Expenditure response to health insurance policies: Evidence from kinks in rural China

Yi Lu, Julie Shi () and Wanyu Yang

Journal of Public Economics, 2019, vol. 178, issue C

Abstract: This paper utilizes administrative data to analyze expenditure responses to the health insurance policy in rural China, and clear visual evidence of bunching is observed at the kink point. A static response model with optimization frictions estimates that a complete elimination of the reimbursement would cause the total expenditure per visit to decrease by 34.5%, and approximately one-third of the studied population makes decisions with errors. Heterogeneous expenditure responses and optimization frictions are observed across demographic groups. Cost-benefit and counterfactual analyses indicate that the current policy generates the greatest welfare gains.

Keywords: Bunching; Health care; Health insurance; Optimization friction (search for similar items in EconPapers)
JEL-codes: D12 G22 I13 (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:pubeco:v:178:y:2019:i:c:s0047272719301100

DOI: 10.1016/j.jpubeco.2019.104049

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