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Individual vs household: How do different calculation patterns of catastrophic health expenditure matter? New
Ying Zhang1,2, Ding Hu1, Yongmei Guan1
1School of Economics and Management, Southeast University, Nanjing, China.
Abstract:
Reducing the incidence and severity of catastrophic health expenditure (CHE) has been considered to be one of the most fundamental goals of the global health care financing system. China, the second largest economy and the most populous country in the world, established a critical illness insurance (CII) programme in 2012 in an effort to protect Chinese residents from CHE shocks. This paper attempts to address whether the different calculation patterns (namely, individuals vs household) of CHE matter under China's CII programme. We compare two CII models built with the World Health Organization's (WHO's) standard and the Chinese standard. Exploiting the latest China family panel studies (CFPS) dataset, we demonstrate that using household as the calculation pattern is more effective in alleviating CHE under a tight premium budget, which is consistent with the international view. This finding raises concerns about the appropriate calculation pattern of CHE in policy making.
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