Inequality of Opportunity in Health Care in China: Suggestion on the Construction of the Urban-Rural Integrated Medical Insurance System

Transcription

1 MPRA Munch Personal RePEc Archve Inequalty of Opportunty n Health Care n Chna: Suggeston on the Constructon of the Urban-Rural Integrated Medcal Insurance System Jawe Sun and Chao Ma and Ze Song and Ha Gu 2. December 2013 Onlne at MPRA Paper No , posted 5. August :27 UTC

2 Inequalty of Opportunty n Health Care n Chna: Suggeston on the Constructon of the Urban-Rural Integrated Medcal Insurance System (December, 2013) Sun Jawe School of Government, Nanjng Unversty, Chna sunjawe.nju@gmal.com Ma Chao Center for Health Management and Care Securty Polcy Research, Nanjng Unversty, Chna machao1954@hotmal.com Song Ze College of Fnance and Statstcs, Hunan Unversty, Chna songze@gmal.com Gu Ha Center for Health Management and Care Securty Polcy Research, Nanjng Unversty, Chna guha@nju.edu.cn Correspongdng author: Ma Chao, PhD, Center for Health Management and Care Securty Polcy Research, Nanjng Unversty, 22 # Hankou Road, Gulou Dstrct, , Nanjng, Jangsu Provnce, Chna. machao1954@hotmal.com 1

3 Inequalty of Opportunty n Health Care n Chna: Suggestons on the Constructon of the Urban-Rural Integrated Medcal Insurance System Abstract: Ths paper nvestgates the urban-rural nequalty of opportunty n health care n Chna based on Roemer s (1998) theory of equalty of opportunty (EOp). Followng the compensaton prncple proposed by Fleurbaey and Schokkaert (2011), ths paper establshes a decomposton strategy of the farness gap whch we use to measure the urban-rural nequalty of opportunty n health care n Chna. Emprcal analyss usng the CHNS data shows that the ratos of the urban-rural farness gap to the urban-rural average dfference n the use of health care are durng and durng , whch ndcates that the urban-rural average dfference observed drectly from orgnal statstcal data may underestmate the degree of the essental nequty. Meanwhle, the ncreasng farness gap and the decomposton results mply that generally levelng the urban-rural rembursement ratos s probably not suffcent, and pro-dsadvantage polces should be put n place n order to mtgate or even elmnate the nequalty of opportunty n health care between urban and rural resdents. Ths mplcaton s also llumnatng for the experments and the establshment of the urban-rural ntegrated medcal nsurance system (URIMIS) n Chna. Under the background of the dual socal structure and the evdent ncome gap between the urban and the rural, the pro-dsadvantage polces wll be more apprecated and effectve n the promoton of the equalty of opportunty n health care. And such postve role of the pro-dsadvantage polces s supported by data from URIMIS plot dstrcts n Jangsu provnce. Key words: Equalty of opportunty; Health care; Farness gap; Urban-rural ntegrated medcal nsurance system JEL Classfcaton: D12, D63, I18 Abbrevatons: n ths paper, we have used some abbrevatons for convenence. Among these abbrevatons, some are standard and commonly used; whle some are not, such as URIMIS (urban-rural ntegrated medcal nsurance system), whch refers to a newly developed medcal nsurance system at the servce of both urban and rural resdents. 2

4 1. Introducton For a long tme, there have been large urban-rural dspartes n health and health care n Chna due to the urban-rural dual systems and the defcency of rural medcal nsurance system. Unfortunately, these dspartes haven t been effectvely reduced n the early stage of health care reform. Although the New Cooperatve Medcal Scheme (NCMS), whch s specally establshed for rural resdents, has almost realzed a whole coverage, ts nsurance level s too low to reduce the out-of-pocket health care expendture. Therefore, the current NCMS seems of lttle help to effectvely protect the nsureds from the catastrophc health expendture or the poverty caused by dseases (Wagstaff et al., 2009; Le and Ln, 2009; Yp and Hsao, 2009). Such stuaton wll nevtably mpede the human captal development n rural areas, thus beng useless for the elmnaton of the poverty trap and relatve deprvaton, as well as for the equalzaton of publc servces. There s an urgent need to buld an urban-rural ntegrated medcal nsurance system (for short, URIMIS), whch ams to promote the urban-rural balanced development n health and health care. Although the development of URIMIS s now one of the major topcs n Chna and the plot experments have sprung up n the recent years, the most wdely used polces merely focus on ncreasng the rembursement rato, especally for rural resdents, n order to reach a unfed medcal nsurance system between the urban and the rural. However, t s not enough to level the rembursement ratos for both urban and rural resdents to cope wth the urban-rural dspartes n health and health care. Meanwhle, t wll also be msleadng f the ntegrated polces are expected to realze a smlar health care expendture between urban and rural resdents. Pursung outcome equalty (such as the same health care expendture) and rembursement equalty (such as the same rembursement rato) may result n neffcency and even nequty n the mprovement of the current stuaton, snce there are ntrnsc dfferences between urban and rural resdents due to ther ndvdual or crcumstance characterstcs 1. Thus we should pay more attenton to the realzaton of the equalty of opportunty (EOp)-an expresson referrng to the essental equalty n ths paper-n health and health care. Unfortunately, there have been few dscussons and researches on the EOp n the doman of health and health care n Chna. Therefore, ths paper ams to evaluate the urban-rural essental nequalty n health care based on the theory of the EOp, and then provdes our suggestons on the mprovement of URIMIS polces. 1 We do not ntend to dg nto ths ssue, but we ve gven several examples n Appendx A as a smple explanaton. 3

5 Based on the theory of the EOp developed by Roemer (1993, 1998, 2002), and the compensaton prncple for the EOp analyss proposed by Fleurbaey and Schokkaert (2009, 2011), ths paper calculates and decomposes the urban-rural farness gaps n health care n Chna. By usng data from the Chna Health and Nutrton Survey (CHNS), the analyss results show that: (1) durng the two perods of and , when we take urban crcumstances as the deal reference crcumstances, the ratos of the urban-rural farness gap to the urban-rural average dfference (the EOp rato of the farness gap) n health care are and respectvely, ndcatng that an underestmaton would be made f we smply take urban-rural average dfference, whch can be drectly observed from the orgnal statstcal data, as nequalty; (2) although the farness gap and ts EOp rato ncrease, the sgnfcance of the effect of rembursement rato decreases n the later perod, whch probably mples that we should not expect the urban-rural nequaltes to be narrowed only by generally levelng the urban-rural rembursement ratos. An nference drawn from the above s that n order to realze the EOp between urban and rural resdents n health care, merely unfyng the rembursement polces s not enough, and the dual socal structure and the wdenng urban-rural ncome gap should be taken nto consderaton. For the medcal nsurance tself, pro-dsadvantage polces 2 are necessary accordng to the maxmn prncple of Roemer(1998). In order to prove ths pont of vew, we have used the data from some URIMIS plot dstrcts n Jangsu provnce for a further dscusson 3. The results have well verfed that pro-dsadvantage polces ndeed have superortes n narrowng the urban-rural farness gap n health care. The rest of ths paper s organzed as follows: secton 2 s a smple descrpton of URIMIS; theory of the equalty of opportunty and the axomatc frameworks are ntroduced n secton 3, and the llustraton of the EOp n health care and our decomposton strategy of the farness gap are also establshed n ths secton; secton 4 outlnes data sources and varables; secton 5 calculates and explans the urban-rural farness gaps n health care by usng the CHNS data, and gets some nterestng results; n secton 6, a further dscusson, also a verfcaton of our nference, s conducted by usng data from URIMIS plot dstrcts n Jangsu provnce; and secton 7 concludes. 2 We gve the defnton n Secton 6. 3 Although URIMIS constructon polces are explored among plot regons, there have been no unfed standards for the polcy evaluaton and comparson yet. Therefore, we also hope that ths paper can offer some practcal suggestons on URIMIS constructon and the mprovement of health care farness n Chna. 4

6 2. URIMIS 4 URIMIS tres to overcome the household regstraton (hukou) restrctons, and ntegrates the two current separate medcal nsurance systems, the Urban Resdent Basc Medcal Insurance (URBMI) and NCMS 5. Wth rasng rembursement ratos, especally for rural resdents, as one of the necessary steps, URIMIS ams to ensure the same opportuntes between urban and rural resdents n health care and medcal securty, and to narrow or even elmnate the urban-rural dspartes n health and health care. URIMIS s stll at the explorng stage. Plot experments were set out frst n some advanced regons, and varous modes have been formed. It was reported that fve provncal admnstratve regons-muncpaltes of Tanjn and Chongqng, Qngha provnce, Nngxa Hu autonomous regon, and the Xnjang Producton and Constructon Corps-and 41 prefecture ctes, as well as 162 countes (dstrcts, county-level ctes), had already establshed URIMIS at the end of Most of these URIMIS areas had drawn up ntegraton strateges to brdge the gap between urban and rural medcal nsurance polces. The advantages of URIMIS have been affrmed by domestc researches, most of whch, however, are just smple llustratons of the process of local URIMIS polces due to the short plot tme and lack of data resources. The qualtatve researches are obvously defcent for the evaluatons and comparsons of dfferent URIMIS modes, and for the judgment about how URIMIS should be. Also, t may fal to understand the real effectveness and effcency of dfferent modes of URIMIS, when ntentonally or unntentonally selectng mproper crtera. 3. Theores and methods 3.1. Equalty of opportunty Durng the development of the equalty of opportunty, Rawls (1971), who values the procedural equalty more than the outcome equalty, has made a huge contrbuton. Rawls ponts out that the publc opportuntes should be equally open to all ndvduals regardless of ther races, relgons or other factors, whch represent the 4 In fact, Chna never gves up the urban-rural coordnaton and ntegraton durng her rapd development, and the new century sees her much greater efforts. URIMIS s just one part of the whole blueprnt of the urban-rural ntegraton. 5 URIMIS s not smply to put URBMI and NCMS nto one fundng or one admnstraton system. Usually a new basc medcal nsurance wll be made to replace both of URBMI and NCMS, and ts multlevel medcal nsurance polces can be freely chosen by urban and rural resdents. 6 The 2011 report are obvously a lttle outdated. The number of the URIMIS plot regons s ncreasng rapdly n the recent two years. However, there has been no relevant offcal report publshed yet. 5

7 denttes. Ths s wrtten as one part of hs second prncple 7 of justce. Another part of the second prncple s about the far allocaton and the overall effcency. And t s usually called the dfference prncple. Ths prncple mples that the most dsadvantage group should be granted the maxmal opportunty. Therefore, the dfference prncple s also called the Rawls maxmn prncple. Rawls s dea of the equalty of opportunty has been further developed durng the followng decades. Sen (1980, 1999) emphaszes that people have the capabltes to choose the way of lfe they value most. Dworkn (1981a, 1981b) ntroduces the concepts of equalty of welfare and equalty of resources, suggestng that some dsadvantages, whch are out of ndvdual control or wthout ndvdual responsbltes, lke crcumstances and handcaps, should be compensated. Arneson (1989) and Cohen (1989) develop Dworkn s theory, and brng forward separately the concepts of equalty of opportunty for welfare and equalty of access to advantage. Based on these theores, Roemer (1993, 1998, 2002) proposes an axomatc approach, whch becomes a famous framework for emprcal studes on the equalty of opportunty n the socal scence doman. Accordng to Roemer s framework of the equalty of opportunty (EOp), one s advantage (y) s determned by two categores,.e. crcumstances (c) and effort (e); the former s beyond one s control, whle the latter s not. The functon s as follows: y y c, e ). (1) ( If we classfy crcumstances nto J types and defne that people n the same knd of crcumstances belong to the same type, then gven one s effort e, the advantage he attans s requred to be fxed no matter whch type he belongs to. Thus a far socety, as Roemer (1998) explans, s a socety that wll maxmze the advantage of those who possess the least advantage 8,.e. max mn y( c, ~ e ). (2) c Totalng the advantage of all ndvduals at each level of the effort, we obtan: max mn y( c, e) f ( e) de, (3) e c where f(e) s the densty functon of the effort. Roemer (1998, pp. 5-32) emphaszes that part of the effort can be affected by crcumstances, whch wll ndrectly affect the dstrbuton characterstcs of the advantage, and the socety should take responsblty for ths knd of nteracton. 7 The frst prncple s about the prorty of freedom, namely, t should be pror consdered, on the premse that all people have equal freedom, to maxmze the freedom that each one can enjoy. 8 It s worth notng that Roemer puts forward a somewhat dfferent proposal from that of Rawls, who cares about how to maxmze the mnmum level of advantage, however, across all ndvduals regardless of ther types. 6

8 Therefore, the advantage one obtans should be n lne wth hs (relatve) degree of effort n hs own type rather than the (absolute) level of effort. In other words, a far socety guarantees that people wth the same degree of effort wll obtan the same advantage rrespectve of ther types; or there s nequalty of opportunty, and the socety s no longer far. As to the ndvdual, one should take responsblty for, and only for, hs degree of effort n hs type; whle one s not responsble for the dstrbuton characterstcs of the effort. In ths way, Roemer defnes the degree of effort usng one s quantle n the condtonal dstrbuton of hs type. Thus the expresson (3) can be rewrtten as: max mn y( c, ) d. c And (4) can be regarded as an explanaton of the maxmn prncple of Roemer Inequalty of opportunty n health and health care The ntroducton of the equalty of opportunty nto the doman of health economcs can be traced back to the 1980s. Danels (1985, 1996) refers to Rawls equalty of opportunty and tres to make use of ths theory nto the analyss of health nequalty. However, emprcal work just sprang up durng the last decade. Zheng (2006) ntroduces ncome-health matrx to measure the health opportunty and the nequalty caused by unequal health securty crcumstances and socoeconomc structure. Rosa Das (2009) proposes straght forward the emprcal applcaton of Roemer s EOp. Usng data from the UK Natonal Chld Development Study, he fnds that there s sgnfcant nequalty of opportunty n health and that crcumstances, such as parental socoeconomc status (SES) and chldhood health, can affect the self-assessed health level n adulthood drectly and ndrectly (e.g. through effort such as educaton). Rosa Das (2010) further mproves and enrches the measurement of nequalty of opportunty by combnng Roemer s framework wth the Grossman model of human captal and health demand, and dscusses the partal-crcumstance problem. Jusot et al. (2010) and Trannoy et al. (2010) do smlar researches on the nequalty of opportunty n adulthood health, wth chldhood condton as the mportant crcumstances. Bala and Jones (2011) nvestgate a specal case of health nequalty, the nequalty of opportunty n mortalty rsk among ndvduals who and whose parents smoke or ever smoked. These artcles all emphasze both the mportance of crcumstances and the capabltes of change by effort for better condtons. Moreover, snce health and educaton are two vtal types of human captal and are nterrelated, Jones et al. (2012) analyze prmarly the role of educaton n the nequalty of opportunty n health, and note that n some dmensons there are sgnfcant and economcally szable lnkages between educaton and health. 7 (4)

9 As mentoned before, researches on the nequalty of opportunty n the doman of health and health care are rather rare, let alone the relevant topcs about Chna. Ths paper may be one of the frst researches that combne the theory of the EOp and health care wthn the urban-rural dual socal structure n Chna. We hope that our dscussons n ths paper wll be helpful to the further understandng of the urban-rural health care dspartes and the mprovement of the URIMIS polcy makng Emprcal strategy Reward prncple & compensaton prncple For the EOp analyss, Fleurbaey and Schokkaert (2009, 2011), wthn ther framework of selectve egaltaransm, propose two prncples-the reward prncple and the compensaton prncple. The reward prncple encourages nequalty caused by the effort,.e. dfferences of the advantage are allowed f they are brought about by the effort. For ths reason, when we measure the EOp, nfluences from the effort should be wped off frst. The typcal method s to calculate the corrected advantage ỹ of ndvdual by fxng the value of the effort ẽ,.e. ỹ = y(c, ẽ). In ths way, we can obtan the drect unfarness by calculatng the nequalty n ỹ usng tradtonal ndexes such as Gn ndex. The compensaton prncple requres that the nequalty caused by the crcumstances should be compensated. In other words, for the same effort, each ndvdual should obtan the same advantage whatever the crcumstances he s n; or compensaton should be gven to those who attan less advantage 9. The typcal calculaton procedure under the compensaton prncple s frst to set an deal dstrbuton of c (c * ), and then to obtan the far dstrbuton of y (y * ) va y * =y(c *, e ). In ths way, the unfar nequalty of opportunty,.e. the farness gap, s (y - y * ). Though the two prncples have somethng n common, they are n effect only compatble under one stuaton that c and e are completely ndependent,.e. they are addtvely separable (Fleurbaey and Schokkaert, 2009). Therefore, we need to choose between the two for emprcal work. Ths paper bases on the compensaton prncple n vew of the followng three reasons. Frst, what we care about s how to remburse rural resdents for ther dsadvantage of crcumstances. Ths s much closer to the logc of the compensaton prncple. Second, the reward prncple s usually used to explan nequaltes wthn a certan group, whle the compensaton prncple, between groups. We concern n ths paper whether the same health need obtans the same health care between urban and 9 Obvously, ths prncple has a close relatonshp wth the horzontal equty whch ndcates that the same health need should receve the same health care regardless of one s crcumstances, such as ncome level, regon or race. 8

10 rural resdents, and ths s more n lne wth the compensaton prncple. Thrd, the nfluence of c to e s actually very common n the real world, whch n most cases we cannot gnore. The compensaton prncple can reflect such nfluence to some extent and thus s more applcable to our research When Roemer meets Oaxaca Followng Fleurbaey and Schokkaert (2011), we defne c as a dummy ndcator of hukou of urban resdents (c=1) and rural resdents (c=0). The vector e ncludes all the other factors whch, durng the analyss, wll be classfed nto two parts, e 1 and e 2. The vector e 1 s on behalf of factors whose correlaton wth c wll brng about llegtmate urban-rural dfferences, e.g. ncome level and medcal nsurance types. Contrarly, the vector e 2 s on behalf of factors whch wll not brng about llegtmate dfferences, e.g. health needs. In ths way, the advantage,.e. the use of health care hc n our emprcal research, can be expressed as a functon of c, e 1 and e 2 : hc 1 2 ( c ) ( e ) ( e ), (5) where β, γ and δ are parameters, α s the constant, and ε s an error tem. What s more, n accordance wth the defnton of e 1, t s approprate to regard e 1 as a functon of c and π (the degree of effort),.e. e ( 1 c 1, ). Thus the functon (5) can be rewrtten as 10 Accordng to Fleurbaey and Schokkaert (2009), the farness gap should be y(c,e )- y(c *,e ). However, n order to obtan postve values of the farness gap and most of the factors, we use the reverse value expresson here,.e. y(c *,e ) - y(c,e ). What s more, snce y(c *,e )and y(c,e ) are the same for urban resdents due to the constructon of the equaton, ths farness gap n effect s the dfference between the counterfactual estmate of the rural resdents health care expendture n the urban crcumstances and the actual health care expendture of the rural resdents hc ( c ) ( c, ) ( e ). (7) And a more general presentaton of ths functon can be wrtten as hc 1 2 ( c ) ( c ) ( c, ) ( c ) ( e ), (8) where we add μ and ρ to separately express the coeffcent dfferences of and χ(e 2 ) between urban and rural groups. Defnng φ(c)=c and takng urban crcumstances (U) as the deal reference crcumstances, then we obtan the farness gap 10 follows: (6) between urban and rural resdents as ˆ f. g. ˆ ( e R) ˆ[ ( U, R) ( R, R)] ˆ ( U, R). (9) The urban-rural nequalty of opportunty n health care can be measured accordng to (9). Here we also obtan a decomposton form smlar to that proposed by Oaxaca (1973). At the rght hand of (9), the constant term can be regarded as a coeffcent of varable I, whose value s 1 nvarably. Here we consder I as one of the 1 ( c, )

11 elements of e 2. In ths way, the former two terms ˆ ˆ ( 2 e ) R can be consdered as the coeffcent effect of e 2, namely the e 2 coeffcent effect. It ndcates that part of the urban-rural health care gap s from the nsuffcent health care expendture of rural 1 1 resdents. The thrd term of ths equaton ˆ[ ( U, R) ( R, R)] can be regarded as the e 1 envronmental characterstc effect, whch ndcates that part of the urban-rural health care gap s from the dfference between the counterfactual characterstcs of e 1 -the same rural resdents wth the same degree of effort and the same effort dstrbuton characterstcs but n the urban crcumstances-and ts actual characterstcs when holdng the coeffcent of e 1 as constant as that of rural resdents. 1 The fourth term ˆ ( U, R) can be regarded as the e 1 envronmental coeffcent effect, whch ndcates that part of the urban-rural health care gap s from the mplacable urban-rural coeffcent dfferences of e 1. In our emprcal research, we specfy the lnear form hc c ( c ) e ( c ) e (10) 1 2 for (8), and e 1 a bc ( d lc ) (11) 1 for (6). In (11) a s the constant, b, d and l are parameters, and τ s an error tem. The estmated results from (10) and (11) wll then be taken nto (12),.e. ˆ f. g. ˆ E( e R) ˆ[ E( U, R) E( R, R)] ˆ E( U, R), (12) for the calculaton of the farness gap. It s worth notng that the methods of obtanng π (the degree of effort) are dfferent between the contnuous varable and the dscrete varable. For contnuous varable such as ncome, the π of ndvdual can be obtaned drectly from hs rank n urban or rural groups whch he belongs to. However, for dscrete varable such as self-reported health status, the method s more complcated. We need to know the propensty score of each ndvdual n hs group (urban group or rural group) wth the help of logstc model, and then to obtan hs π accordng to hs score. Meanwhle, ths paper uses the Geweke-Hajvasslou-Keane (GHK) smulaton (Gates, 2007) 11 -an approach of full nformaton maxmum lkelhood estmatonfor the system estmaton, allowng both the error terms of (10) and (11) to be serally correlated. 11 As Gates (2007) explans, the GHK smulaton has excellent features, and t s wdely used n the health economcs doman, e.g. Deb and Trved (2006), Rosa Das(2010) and Bala and Jones(2011), etc. STATA has already developed the correspondng command cmp, whch s detaledly ntroduced by Roodman (2011). 10

12 4. Data 4.1. Data sources The sample s from the Chna Health and Nutrton Survey (CHNS) whch s held by the Carolna Populaton Center of the Unversty of North Carolna at Chapel Hll and the Natonal Insttute of Nutrton and Food Safety at the Chnese Center for Dsease Control and Preventon. The CHNS, an ongong research project, ncludes data waves n 1989, 1991, 1993, 1997, 2000, 2004, 2006 and 2009, coverng urban and rural regons n nne provnces whch vary substantally n geography, economc development, publc resources and health ndcators. Subsample n each of the provnces s drawn va a multstage, random cluster process. Ths paper uses data waves from 1997 to 2006, among whch data from waves of 1997 and 2000 consttutes the group of perod 1, and data from waves of 2004 and 2006 consttutes the group of perod 2. We make such data arrangement for the followng reasons. Frst, n the analyss we only select the respondents who had suffered from llnesses durng the past four weeks before surveyed 12. Mssng values n waves of 1989, 1991 and 1993 are too many to complete the estmaton. Hence, we decde not to employ data from the three waves. Second, gven that the URIMIS plot actons have flourshed snce 2009, and there s no nformaton that can help us to dstngush regons whch are n the plot experments from those whch are not, we have to drop data n the 2009 wave for safety. Thrd, the numbers of our target respondents are not bg enough n some waves. If we estmate by usng separately the rest four waves, t may dscount the valdty of our conclusons. Moreover, NCMS was establshed n 2003, offerng a natural and reasonable boundary for poolng the data. As a result, the fnal data only ncludes respondents who had suffered from llnesses durng the past four weeks before surveyed n waves of 1997, 2000, 2004 or And respondents from the former two waves are pooled to represent the characterstcs of the group of perod 1; whle respondents from the latter two waves, the group of perod Varables For the measurement of the use of health care, we employ the health care expendture 13, the same as most lteratures do. Durng the selecton of ndependent varables and the estmaton, the key s how to dfferentate between llegtmate 12 In the 2006 wave, the correspondng queston n the questonnare s Durng the past 4 weeks, have you been sck or njured? Have you suffered from a chronc or acute dsease. 13 In the 2006 wave, the correspondng queston n the questonnare s How much dd ths treatment cost or has ths treatment cost so far (ncludng all regstraton fees, medcnes, treatment fees, bed fees, etc.). 11

13 factors and legtmate factors (Fleurbaey and Schokkaert, 2011). By referrng to relatve studes on racal/ethcal dspartes of health and health care (e.g. Insttute of Medcne, 2003; McGure et al., 2006; Cook et al., 2010; Fleurbaey and Schokkaert, 2011), we defne that e 1 -the vector of llegtmate factors-ncludes varables descrbng ndvdual SES, medcal nsurance polces and regonal characterstcs n health care, etc., and that e 2 -the vector of legtmate factors-ncludes varables descrbng health needs and ndvdual preferences. Specfcally, varables n e 1 can be classfed nto three parts: (1) SES varables, ncludng famly per capta ncome and educaton; (2) polcy varable,.e. rembursement rato; and (3) envronmental varables related to health care, ncludng regon, medcnes avalablty and travel tme for doctor vsts. Varables n e 2 are classfed nto four parts: (1) demographc varables, ncludng age, sex and martal status; (2) general health varables, ncludng self-reported health status and chronc dsease hstory; (3) health varables reflectng stuatons of llness,.e. types of llness one has suffered from and the severty of the llness, durng the past four weeks; and (4) preference varables, ncludng treatment preferences and lfestyle preferences such as whether smoke or drnk. As s known, the actual rembursement rato-the proporton of health care expendture pad for by medcal nsurance 14 -may be the best ndcator to measure the nsurng level and the economc burden of health care, compared to ndcators about whether one has partcpated n any medcal nsurance or what the name of the partcpated medcal nsurance s. However, ths s only feasble for respondents whose health expendtures are not zero. In the process of data dsposng, we have done some adjustment to cope wth the zero problems. For respondents who do partcpate n medcal nsurances but spend zero on health care, we take ther self-reported polcy rembursement ratos 15 as replacements. If one s self-reported polcy rembursement ratos are mssng, then we replace the mssng values wth the average rato of other matched respondents who are n the same cty, enjoyng the same medcal nsurance and havng the same health status as hm. Meanwhle, the treatment preferences are usually gnored n the health care researches, especally n relevant researches n Chna. Ths paper controls the treatment preferences to some extent va the queston of what dd you do when you felt ll. The fnal sample ncludes 4168 ndvduals, 1076 of whch are from the group of perod 1, and 3092 are from the group of perod 2. In perod 1, 412 respondents, 14 In the 2006 wave, the correspondng queston n the questonnare s What percentage of these costs was pad by nsurance or may be pad by nsurance. 15 In the 2006 wave, the correspondng questons are What percentage of the fees for outpatent care does your nsurance pay (not ncludng regstraton fee) and What percentage of the fees for npatent care does your nsurance pay (not ncludng food expenses). 12

14 makng up 38.3% of the subsample, are from urban areas. And n perod 2, there are 1283 urban respondents and 1809 rural respondents, wth the proporton of urban resdents ncreasng to 41.5%. The descrpton of varables s shown n Table 1, n whch we see obvous urban-rural dfferences n the four-week health care expendture. The average dfferences are yuan 16 and yuan respectvely n perod 1 and perod 2, wth the urban resdents expendng more n both perods. Urban-rural dfferences of SES varables (e.g. ncome and educaton) and polcy varable (.e. actual rembursement rato) are evdent, too. The urban-rural medcal envronmental dfferences seem small, whch are somewhat counter-ntutve. Maybe these avalable varables are not able to reflect the qualtes of health care properly or completely, although they do show dfferences. However, they are stll reserved for the analyss of the farness gap. [Please nsert Table 1 here] 5. Results How serous s the urban-rural nequalty of opportunty n health care? We turn to the decomposton strategy n secton for analyzng each farness gap n perod 1 and perod 2. The results are shown n Table 2. [Please nsert Table 2 here] When the urban crcumstances are regarded as the deal reference crcumstances, just as Table 2 mples, the total farness gap s yuan n perod 1. Gven that the drectly observed urban-rural average dfference n health care n the same perod s yuan, the rato of the farness gap to the average dfference (the EOp rato of the farness gap) n heath care n perod 1 s Intutvely, ths rato ndcates f the orgnal data shows that urban resdents on average spend 100 yuan more than rural resdents on health care, the truth s that urban resdents should have spent averagely 16.7 yuan less than rural resdents. In other words, the farness gap wll reach as much as yuan f the data shows a 100-yuan average dfference between urban and rural resdents. Smlarly, the urban-rural average dfference n health care n perod 2 s yuan, but the estmated farness gap n the same perod reaches as much as yuan. Therefore, the EOp rato of the farness gap n perod 2 s as hgh as Ths number ndcates that f the average health care expendture of rural resdents s 100 yuan less than that of urban resdents, accordng to the EOp, t should have been 74.4 yuan more than that of urban resdents. Snce the 16 Prces nvolved n our study are nflated to the 2009 level accordng to relevant nformaton suppled by CHNS. 13

15 EOp ratos of the farness gap of the two perods both exceed 100%, the average dfferences have underestmated the essental nequtes between the urban and the rural n both perods. Hence, we may say that compared to the outcome nequalty, the nequalty of opportunty mples a much worse stuaton of rural resdents n health care. Moreover, the value of the farness gap n perod 2 s bgger than that of perod 1, whch shows an ncrease of the nequalty of opportunty as the tme goes. For the three decomposton parts of the farness gap, Table 2 shows that the e 2 coeffcent effect s always predomnant, accountng for 57.75% of the whole farness gap n perod 1 and 67.25% n perod 2. The EOp ratos of the e 2 coeffcent effect are n perod 1 and n perod 2. We may thnk about ths effect and ts mportance from the aspects of health conscousness and servce qualtes. There are ngraned dfferences between urban and rural resdents n the conscousness of health and health care-urban resdents prefer more to health nvestment. Meanwhle, there are dfferences n health servce qualtes between the urban and the rural-urban resdents usually receve better medcne and medcal technques. The e 1 envronmental coeffcent effect, accordng to Table 2, does not play a bg role. Its EOp ratos are n perod 1 and n perod 2. Meanwhle, the EOp ratos of the e 1 envronmental characterstc effect are and respectvely, makng up 34.96% of the whole farness gap n perod 1 and 29.93% n perod 2. The absolute contrbuton of the e 1 envronmental characterstc effect to the farness gap ncreases, whle ts relatve contrbuton does n the opposte way. Table 2 also shows nterestng changes of the nfluental powers of some varables belongng to e 1 (the vector of llegtmate factors), especally the rembursement rato and the famly per capta ncome. The rembursement rato, whch plays a bg role n perod 1, shows lttle mportance n perod 2, e.g. the EOp rato of the rembursement rato n the e 1 envronmental characterstc effect s 0.236, but falls to as lttle as n perod 2. One possble nterpretaton s that before the establshment of NCMS (n perod 1), many rural resdents were lack of suffcent and effcent medcal nsurances, and partcpatng n some medcal nsurances (e.g. UEBMI) -or more straghtly speakng, enjoyng a certan rembursement n the outpatent or npatent servces-represented some knd of prvlege. Such prvlege n health care usually related to better health servces and lower prces. On the one hand, the prvlege encouraged nsureds to seek health care. On the other hand, non-nsureds, especally poor rural resdents, would be reluctant to purchase health care unless they were serously ll. As the urban resdents-especally urban workers and government offcers-and a few rch rural resdents got most of the prvlege n perod 1, the effect of the rembursement rato cannot be overlooked. Whle n perod 2, NCMS had been 14

16 already establshed. More and more rural resdents had partcpated n NCMS and enjoyed the rembursement beneft. The rembursement rato was not a prvlege for just a certan group of people any longer, although there was stll obvous dfference n rembursement between urban and rural resdents due to dfferent medcal nsurance polces of UEBMI, URBMI and NCMS. Therefore, the effect of the rembursement rato becomes so small that we can even gnore t n perod 2. Meanwhle, the effect of the famly per capta ncome shows a dstnct ncrease n perod 2. A possble explanaton s that the consumpton of health care was becomng less passve after the establshment of NCMS. As mentoned above, n perod 1 when NCMS had not been establshed yet, many rural resdents, especally the poor, were lack of suffcent and effcent medcal nsurances and health care servces. As a result, the health care consumpton n the rural was a knd of passve consumpton. For most rural resdents, they would not go to hosptal untl they had been serously ll. Therefore, ncome was almost rrelevant to the health care expendture n ths perod. Whle n perod 2 when NCMS had already been establshed, more and more rural resdents partcpated n ths medcal nsurance. The health-seekng behavors and health perceptons changed gradually among rural resdents, and the health care consumpton became more and more actve. Table 3 proves the above explanaton by quantle regressons for rural resdents. The health care expendture s not sgnfcantly dependent on ncome n perod 1 (except at the 0.9 quantle); whle ths stuaton has been reversed n perod 2. Therefore, the nfluence of ncome on the farness gap ncreased durng And such nfluence probably contnues. [Please nsert Table 3 here] In vew of the ndex number problem n the Oaxaca decomposton that the results from usng dfferent ndexes may vary largely, followng the advce of DeMurger et al. (2007), we re-conduct the farness gap decomposton, wth rural crcumstances (R) as the deal reference crcumstances, as a robustness test. Our conclusons above can stll hold true accordng to the results shown n Table B.1 of Appendx B. 6. Further dscusson 6.1. Prelmnary nference We see n Table 2 an ncrease of the farness gap between perod 1 and perod 2, and ths ncrease s faster than that of the urban-rural average dfference. Although 15

17 there s a clear rse of the rembursement rato for rural resdents, the effect the rembursement rato has made on narrowng the farness gap s rather small, and decreases sharply n perod 2. On the contrary, the effect of the famly per capta ncome ncreases apprecably. Therefore, the bg background of the ncreasng urban-rural ncome gap should be taken nto consderaton when mprovng medcal nsurance polces. Although t s not the man concern of the medcal nsurance system to narrow the urban-rural ncome gap, such gap has already worsened the performance of medcal nsurance polces. There s no gansayng the fact that the relevant government sectors, whch are responsble for the medcal nsurance polcy makng and supervson, have made great effort to narrow the urban-rural dfference n rembursement. However, snce the urban-rural ncome gap s wdenng, such effort may be counterproductve. Just as that descrbed n the Example C n Appendx A, the ncome gap can only counteract the good ntentons of current medcal nsurance polces, beng a hndrance for URIMIS ams. Therefore, under the background of the wdenng ncome gap, only generally levelng rembursement ratos between urban and rural resdents, as we often see n the plot URIMIS polces, s now obvously nsuffcent to mtgate the urban-rural nequaltes n health care. On the bass of Roemer s EOp, the pro-dsadvantage polces on rembursement are hghly desderated. The above s just our prelmnary nference whch needs further verfcaton. Fortunately, n Jangsu provnce, there are ndeed some dstrcts where the pro-dsadvantage polces on medcal nsurance are mplemented. We have made a specal nvestgaton from URIMIS plot dstrcts n Jangsu provnce. The data wll be helpful to the further argument Jangsu plot URIMIS data The Jangsu plot URIMIS survey, adoptng a multstage, random cluster method, had selected 6 dstrcts 17 and lasted from December 2011 to Aprl Ths survey amed to estmate the effcency and the dfferences n effcency of varous URIMIS modes n Jangsu provnce. Here we classfy the dstrcts nto two groups accordng to whether they had mplemented the pro-dsadvantage polces for URIMIS. For judgment, we consult Gu and L (2013, pp ) and defne the pro-dsadvantage polces as polces that offer fscal subsdes to those poor rural resdents who want to partcpate n medcal nsurances wth a hgher securty level. For nstance, f lower-ncome rural resdents who should have partcpated n NCMS want to and now have the chance to-wth the help of premum subsdes-select 17 They are Tacang, Wux, Wujn, Yxng, Xnghua and Jngjang. 16

18 UEBMI, URBMI or some new medcal nsurance born after the URIMIS establshment, we wll say that the local medcal nsurance polces are pro-dsadvantage 18. We select respondents who had got sck durng the past one year before surveyed 19. At the mean tme, respondents wth mssng values are dropped. The fnal sample ncludes 2065 ndvduals, among whch 608 ndvduals are n dstrcts where there are pro-dsadvantage polces (PD group), whle the rest 1457 ndvduals are not (NPD group). The PD group has 311 rural respondents and 297 urban respondents, whle the NPD group has 766 and 691 respectvely. Table B.2 of Appendx B shows the detaled nformaton of the data Farness-gap decomposton Table 4 exhbts the decomposton of farness gaps for both the PD group and the NPD group by usng the smlar strategy wth that n Secton 5. An mportant fndng s that the farness gaps of the PD group are far less than those of the NPD group, no matter whether we take U or R as the deal reference crcumstances. The man dfference between the two groups s located n the e 1 envronmental characterstc effect whch s only notceable n the NPD group. The results mply that the nfluental power of the e 1 envronmental characterstc effect s drectly challenged n the PD group, snce rural resdents, who are wth hgher needs for health care but at lower ncome levels, are able to afford more health care n an advanced medcal nsurance system. Therefore, the pro-dsadvantage polces do mprove the essental EOp between urban and rural resdents n health care. [Please nsert Table 4 here] Table 5 supports the pro-dsadvantage polces by quantle regressons smlar to those n Table 3. In the NPD group, the correlaton between ncome and health care expendture s sgnfcant for most quantles; whle such correlaton n the PD group s not sgnfcant at all. It s not dffcult to understand. Comparng the NPD group wth the group of perod 1 or perod 2 n Table 3, we see an mprovement of the rembursement polces, snce the health care use of the rural poorest (at the 0.1 quantle) becomes senstve to ther ncomes, whch s a sgn of actve consumpton. 18 Compared wth the other two, NCMS rembursement rato s smaller. Snce rural resdents at the lowest ncome level usually need more health care but cannot pay the bll, such pro-dsadvantage polces wll mprove ther affordablty and reduce the health rsks brought about by passve health care consumpton. Besdes, such pro-dsadvantage polces offer prvlege to the rural poor, but we do not call them pro-rural polces, because the polces are only avalable for poor resdents n the rural, not all rural resdents. 19 The questonnare of ths survey s a lttle dfferent from relevant parts of the CHNS questonnares. Therefore, we change a few varables for the farness gap analyss n ths secton. Please see Appendx B Table B.2 for detals. 17

19 However, the NPD strategy s not suffcent f URIMIS wants to reduce the nequalty of opportunty n health care between the urban and the rural as much as possble. We fnd better results n the PD group n whch the farness gaps are much smaller (see Table 4) and n whch the use of health care seems unrelated to ncome (see Table 5), reflectng to some extent a based-on-need allocaton of health care. Therefore, the nsgnfcant correlaton between health care expendture and ncome n the PD group shown n Table 5 does not tell the same thng as that n the group of perod 1 shown n Table 3. And compared wth Table 3, the PD group also possesses a dfferent explanaton for the nsgnfcance at the 0.1 quantle. [Please nsert Table 5 here] Snce ths survey data s of cross secton data, the average effect of treatment on the treated (ATT) of the PD group cannot be obtaned from drect comparson wth the NPD group. It s proved that under such non-randomzed tral, the approach of propensty score match (PSM) may maxmally mtgate the effect caused by the confoundng bas and the sample selecton bas (Rosenbaum and Rubn, 1985; Heckman et al., 1998). Therefore, ths paper conducts four methods of PSM for analyzng ATT. The results are shown n Table 6. When we take U as the deal reference crcumstances, the pro-dsadvantage polces can reduce the farness gap of the urban-rural health care by 27.2%. When we take R as the deal reference crcumstances, the reducton s 58.3%. At ths moment, we beleve we have proved our nference descrbed n secton 6.1 that the pro-dsadvantage polces wll greatly help to realze the EOp n health care between urban and rural resdents. [Please nsert Table 6 here] 7. Conclusons As one mportant part of the human captal, health s the basc premse for work, and s also vtal to the human welfare (Schultz, 1961; Deaton, 2003). The health care nequaltes would serously harm the socal welfare just as the ncome nequaltes do. Thus t s of great mportance to focus on the ssue of equty n health care. Mooney (1986) ponts out that equalty should enjoy the prorty n the trade-offs of effcency and equalty n terms of health. Sen (2002) also proposes that the equty of health care s one of the major parts of justce for a country, and that the basc health care system should guarantee the cvl rghts to receve health care. Rural resdents have made great contrbuton to Chna s economc development. However, what they share from the prosperty s far less than what they should obtan. 18

20 The nequalty n health care s just one conspcuous aspect among the urban-rural llegtmate gaps. Snce the 21 st century, Chna has been mprovng the rural health and health care condtons wth great effort, ncludng the expanson of NCMS, the rase of NCMS rembursement ratos, and the exploraton of URIMIS. Durng the mprovement, t s beng heatedly dscussed, but wthout an agreement, on how to effectvely reduce even elmnate the urban-rural dspartes n health care. Ths paper suggests that focusng on the urban-rural nequalty of opportunty s much more meanngful than focusng on the urban-rural outcome equalty or rembursement equalty n health care. And generally levelng the rembursement ratos between urban and rural resdents s not suffcent to realze the EOp n health care. The pro-dsadvantage polces are needed. Ths paper analyzes the nequalty of opportunty n health care between urban and rural resdents from a broader perspectve based on the theory of the EOp. We use the framework of the compensaton prncple proposed by Fleurbaey and Schokkaert (2011) as the base for emprcal analyss, and the farness gap as a measurement of the urban-rural nequalty of opportunty n health care. The Oaxaca decomposton s establshed and we defne three parts of the farness gap, the e 2 coeffcent effect, the e 1 envronmental characterstc effect, and the e 1 envronmental coeffcent effect. We frst measure the farness gaps usng data from CHNS n and The results ndcate that the urban-rural average dfferences whch can be drectly observed from orgnal statstcal data may underestmate the essental nequaltes. In addton, we have notced a dramatc change of the effect of rembursement rato and ncome durng the two perods. Through further analyss, we nfer that snce the urban-rural ncome gap s wdenng, generally levelng rembursement ratos between urban and rural resdents becomes nsuffcent to mtgate the urban-rural nequaltes n health care. Then a queston may arse on how to make use of the medcal nsurance polces n URIMIS. We gve our suggeston, whch s n lne wth the dea of Roemer(1998) 20, that the urban-rural ncome gap, whch becomes wder and wder n recent years, should be taken nto consderaton n URIMIS. Therefore, under current stuaton, the pro-dsadvantage polces should be made to help mprove the affordablty of the rural poor. Our suggeston s well verfed by the plot URIMIS data n Jangsu provnce. The results show that the urban-rural farness gap n health care can be narrowed sgnfcantly va the pro-dsadvantage polces. There are nevtably some lmtatons n our research. In the further dscusson, 20 Accordng to Roemer, n an deal equal world, resources should not be dstrbuted on the bass of (absolute) level of effort of ndvduals especally when they are n dfferent types, because crcumstances may affect effort. Please see secton 3 for detals. 19

21 we use data from Jangsu provnce as a supplementary support of our proposton. Although the data has covered the northern, mddle and southern parts-the three major economc zones - of Jangsu provnce and s able to represent the characterstcs of the URIMIS modes n Jangsu and other advanced provnces, t may not be on behalf of the URIMIS plot condtons of the whole Chna. Nevertheless, as mentoned before, ths paper s a prelmnary study on Chna s specal medcal nsurance polces by usng Roemer s EOp theory, n order to provde some useful suggestons on the further mprovement of the medcal nsurance systems. We hope that ths paper wll nspre more nterest n the feld of the health care justce n Chna and other countres. 20

22 Acknowledge Ths research uses data from Chna Health and Nutrton Survey (CHNS). We thank the Natonal Insttute of Nutrton and Food Safety, Chna Center for Dsease Control and Preventon, Carolna Populaton Center, the Unversty of North Carolna at Chapel Hll, the NIH (R01-HD30880, DK056350, and R01-HD38700) and the Fogarty Internatonal Center, NIH for fnancal support for the CHNS data collecton and analyss fles from 1989 to 2006 and both partes plus the Chna-Japan Frendshp Hosptal, Mnstry of Health for support for CHNS 2009 and future surveys. Ths paper s part of the research programs Study on the Urban-rural Integrated Medcal Insurance Modes: Effect Assessment and the Optmal Mode Selecton ( ) supported by the Natonal Natural Scence Foundaton of Chna (NSFC), Study on the Capacty and Sustanablty of Socal Medcal Insurances (2011ZDIXM022) supported by Jangsu College Phlosophy and Socal Scence Major Research Foundaton, and Study on the Urban-Rural Integrated Medcal Insurance Systems under the Theory of Equalty of Opportunty (CXLX13_061) supported by Jangsu College Graduates Research and Innovaton Plan. We thank Professor Allard E. Dembe (Dvson of Health Servces Management and Polcy, College of Publc Health, The Oho State Unversty, USA) and Assstant Professor Chen X (Department of Health Polcy and Management, School of Publc Health, Yale Unversty, USA) for ther constant and professonal gudance for us on the study of health economcs, and Assstant Professor Qu Zhaopeng (Populaton Research Insttuton, School of Busness, Nanjng Unversty, Chna), Postdoctoral Fellow and Lecturer L Jaja (School of Publc Health, Shandong Unversty, Chna) and Mary Hong (Kennedy School of Government, Harvard Unversty, USA) for ther detaled and valuable comments. 21