The System Of Health Financing And Development Of Private Health Insurance In China

Human capital is mostly correlated with health, of which health expenditure financing and medical service play a core role. Consisting of government, social and personal payment, the health expenditure system relies on the proportion and inter-effects of public medical insurance, private health insurance and out-of-pocket money.With the accelerating demand for health and medical service of residents, our medical financing system faces new challenges. Due to the enforcement of New Medical Reform’s Policy, factors that would impact on healthcare financing need further research. By using provincial panel data, we show our empirical study results as following:China’s social medical insurance payment is positively correlated with private health insurance (PHI), in contrast to the crowding-out effect assumed in many literature. The medical reform and the improvement and accessibility of medical service promoted the consumption of PHI. Medical fees could stimulate the buying of PHI for lower income groups. And the medical security coverage for old-aging population is not well provided.