usually the combination of various measures. They mainly rely on their own resources, relatives and friends and non-official mechanism of village community to cope with high medical costs, such as the use of cash deposits, being migrant workers, borrowing money form relatives and friends and so on. They have not attached enough importance to the strategies of illness prevention and health education. The effect of the steps used by farm households to mitigate major illness risk losses (such as income diversification and engaging in medical insurance) is limited. The lack of resources poor households own results in a lack of ability of using the mechanisms and resources outside the family to manage major illness risk.Through analysis of the occurrence of major illness in poor rural areas and the estimation of major illness risk losses, this dissertation achieves the following key conclusions: chronic diseases are increasing prevalence in rural areas, incidence rate of major illness of farm households is high and most of the major illness received outpatient treatment. Major illness risk of the poor group is considerably high, and some of them have not received positive and effective treatment; the economic costs of major illness per household are high. The discrepancy on time-cost between poverty-stricken households and non-poverty-stricken households are evident because those low-income households are more likely to get into a vicious cycle of "poverty- major illness - poverty" owing to absenteeism due to illness; The risk of major illness related poverty for farm households is high, and households with low income, high inpatient expense and provincial hospital inpatient have considerably higher risk, which should be the objects focused on by rural medical care system.