Social Health Insurance Reform and Economic Growth: Simulation Analysis in China

Lili Zheng

doi:doi:10.11648/j.ijber.20190806.26

| Peer-Reviewed |

Social Health Insurance Reform and Economic Growth: Simulation Analysis in China

Lili Zheng

Received: 21 November 2019 Accepted: 6 December 2019 Published: 10 December 2019

Views: Downloads:

Download PDF

Share This Article

Twitter
Linked In
Facebook

Abstract

China has implemented drastic reforms in social health insurance within the past decade. I investigate how social health insurance affects economic growth in China by employing a three-period overlapping generations’ model in which social health insurance is determined endogenously. My model consists of three parts: individuals, firms and the government. In my model, social health insurance influences savings, physical capital, human capital and economic growth. I find that the higher the contribution rates of individual accounts to social health insurance, the lower the personal savings rate; with an increase in the personal account payment rate, an increase in the payment rate is associated with an increase in personal account funds, and the medical expenditure will increase; the contribution of each monetary unit will lead to more than one monetary unit of output, representing the multiplier effect of the personal account payment rate on economic growth. So the contribution rates of personal accounts are conducive to physical and human capital accumulation, generating a multiplier effect on economic growth. Simulation results show that a lower rate of pooled account payments and higher rate of personal account payments result in greater economic growth. I also find that the proportion of employment payments transferred to personal accounts positively influences economic growth. The theoretical model and simulation indicate that the reform of social health insurance causes an increase in economic growth.

DOI	10.11648/j.ijber.20190806.26
Published in	International Journal of Business and Economics Research (Volume 8, Issue 6, December 2019)
Page(s)	458-468
Creative Commons	This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited.
Copyright	Copyright © The Author(s), 2024. Published by Science Publishing Group

Keywords

Social Health Insurance Reform, Physical Capital, Human Capital, Economic Growth

References

[1]	Grossman, M., 1972, the Demand for Health: A Theoretical and Empirical Investigation, Columbia University Press.
[2]	Arrow, K. J., 1963, Uncertainty and the Welfare Economics of Medical Care, The American Economic Review, 53 (5): 941-973.
[3]	Chou S., M. Grossman, H, Saffer, 2002, An Economic Analysis of Adult Obesity: Results from the Behavioral Risk Factor Surveillance System, NBER Working Paper No. 9247.
[4]	Wagstaff A, 2005, The bounds of the concentration index when the variable of interest is binary, with an application to immunization inequality, Health Economic, 14 (4): 429-32.
[5]	North D., 1981, Structure and Change in Economic History, New York.
[6]	Solow. R M A. Contribution to the Theory of Economic Growth, Quarterly. Journal of Economics. 1956 (70): 165-194.
[7]	Modigliani, F. and Brumberg, R. H., 1954 Utility Analysis and the Consumption Function: An Interpretation of Cross-Section Data. In: Kurihara, K. K., Ed., Post-Keynesian Economics, Rutgers University Press, New Brunswick, 388-436.
[8]	Samuelson P. A., 1958, An Exact Consumption-Loan Model of Interest with or without the Social Contrivance of Money, Journal of Political Economy 66 (6): 467-482.
[9]	Feldstein M., Social Security, Induced Retirement, and Aggregate Capital Accumulation, Journal of Political Economy, 82 (5): 905-926.
[10]	Kotlikoff L. 1988, Does the consumption of different age groups move together? A new non-parametric test of intergenerational atruism. NBER Working paper No. 2490.
[11]	Chou S., J. Liu, J. K. Hammitt, 2006, Households' Precautionary Behaviors—The Effects of the Introduction of National Health Insurance in Taiwan, Review of Economics of the Household 4 (4): 395-421.
[12]	Mu Huaizhong, 2001, Analysis on the economic effect of social security level, Chinese Journal of Population Science, 3.
[13]	Romer, P. M., 1986, Increasing Returns and Long-Run Growth, The Journal of Political Economy, 94 (5): 1002-1037.
[14]	Lucas, R. E., 1988, On the Mechanics of Economic Development, Journal of Monetary Economics, 22: 3-42.
[15]	Martin Fe Lucas, R. E., 1988, On the Mechanics of Economic Development, Journal of Monetary Economics, Vol. 22, pp. 3-42.
[16]	Kemnita, A., and B. U. Wigger, 2000, Growth and Social Security: the Role of Human Capital. European Journal of Political Economy, (16): 673-683.
[17]	Shen, Y. 2012, The Impact of Social Security on Human Capital and Its Economic Growth—Based on China’s Data from 1989 to 2008. Soc. Secur. Res. 4, 69–76.
[18]	Barro, R. J. and X. Sala-I-Martin, 1995, Economic Growth, New York, McGraw-Hill Inc.
[19]	Perotti, R., 1996, Growth, Income Distribution and Democracy: What the Data Say. Journal of Economic Growth, 1 (2): 149-187.
[20]	Ludo Cuyvers, Glenn Rayp, 1998, Social Dumping and Social Competition in the Global Economy, Intersentia Economische Wetenschappen, Editors: Ludo Cuyvers, Bart Kerremans, pp. 13-47.
[21]	Bellettini G. and C. B. Ceroni, 2000, Social security expenditure and economic growth: an empirical assessment, Research in Economics, 54 (3): 249-275.
[22]	Zhang, J., Zhang, J., 2004, How does social security affect economic growth? Evidence from cross country data. Journal of Population Economics 17, 473-500.
[23]	Lee C., C. Chang, 2006, Social security expenditure and GDP in OECD countries: A cointegrated panel analysis, International Economic Journal 20 (3): 303-320.
[24]	Wang Dihai, health human capital, economic growth and poverty trap, Economic Research Journal, 2012, 6: 144-155.
[25]	Diamond, P. A., 1977, a framework for social security analysis, Journal of Public Economics 8: 275-298.

Cite This Article

Plain Text BibTeX RIS

APA Style

Lili Zheng. (2019). Social Health Insurance Reform and Economic Growth: Simulation Analysis in China. International Journal of Business and Economics Research, 8(6), 458-468. https://doi.org/10.11648/j.ijber.20190806.26

Copy | Download

ACS Style

Lili Zheng. Social Health Insurance Reform and Economic Growth: Simulation Analysis in China. Int. J. Bus. Econ. Res. 2019, 8(6), 458-468. doi: 10.11648/j.ijber.20190806.26

Copy | Download

AMA Style

Lili Zheng. Social Health Insurance Reform and Economic Growth: Simulation Analysis in China. Int J Bus Econ Res. 2019;8(6):458-468. doi: 10.11648/j.ijber.20190806.26

Copy | Download

@article{10.11648/j.ijber.20190806.26,
  author = {Lili Zheng},
  title = {Social Health Insurance Reform and Economic Growth: Simulation Analysis in China},
  journal = {International Journal of Business and Economics Research},
  volume = {8},
  number = {6},
  pages = {458-468},
  doi = {10.11648/j.ijber.20190806.26},
  url = {https://doi.org/10.11648/j.ijber.20190806.26},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.ijber.20190806.26},
  abstract = {China has implemented drastic reforms in social health insurance within the past decade. I investigate how social health insurance affects economic growth in China by employing a three-period overlapping generations’ model in which social health insurance is determined endogenously. My model consists of three parts: individuals, firms and the government. In my model, social health insurance influences savings, physical capital, human capital and economic growth. I find that the higher the contribution rates of individual accounts to social health insurance, the lower the personal savings rate; with an increase in the personal account payment rate, an increase in the payment rate is associated with an increase in personal account funds, and the medical expenditure will increase; the contribution of each monetary unit will lead to more than one monetary unit of output, representing the multiplier effect of the personal account payment rate on economic growth. So the contribution rates of personal accounts are conducive to physical and human capital accumulation, generating a multiplier effect on economic growth. Simulation results show that a lower rate of pooled account payments and higher rate of personal account payments result in greater economic growth. I also find that the proportion of employment payments transferred to personal accounts positively influences economic growth. The theoretical model and simulation indicate that the reform of social health insurance causes an increase in economic growth.},
 year = {2019}
}

Copy | Download

TY  - JOUR
T1  - Social Health Insurance Reform and Economic Growth: Simulation Analysis in China
AU  - Lili Zheng
Y1  - 2019/12/10
PY  - 2019
N1  - https://doi.org/10.11648/j.ijber.20190806.26
DO  - 10.11648/j.ijber.20190806.26
T2  - International Journal of Business and Economics Research
JF  - International Journal of Business and Economics Research
JO  - International Journal of Business and Economics Research
SP  - 458
EP  - 468
PB  - Science Publishing Group
SN  - 2328-756X
UR  - https://doi.org/10.11648/j.ijber.20190806.26
AB  - China has implemented drastic reforms in social health insurance within the past decade. I investigate how social health insurance affects economic growth in China by employing a three-period overlapping generations’ model in which social health insurance is determined endogenously. My model consists of three parts: individuals, firms and the government. In my model, social health insurance influences savings, physical capital, human capital and economic growth. I find that the higher the contribution rates of individual accounts to social health insurance, the lower the personal savings rate; with an increase in the personal account payment rate, an increase in the payment rate is associated with an increase in personal account funds, and the medical expenditure will increase; the contribution of each monetary unit will lead to more than one monetary unit of output, representing the multiplier effect of the personal account payment rate on economic growth. So the contribution rates of personal accounts are conducive to physical and human capital accumulation, generating a multiplier effect on economic growth. Simulation results show that a lower rate of pooled account payments and higher rate of personal account payments result in greater economic growth. I also find that the proportion of employment payments transferred to personal accounts positively influences economic growth. The theoretical model and simulation indicate that the reform of social health insurance causes an increase in economic growth.
VL  - 8
IS  - 6
ER  -

Copy | Download

Author Information

Lili Zheng

School of Insurance, Central University of Finance and Economics, Beijing, China

Download PDF

Sections

Plain Text BibTeX RIS

APA Style

Lili Zheng. (2019). Social Health Insurance Reform and Economic Growth: Simulation Analysis in China. International Journal of Business and Economics Research, 8(6), 458-468. https://doi.org/10.11648/j.ijber.20190806.26

Copy | Download

ACS Style

Lili Zheng. Social Health Insurance Reform and Economic Growth: Simulation Analysis in China. Int. J. Bus. Econ. Res. 2019, 8(6), 458-468. doi: 10.11648/j.ijber.20190806.26

Copy | Download

AMA Style

Lili Zheng. Social Health Insurance Reform and Economic Growth: Simulation Analysis in China. Int J Bus Econ Res. 2019;8(6):458-468. doi: 10.11648/j.ijber.20190806.26

Copy | Download

@article{10.11648/j.ijber.20190806.26,
  author = {Lili Zheng},
  title = {Social Health Insurance Reform and Economic Growth: Simulation Analysis in China},
  journal = {International Journal of Business and Economics Research},
  volume = {8},
  number = {6},
  pages = {458-468},
  doi = {10.11648/j.ijber.20190806.26},
  url = {https://doi.org/10.11648/j.ijber.20190806.26},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.ijber.20190806.26},
  abstract = {China has implemented drastic reforms in social health insurance within the past decade. I investigate how social health insurance affects economic growth in China by employing a three-period overlapping generations’ model in which social health insurance is determined endogenously. My model consists of three parts: individuals, firms and the government. In my model, social health insurance influences savings, physical capital, human capital and economic growth. I find that the higher the contribution rates of individual accounts to social health insurance, the lower the personal savings rate; with an increase in the personal account payment rate, an increase in the payment rate is associated with an increase in personal account funds, and the medical expenditure will increase; the contribution of each monetary unit will lead to more than one monetary unit of output, representing the multiplier effect of the personal account payment rate on economic growth. So the contribution rates of personal accounts are conducive to physical and human capital accumulation, generating a multiplier effect on economic growth. Simulation results show that a lower rate of pooled account payments and higher rate of personal account payments result in greater economic growth. I also find that the proportion of employment payments transferred to personal accounts positively influences economic growth. The theoretical model and simulation indicate that the reform of social health insurance causes an increase in economic growth.},
 year = {2019}
}

Copy | Download

TY  - JOUR
T1  - Social Health Insurance Reform and Economic Growth: Simulation Analysis in China
AU  - Lili Zheng
Y1  - 2019/12/10
PY  - 2019
N1  - https://doi.org/10.11648/j.ijber.20190806.26
DO  - 10.11648/j.ijber.20190806.26
T2  - International Journal of Business and Economics Research
JF  - International Journal of Business and Economics Research
JO  - International Journal of Business and Economics Research
SP  - 458
EP  - 468
PB  - Science Publishing Group
SN  - 2328-756X
UR  - https://doi.org/10.11648/j.ijber.20190806.26
AB  - China has implemented drastic reforms in social health insurance within the past decade. I investigate how social health insurance affects economic growth in China by employing a three-period overlapping generations’ model in which social health insurance is determined endogenously. My model consists of three parts: individuals, firms and the government. In my model, social health insurance influences savings, physical capital, human capital and economic growth. I find that the higher the contribution rates of individual accounts to social health insurance, the lower the personal savings rate; with an increase in the personal account payment rate, an increase in the payment rate is associated with an increase in personal account funds, and the medical expenditure will increase; the contribution of each monetary unit will lead to more than one monetary unit of output, representing the multiplier effect of the personal account payment rate on economic growth. So the contribution rates of personal accounts are conducive to physical and human capital accumulation, generating a multiplier effect on economic growth. Simulation results show that a lower rate of pooled account payments and higher rate of personal account payments result in greater economic growth. I also find that the proportion of employment payments transferred to personal accounts positively influences economic growth. The theoretical model and simulation indicate that the reform of social health insurance causes an increase in economic growth.
VL  - 8
IS  - 6
ER  -

Copy | Download