Impact of Medical Debt on the Financial Welfare of Middle- and Low-Income Families across China

Jiajing Li, Chen Jiao, Stephen Nicholas, Jian Wang, Gong Chen and Jinghua Chang
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Jiajing Li: Center for Health Economics Experiment and Public Policy, School of Public Health, Cheeloo College of Medicine, Shandong University, No. 44 Wenhua West Road, Lixia District, Jinan 250012, China
Chen Jiao: Center for Health Economics Experiment and Public Policy, School of Public Health, Cheeloo College of Medicine, Shandong University, No. 44 Wenhua West Road, Lixia District, Jinan 250012, China
Stephen Nicholas: School of Economics and School of Management, Tianjin Normal University, No. 339 Binshui West Avenue, Tianjin 300387, China
Jian Wang: Dong Fureng Institute of Economics and Social Development, Wuhan University, No. 54 Dongsi Lishi Hutong, Dongcheng District, Beijing 100010, China
Gong Chen: Institute of Population Research, Peking University, No. 5 Yiheyuan Road, Haidian District, Beijing 100871, China
Jinghua Chang: Institute of Population Research, Peking University, No. 5 Yiheyuan Road, Haidian District, Beijing 100871, China

IJERPH, 2020, vol. 17, issue 12, 1-13

Abstract: Background: Medical debt is a persistent global issue and a crucial and effective indicator of long-term family medical financial burden. This paper fills a research gap on the incidence and causes of medical debt in Chinese low- and middle-income households. Method: Data were obtained from the 2015 China Household Finance Survey, with medical debt measured as borrowings from families, friends and third parties. Tobit regression models were used to analyze the data. The concentration index was employed to measure the extent of socioeconomic inequality in medical debt incidence. Results: We found that 2.42% of middle-income families had medical debt, averaging US$6278.25, or 0.56 times average household yearly income and 3.92% of low-income families had medical debts averaging US$5419.88, which was equivalent to 2.49 times average household yearly income. The concentration index for low and middle-income families’ medical debt was significantly pro-poor. Medical debt impoverished about 10% of all non-poverty households and pushed poverty households deeper into poverty. While catastrophic health expenditure (CHE) was the single most important factor in medical debt, age, education, and health status of householder, hospitalization and types of medical insurance were also significant factors determining medical debt. Conclusions: Using a narrow definition of medical debt, the incidence of medical debt in Chinese low- and middle-income households was relatively low. But, once medical debt happened, it imposed a long-term financial burden on medical indebted families, tipping many low and middle-income households into poverty and imposing on households several years of debt repayments. Further studies need to use broader definitions of medical debt to better assess the long-term financial impact of medical debt on Chinese families. Policy makers need to modify China’s basic medical insurance schemes to manage out-of-pocket, medical debt and CHE and to take account of pre-existing medical debt.

Keywords: medical debt; poverty; catastrophic health expenditure; medical expenditure; medical financial burden (search for similar items in EconPapers)
JEL-codes: I I1 I3 Q Q5 (search for similar items in EconPapers)
Date: 2020
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