Determinants of Out-of-Pocket Health Expenditure in China Analysis Using China Health and Nutrition Survey Data

Background: Within total health expenditure, the share of out-of-pocket health expenditure by individuals has increased in the past 25 years in China, from 20% in 1980 to 49% in 2006, with a peak of 59% in 2000. Medical issues have become a larger concern than any other issue for households. Objective: To estimate the determinants of individual out-of-pocket health expenditure in China. Methods: We used a subsample of 9860 adults aged >= 18 years from the 2004 China Health and Nutrition Survey. To control for potential sample selection bias, the Heckman selection model was used to analyse individuals' health expenditure decisions, which is based on a sample that excludes individuals who do not report paying for healthcare. Results: Of the sampled population, 24.6% reported recent illness, 80.6% of whom sought care; 82.3% of those who sought care reported the amount of health spending. The average out-of-pocket health expenditure was Chinese Yuan (Y) 502 (Y100 = $US12.2 in 2004). Illness perceived as `quite serious' and self-reported poor health status had the highest coefficients (2.012 [p < 0.01] and 3.351 [p < 0.01], respectively). People spent more on healthcare with increasing age, especially over the age of 65 years, with a coefficient of 1.171 (p < 0.01). Those who had chronic disease, earned higher incomes, resided in urban areas, lived in the middle or eastern region, or lived in a household with a head having a middle school or higher education paid more for healthcare. In the model examining disaggregated effects of insurance programmes, the coefficients were positive, except for commercial insurance, and the coefficient for labour insurance was significant. Conclusion: Perceived severity of illness and self-reported health status are the most important factors when determining out-of-pocket health expenditure. The effect of aging is substantial. China should develop appropriate medical relief policies for the elderly to help them gain access to necessary healthcare services. Certain types of insurance programmes tend to increase out-of-pocket health expenditures, which highlights the need to continuously monitor and rigorously evaluate the impact of ongoing health insurance reform in China.