Modelling medical care usage under medical insurance scheme for urban non-working residents

Abstract

This research investigates and evaluates China’s urban medical care usage for non-working residents using microsimulation techniques. It focuses on modelling medical services usage and simulating medical expenses on hospitalization treatments as well as clinic services for serious illness in an urban area for the period of 2008–2010. A static microsimulation model was created to project the impact of the medical insurance scheme. Four kinds of achievements have been made. For three different scenarios, the model predicted the hospitalization services costs and payments, as well as the balance of the social pool fund and the medical burden on families.

Introduction

After establishing a medical insurance system for the urban employed population in 1998 and founding a new cooperative medical care system in rural regions in 2002 [1], China launched a pilot project of medical insurance reform in September 2007 to cover urban residents outside of the workforce [2]. The pilot project has been carried out in 79 cities to cover non-working urban residents, including children, students and elderly people. Both the Central Government and local governments fund the subsidies. The target has been set of establishing a medical service system which covers all urban residents by 2010 [3].

Kunming began its urban residents’ medical insurance scheme in October 2007 [4]. Participation in this medical insurance plan is voluntary. The premiums are paid by households or families, instead of individuals. The government gives subsidies of at least 70 per cent of the insurance premiums annually to each participant, with higher subsidies going to families who are low income earners or with disabled individuals. By the end of February 2008, several months since the scheme’s commencement, 0.207 million urban residents had been covered by the medical insurance scheme. The goal is to cover 0.90 million urban residents who are out of labour workforce by 2009, and to cover all urban residents of Kunming (around 1.2 million) by 2010.

This research focuses on modelling medical services use and predicting medical expenses on hospitalization treatments as well as clinic services for serious illnesses for non-working urban residents in Kunming. The key aims of this research can be described in two aspects. First, it estimates the potential urban resident population entering the medical insurance scheme and predicts the medical costs. Second, it estimates and evaluates the responsibility or subsidies of the Chinese government to the medical insurance scheme. In this way, this research aims to advance the understanding and impact of health insurance reform in China, and to assist in future policy formulation and implementation. The research creates a static microsimulation model to project the impact of the medical insurance scheme in an urban area of China to assist in setting future policy.

Using microsimulation techniques, this project answers the major research question:

• What is the cost of expanding the social medical insurance to all urban residents without employment over 2008–2010?

By combining information from the National Health Services Surveys (conducted in 1998 and 2003), insurance coverage and medical services costs on hospitalization are projected over the period of 2008–2010. For the simplification in the model, unless specification, urban residents mean urban residents who are not in the labour force.

The main method used in this research is microsimulation. A microsimulation model operates on individual unit records describing persons, households, or firms. The simulation model applies a set of rules to each individual record. The characteristic of microsimulation models is to analyse the likely behaviour of and the impact of policy change upon individuals [5]. By using the individual level as the basis of the model, microsimulation allows analysis at a very detailed level or, through aggregation, more general analysis can be done. Unlike modelling based on a typical or median case, microsimulation models provide a much richer source for research by enabling the exploration of heterogeneity and diversity within the simulated population [6]. Comparing with macro models, microsimulation models have the advantage of handling short-term data sources. They are quite useful when facing insufficient historical data or policy changes.

Microsimulation has proven to be a particularly useful tool for policy analysis in many areas of policy and has been widely used in many countries in the world. Apart from making a major contribution to the development of tax and transfer policies, microsimulation models in recent years have become more common in the research and policy areas of health and aged care [7]. The models involve pharmaceutical subsidies [8], [9], human resource issues in health [10], medical services and medical insurance schemes [11], [12], dental health services [13], and primary and aged care [14], [15], [16], [17]. Another fast growing research area is spatial microsimulation, that focuses on predicting the local effects of policy change and service needs of small area populations [18], [19], [20], [21].