Economic Analysis Of China's Medical Insurance System Reform

Recently, the U.S. government has passed the health care reform bill. This might be a great victory for the uninsured people. So far, all developed countries have carried out health insurance system, in which government has played a major role. This bill will have a significant impact on the health care insurance system all over the world.The United States is a country which worships liberalism and market competition. This explains that why seven presidential, including Truman, had failed to establish a health care insurance system which includes universal coverage; until Obama put health care reform on the desk again and won a decisive victory. Why did the U.S. government make such a choice? We will benefit a lot for Chinese health care reform if we find the reason why.My point is that when we consider about health care reform, we cannot discuss it only in health care sector, but consider it under the macro-economic circumstances. China's endowment of economic development is that we have a great number of labors, but same problem bothers us:our human capital is too little. This requires us to develop our economy. Otherwise the damage would be fatal. So, we should choose our health care insurance on the basis of economic development.As far as economic situation in our country is concerned, we can see that there are three incentives which stimulate economic growth, including investment, export, and consumption. We can see that these three incentives are not doing a good job at this time, especially when we are experiencing current global economic recession and trade protectionism. Our country has been implementing export-oriented policy. Now we are faced with great difficulties, and the measures we can take for now is to stimulate domestic consumption.However, although the government had decided to boost domestic consumption early in year 2004, it remains low and household savings remain high. Even the government has taken measures, such as reducing savings interest rates and charging tax interest income, the situation has not changed.Many scholars have studied this issue from the point of precautionary saving. They think that our country is undergoing dramatic changes from the traditional planned economy to market economy. And great changes have taken place in China. Residents have got to pay for housing, health care, education, etc, which were welfare incomes for them in the past. Thus the old welfare system is no longer in existence, and new social security system is not yet established, so the residents start to save a lot in order to deal with the uncertainty in the future.Currently, many scholars have studied the theory of precautionary savings of household savings in China. But they mainly use the methods which are popular in the western countries. Actually, China's situation is quite different. Western countries have implemented many social security systems, so mostly the people are encountered with uncertainties of income. And they have no reason to worry too much about their expenditure in the future. While when we study the uncertainties of Chinese people, we should pay more attention to the unexpected future expenditures. Because "medical treatment is difficult and expensive" has become a important issue in China, this paper attempts to find out that if the government invests more to health care insurance system, whether it will change the people's saving behavior or not.As for the arrangements of this thesis, firstly, this paper introduces some views of the literature on precautionary saving. On the basis of previous studies, the third chapter of this article has established a model by modifying a number of conditions. If certain conditions are satisfied, we can find that if the government invests more in the health care insurance system, the residents will consume more and save less. Based on this conclusion, we can do a simulation by setting some specific values. And we can get the same conclusion. Then we have another question. If the government invests more in the health care system, whether the health status of the residents will improve or not? The fourth chapter of this paper has further solved this question. And we have established a model by using the WHO data. And finally we have found that if the government provides more to the health care system, it will promote the long-term economic development by improving human capital. The fifth chapter presents different health care insurance systems and concludes that the main difference of health care insurance systems is the government role in it. And we can even say that health care insurance is a combination of government role and market mechanism. And the most direct way for the governments to intervene in health care system is to invest in it.In the last chapter, we introduce the health care insurance system in China and make some suggestions. As the health care insurance system reform has become the hottest issues of China, the government should stick to some principles, such as the reform cannot be market-oriented and the government should play a major role in it. If the government invests more in health care insurance system rather than push it to the market, it will promote economic development by reducing precautionary savings and increasing human capital.