The effect of public insurance policy on the private insurance market: New evidence from a quasi-experiment in China

Hua Chen, Yugang Ding, Xiangnan Wang and Yifei Yang

Economic Analysis and Policy, 2023, vol. 78, issue C, 937-953

Abstract: Analyzing the net social welfare of a public health insurance policy necessitates an accurate estimation of its impact on the private health insurance market. This paper presents new evidence of the effect of public health insurance on private health insurance market by exploiting a quasi-experiment of Urban Resident Basic Medical Insurance (URBMI) in China. Our findings indicate that the implementation of URBMI has no significant effect on the aggregated private health insurance market. However, upon dividing the private health insurance market into medical and illness insurance markets, we observe a significant crowding-out effect of URBMI on the former but not the latter. This finding may help explain the mixed results in the literature, which typically lumps all segments of private health insurance markets together. In terms of the possible channels, we find that the crowding-out effect of public health insurance on private health insurance is through lowering the cost of health services, raising the accessibility to health services or reducing health risks.

Keywords: Health insurance; Crowding-out effect; Quasi experiment; Staggered difference-in-differences; China (search for similar items in EconPapers)
JEL-codes: G22 H43 I13 (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecanpo:v:78:y:2023:i:c:p:937-953

DOI: 10.1016/j.eap.2023.04.031

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