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Ex post moral hazard, the additional healthcare utilization induced by health insurance, can be decomposed into an efficient portion generated by the income effect and an inefficient portion caused by the substitution effect, which has been discussed theoretically, but few studies have provided evidence of the efficient moral hazard. In 2016, the Chinese government launched the consolidation of urban and rural resident health insurance at the national level. After the consolidation, insurance benefits for nearly 800 million rural residents got improved. This paper uses a nationally-representative sample of 30,972 individuals from the China Health and Retirement Longitudinal Study (2011–2018) and adopts a 2-step empirical approach with the difference-in-differences method and the fuzzy regression discontinuity design to estimate the efficient moral hazard in the consolidation among rural residents. We find that the price shock contained in the consolidation increases inpatient care utilization, and the corresponding price elasticity is between −0.68 and −0.62. Further analysis shows that the efficient moral hazard resulting in welfare gains accounts for 43.33%–66.36% of the additional healthcare utilization. These findings highlight the necessity of evaluating the efficient moral hazard when analyzing the cost-benefit of health insurance reform. • We provide rare evidence of the efficient moral hazard effect in health insurance. • We focus on low-income groups from developing countries. • We use a 2-step empirical approach to estimate the efficient moral hazard effect. • The efficient moral hazard generated by income effect accounts for 43.33%–66.36%. [ABSTRACT FROM AUTHOR]

With a goal of improving health system quality and efficiency, reforms of China's health system over the past decade have sought to strengthen primary healthcare in lower-level clinics and health centers. Despite these wide-ranging reforms and initiatives, population-based studies have documented dramatic declines in patients' use of primary care facilities during this period. In this paper, we explore the determinants of this trend in China's rural areas using detailed longitudinal data following a nationally-representative sample of rural households and village clinics from 2011 to 2018. We estimate that between 2011 and 2018, the probability that individuals sought care at village clinics when ill dropped by 44%. At the same time, the utilization of outpatient services in county hospitals increased by 56% and patient self-treatment increased by 20%. Detailed Kitagawa-Oaxaca-Blinder decompositions suggest four primary drivers of this trend: the shifting burden of disease in rural areas, changes in how patients choose to seek care given different disease conditions, declining drug inventory in village clinics, and the decreasing importance of remoteness as a determinant of healthcare seeking behavior. Our results highlight the deteriorating role of village clinics in the rural healthcare system and the increasing importance of self-treatment and higher-tier primary care services. • Recent policies in China have sought to strengthen primary care. • Despite this, rural primary care utilization in villages has continued to decline. • Utilization of village clinics has shifted to self-treatment and upper-tier facilities. • Decomposition analysis show four main factors driving this trend. • Results highlight a deteriorating role of village clinics in the health system. [ABSTRACT FROM AUTHOR]

Informal payment for medical services is a common phenomenon in China. Patients make informal payments, in cash or in kind, to physicians in addition to official charges billed for medical services. This paper assesses the associations between patients' perceptions of the physician as an agent for the patient's interests (physician agency problem) and informal payment behavior. Using data of 24,000 and 6700 rural households respectively from the Health Development of Rural China Program database (collected in 2008) and Ningxia data source (collected in 2015), we find that patients' concern about physician agency problems is significantly associated with informal payments. The data shows that patients are more likely to make informal payments when they show low trust towards their physicians. For example, in the surgical cases, among patients who strongly distrusted the physicians, 17.9% (95% confidence interval [CI]:]: 13.5, 22.3) initiated informal payments, compared to 8.0% (95% CI: 5.1, 10.9) who expressed "strong trust" in their physicians. Poor communication was also significantly associated with an increase in the informal payment rate. For example, in the non-surgical setting, among the patients who rated the physicians' explaining skills as "poor," 5.9% (95% CI: 5.0, 6.9) of them made informal payments, significantly higher than the patients who rated "excellent" (of whom 1.8% made informal payments 95% CI, 0.9, 2.7). In this study, we provide an explanation for this finding: patients may initiate informal payments to physicians in order to mitigate the physician agency problem. It suggests that to mitigate informal payments, improving alignment between doctors' incentives and patients' interests would be essential. • Informal payments were directly related to patients' concerns about physicians' behavior. • Patients were more likely to make informal payments when they showed low trust towards their physicians. • Poor communication between patients and physicians was related to informal payment rate. • Informal payment might be viewed as an effort by the patients to align the physicians. [ABSTRACT FROM AUTHOR]