Expenditure response to patient cost-sharing: evidence from China’s New Cooperative Medical Scheme

Hong Liu (), Xiaobo Peng () and Hui Xiang ()
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Hong Liu: Renmin University of China
Xiaobo Peng: Central University of Finance and Economics
Hui Xiang: Enterprise Research Institute, Development and Research Center of State Council

Journal of Population Economics, 2025, vol. 38, issue 2, No 3, 34 pages

Abstract: Abstract This study investigates healthcare expenditure responses to cost-sharing reduction in rural China. Using administrative claims data, we exploit a quasi-experimental setting under the New Cooperative Medical Scheme and identify the effect of cost-sharing using a difference-in-differences strategy. We find an overall price elasticity of inpatient expenditure of − 0.633, of which the extensive margin and intensive margin elasticities are − 0.407 and − 0.226, respectively. Expenditure responses on the extensive margin are heterogeneous by patient age, health, and poverty status. Further analyses suggest that providers’ financial incentives play a role in the intensive margin responses. We also find a reduction in rural residents’ exposure to out-of-pocket expenditure risk after the cost-sharing reduction. Our findings can help policymakers in developing countries enhance financial protection for low-income people and design effective cost-control policies.

Keywords: Healthcare expenditure; Health insurance; Cost-sharing; Price elasticity; China (search for similar items in EconPapers)
JEL-codes: I11 I12 I13 I15 (search for similar items in EconPapers)
Date: 2025
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DOI: 10.1007/s00148-025-01088-1

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