Research Of Adverse Selection In China’s Health Care System

With living standards improving, people’s demands on health care is increasing. The issue that how to make our own health care be safeguarded has been the focus of attention. At the same time, after ten years of reform and development, China has initially established a kind of multi-level medical security covering urban and rural residents in which basic medical insurance is the main body and many other forms of supplementary medical insurance and commercial health insurance is supplement. However, asymmetric information problem from voluntary enrollment and actual operational failures that has always plagued our health insurance system has seriously affected the coverage of health insurance and increased medical expenses. Therefore, the study of adverse selection problem in China’s medical security system has a more practical significance in the new era background. This paper first describes the content and the status quo of China’s medical insurance system to constitute a clear scope of the study. Then I analyze adverse selection in insurance market using static and dynamic game model, and explain the existence and nature of balance when adverse selection exists. After this paper, according to China Health and Retirement Longitudinal Study (CHARLS), I use two kinds of parametric methods and a non-parametric method to conduct a comprehensive inspection of the problem of asymmetric information in China’s social health security system. Finally, based on a sample group thinking, I use fixed effects model to analyze insured’s adverse selection from the perspective of risk frequency and risk degree. Studies show that: asymmetric information obviously exists in China’s medical insurance system, adverse selection phenomenon only exists in risk degree of outpatient treatment.