The Impact of Individual Health Account Scheme on Lifetime Income Redistribution: Evidence from China

16 Pages Posted: 7 Oct 2015

See all articles by Guan Gong

Guan Gong

Shanghai University of Finance and Economics

Hongmei Wang

University of Nebraska at Omaha - College of Public Health

Lingli Xu

Shanghai University

Date Written: November 2015

Abstract

This paper investigates the effects of a combination of individual health accounts (IHAs) and catastrophic insurance on lifetime income redistribution by examining the variations in end‐of‐life IHA balances and lifetime out‐of‐pocket health expenditures. We exploit longitudinal health expenditure data from 2005 to 2007 in Kunshan City, Jiangsu Province of China. We find a high concentration of low IHA balances at the end of life, with most equal to zero. This finding suggests that most IHA balances are used for health expenditures and that the income redistribution effect through the accumulation of IHA balance is limited. However, the results also show a wide variation in lifetime out‐of‐pocket spending in the form of deductibles and coinsurance, which implies serious inequality in individual financial burden that can lead to a large income redistribution effect.

Suggested Citation

Gong, Guan and Wang, Hongmei and Xu, Lingli, The Impact of Individual Health Account Scheme on Lifetime Income Redistribution: Evidence from China (November 2015). Review of Development Economics, Vol. 19, Issue 4, pp. 925-940, 2015, Available at SSRN: https://ssrn.com/abstract=2670317 or http://dx.doi.org/10.1111/rode.12179

Guan Gong (Contact Author)

Shanghai University of Finance and Economics ( email )

777 Guoding Road
Shanghai, AK Shanghai 200433
China

Hongmei Wang

University of Nebraska at Omaha - College of Public Health

984350 Nebraska Medical Center
Omaha, NE 68198-4350
United States

Lingli Xu

Shanghai University

149 Yanchang Road
SHANGDA ROAD 99
Shanghai 200072, 200444
China

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