A Study On Adverse Selection Of Supplemental Commercial Medical Insurance

In recent years, China’s social health insurance system has made great progress in institutional construction, providing basic health security for the masses. But with the aging of population and the improvement of living standards, people also have multi-level medical security needs. By purchasing supplemental commercial medical insurance, people can meet the needs of coverage beyond basic medical insurance. This is an important way to build a multi-level medical security system. However, if there is adverse selection problem arising from asymmetric information in insurance market, it will seriously hinder the healthy development of supplemental medical insurance.In this thesis, "China Health and Retirement Longitudinal Study" 2011 Baseline Data and 2013 Followup Data are used to test adverse selection problem of supplemental medical insurance, with variables representing personal health risks through econometric analysis such as Logit model, Probit model, Bivariate Probit model and Fixed Effect Model. The main innovation of this study is focusing on adverse selection problem of supplemental medical insurance and using more authoritative database, which supplement research literature in this field.The study finds only a weak positive correlation between the presence of chronic diseases and insurance purchasing; supplemental medical insurance group have been centered on highly educated population; there is no obvious evidence for supplemental medical insurance to promote the use of medical services. This thesis argues that there is information asymmetry in supplemental medical insurance market. But the effect of adverse selection is very weak. Accordingly we propose the following policy recommendations:(a) improve the insurance underwriting process (b) use health management as a way to prevent and control risk of diseases (c) strengthen the propaganda of insurance knowledge.