Evolution of the medical insurance payment method and medical service pricing: international comparison and lessons for China

ZHU Hengpeng1 PENG Xiaobo2

(1.Research Fellow at the Institute of Economics, Chinese Academy of Social Sciences)
(2.Lecturer at School of Economics, Central University of Finance and Economics)
【Knowledge Link】credence goods; experience goods

【Abstract】Many local healthcare funds have been in debt recently in China as medical expenditures increase rapidly. Given the new normal of economy, in which economic growth slows down and financial revenue declines, it is better for China to improve management of existing resources than seek to expand sources of incomes. Therefore, how to raise the distribution efficiency of China’s limited medical resources has become a focus of discussion by Chinese scholars and policymakers. To that end, it is necessary to firstly examine the evolution of medical insurance payment methods in other countries. This paper summarized the evolution of the formation mechanism of medical service prices and mainly discussed about how medical insurance payment methods are determined and adjusted by medical service providers, patients, and insurance companies after the introduction of the medical insurance system. This paper found that under the medical insurance system, the medical service payment mechanism or the medical insurance payment mechanism plays a key role in guiding the allocation of medical resources and behavior of medical service providers and patients. Meanwhile, through international comparison, this paper also discussed about the fundamental systematic arrangements necessary for the role of such a medical insurance payment mechanism.

【Keywords】 medical insurance; medical service price; payment mechanism;

【DOI】

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(Translated by GENG Qingyou)

    Footnote

    [1]. [1] URBMI and NRCMS are about to become the history, for most areas of China have integrated the two medical insurances into a unified (urban-rural) residents’ medical insurance. [^Back]

    [2]. [1] The survey results show that in Sanming, Fujian, the funds for UEBMI had deficit of CNY 125.464 million in 2010 and total deficit of CNY 83.169 million in total; Urban-Rural Residents’ Medical Insurance Fund (URBMI and NRCMS) had current deficit of CNY 16.30 million in 2013. [^Back]

    [3]. [2] Cutler, D.M., “Equality, Efficiency, and Market Fundamentals: The Dynamics of International Medical Care Reform,” Journal of Economic Literature, 2002, 40 (3), 881–906. [^Back]

    [4]. [3] Gu, X. Study and Exploration (学习与探索), (1): 163–166 (2010). [^Back]

    [5]. [1] Gu, X. Dongyue Tribune (东岳论坛), (10): 25–31 (2011). [^Back]

    [6]. [2] Medical service market here exclusively refers to supply and demand of medical service rather than medicine and device. [^Back]

    [7]. [1] In the case of information asymmetry between the seller and the buyer, if the seller knows more than the buyer, credence goods market emerges. The common form of credence goods is “expert” service such as medial service, auto repair service, and taxi service. [^Back]

    [8]. [2] Arrow, K. J., “Uncertainty and the Welfare Economics of Medical Care,” American Economic Review, 1963, 53 (5), p 941–73. [^Back]

    [9]. [1] Dulleck U., Rudolf K. and Matthias S., “The Economics of Credence Goods: An Experiment on the Role of Liability, Verifiability, Reputation, and Competition,” The American Economic Review, 2009, 101 (2), 526–555. [^Back]

    [10]. [1] In 1910 for example, a clinic in Tacoma, Seattle provided medical service to the employer and employees of sawmill and charged insurance premium of USD 0.5 per person/month. In 1929, the doctors from Elk, Oklahoma founded a farmers’ cooperative medical program by combining the farmers’ representatives in the communities, and each member contributed USD 50 to found a new hospital, which provided service to the members at discounted prices. [^Back]

    [11]. [2] Nine million of the total 12 million people were secured. [^Back]

    [12]. [1] Cutler, D. M., “Equality, Efficiency, and Market Fundamentals: The Dynamics of International Medical Care Reform,” Journal of Economic Literature, 2002, 40 (3), 881–906. [^Back]

    [13]. [1] The practice is prevailing in China today. [^Back]

    [14]. [2] Yuan, G. & Gu, X. Chinese Health Economics (中国卫生经济), 33(12): 109–112 (2014). [^Back]

    [15]. [3] Cutler, D. M., “Equality, Efficiency, and Market Fundamentals: The Dynamics of International Medical Care Reform,” Journal of Economic Literature, 2002, 40 (3), 881–906. [^Back]

    [16]. [1] Cutler, D. M., “Equality, Efficiency, and Market Fundamentals: The Dynamics of International Medical Care Reform,” Journal of Economic Literature, 2002, 40 (3), 881–906. [^Back]

    [17]. [2] Gu, X. Study and Exploration (学习与探索), (1): 163–166 (2010). [^Back]

    [18]. [3] Source: Fox Peter D., Peter R. Kongstvedt, A History of Managed Health Care and Health Insurance in the United States, Chapter 1, The Essentials of Managed Care, 6th ed. Burlington, MA: Jones & Bartlett Learning; 2013. [^Back]

    [19]. [4] Source: Kaiser Family Foundation. [^Back]

This Article

ISSN:1007-0974

CN: 11-3799/F

Vol , No. 01, Pages 24-38+4

January 2018

Downloads:4

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Article Outline

Knowledge

Abstract

  • 1 Before the emergence of medical insurance: differential pricing of doctors
  • 2 After the introduction of insurance system: how to form incentive-compatible payment mechanism
  • 3 Government role in social medical insurance system: policy makers and industrial supervisors
  • 4 Conclusions and implications
  • Footnote