Yuanli Liu

The Chinese government is in the process of providing health insurance to the uninsured rural population by expanding the rural Cooperative Medical System (CMS) to every rural county. Using the China Health Surveillance Baseline Survey in 2001, we conducted a case study on two CMS pilot programs and investigated whether or not enrolling in these CMS pilot programs has led to an increase in health care utilization and a decrease in the likelihood of catastrophic health spending for rural residents. Matched data sets are produced using propensity score and the instrumental variable (IV) method is used. We have found that the CMS pilot programs have had a significant and positive effect on the probability of seeking medical care and the number of visits. However, the CMS programs did not seem to have had a significant impact on households' out‐of‐pocket health expenditure and on reducing catastrophic spending. The findings generated from the matched data are consistent with those obtained from the full set of data and those obtained from the IV method. (JEL I18)

Mental illnesses account for 20% of the total burden of disease in China. Yet, health policy in China has not devoted much attention to mental health problems and their impact on Chinese society. The objective of this paper is to investigate the impact of mental health status on labour market outcomes, such as employment and income, and provide evidence about some of the economic consequences of mental illnesses. Using the China Health Surveillance Baseline 2001 Survey and an instrumental variables estimation approach, we address possible reverse causation between work and mental health. To estimate the impact of self-reported mental health status, we use the two-part model, the first part estimating a logit equation for the probability of being employed and the second-part estimating an ordinary least squares (OLS) model on the log of individual income condition on being employed. We use a list of symptoms of mental disorders to constitute a measure of mental health status. Our identification strategy relies on instruments that measure average mental health status by zip code other than the observed individual to implement an instrumental variables model. Both men and women suffer a significant reduction in the employment rate and annual income if the average mental health deteriorates at a population level. The mental health index has a positive and significant effect on the likelihood of being employed. Our findings are consistent with what has been found in industrialised countries. This is the first empirical study that reveals that poor mental health status can be disruptive of labour market activities in China. A rapid rise of mental and behavioural problems in population reflects the transition to a market economy and indicates pressing problems that have gone unrecognised and unaddressed. The negative economic consequences in labour market outcomes suggest a potential gain from preventing and curing the mental disorder. Our study about the impact of mental health on labour market participation adds value to the effort of evidence-based, decision-making process by the Chinese government. IMPLICATIONS FOR HEALTH CARE PROVISION AND POLICIES: A larger effort is required from the Chinese government and society in providing individuals with mental illnesses easier access to mental health care and better treatment. Allocating more resources to prevention and intervention and changing societal attitude towards individuals with mental illnesses should be important components in China's mental health policy. IMPLICATIONS FOR HEALTH CARE RESEARCH: A quantitative analysis on how much economic gain can be achieved from treatment and the trade-off between costs and benefits of treating mental disorders in China needs to be conducted in the future. In addition, further study on understanding the mental health delivery system in China should be conducted. By investigating care seeking, organisation of treatment and financing of care delivery, we may be able to identify high priority investments in mental health care.

Background: Most of the about 140 million informal sector workers in urban China do not have health insurance. A 1998 central government policy leaves it to the discretion of municipal governments to offer informal sector workers in cities voluntary participation in a social health insurance for formal sector workers, the so-called 'basic health insurance' (BHI). Methods: We used the contingent valuation method to assess the maximum willingness to pay (WTP) for BHI among informal sector workers, including unregistered rural-to-urban migrants, in Wuhan City, China. We selected respondents in a two-stage self-weighted cluster sampling scheme. Results: On average, informal sector workers were willing to pay substantial amounts for BHI (30 Renminbi (RMB), 95% confidence interval (CI) 27-33) as well as substantial proportions of their incomes (4.6%, 95% CI 4.1-5.1%). Average WTP increased significantly when any one of the copayments of the BHI was removed in the valuation: to 51 RMB (95% CI 46-56) without reimbursement ceiling; to 43 RMB (95% CI 37-49) without deductible; and to 47 RMB (95% CI 40-54) without coinsurance. WTP was higher than estimates of the cost of BHI based on past health expenditure or on premium contributions of formal sector workers. Predicted coverage with BHI declined steeply with the premium contribution at low contribution levels. When we applied equity weighting in the aggregation of individual WTP values in order to adjust for inequity in the distribution of income, mean WTP for BHI increased with inequality aversion over a plausible range of the aversion parameter. Holding other factors constant in multiple regression analysis, for a 1% increase in income WTP for BHI with different copayments increased by 0.434-0.499% (all p < 0.0001), and for a 1% increase in past health care expenditure WTP increased by 0.076-0.148% (all p < 0.0004). Being male, a migrant, or without permanent employment significantly decreased WTP for BHI. Education was not a significant determinant of WTP for BHI. Conclusion: Our results suggest that Chinese municipal governments should allow informal sector workers to participate in the BHI. From a normative perspective, BHI for informal sector workers is likely to increase social welfare because average WTP for BHI is significantly higher than estimates of the average cost of BHI. We further find that informal sector workers do not value the BHI as a mechanism to recover the relatively frequent but small financial losses associated with common illnesses, but because it protects against the rare but large financial losses associated with catastrophic care. From a behavioural perspective, our results predict that at a price equal to the average premium contribution of formal sector workers 35% of informal sector workers will enrol in the BHI. Subsidies and changes in insurance attributes (e.g. including catastrophic care and portability) should be effective in increasing BHI coverage. In addition, coverage should expand with rising incomes among informal sector workers in China. Finally, adverse selection will be unlikely to be a large problem, if the BHI is offered to informal sector workers.