Can supplementary private health insurance reduce vulnerability to expected poverty and catastrophic health expenditure in China?

backgroundIn China, where social health insurance (SHI) covers over 95% of the population, supplementary private health insurance (SPHI) primarily addresses high out-of-pocket (OOP) payments that remain after SHI reimbursements. In line with the policy objective of alleviating the OOP burden, this study aims to evaluate the impact of SPHI on vulnerability to expected poverty (VEP) and catastrophic health expenditure (CHE).

methodsA cross-sectional dataset consisting of 25,568 samples was obtained from the 2023 National Health Service Survey (Shandong). Three-stage feasible generalized least squares (FGLS) method was employed to estimate VEP. CHE was measured by OOP healthcare payments that equalled or exceeded 40% of a household's capacity to pay. To address potential endogeneity issues, the county-level average participation rate of SPHI was used as an instrumental variable (IV). The probit and IV Probit models were applied to assess how SPHI affects VEP and CHE.

resultsAmong respondents covered by SHI, only 13.87% individuals purchased SPHI. Those with SPHI exhibited a 11.96% lower likelihood of VEP and experienced 8.06% fewer instances of CHE compared to those without SPHI. The two-stage least squares regression results indicated that SPHI significantly reduces the likelihood of VEP (coefficient: -2.897, P < 0.01) and CHE (coefficient: -1.930, P < 0.01). Additionally, SPHI provided greater welfare benefits, particularly for older adults, rural residents, and individuals with chronic diseases.

conclusionThe findings suggest that SPHI can significantly contribute to poverty reduction, even among populations already covered by SHI. Therefore, we recommend that other low- and middle-income countries, where SHI serves as the primary insurance system as in China, consider implementing SPHI for vulnerable groups to reduce illness-induced impoverishment.