The impact of rural health insurance on vulnerability to chronic poverty among rural residents in China: analysis using Probit and IVprobit models

Abstract

IntroductionPoverty is a global problem, and combating it is a major governance issue worldwide. In China, poverty management efforts have shifted from eliminating absolute poverty to managing relative poverty. One of the most important tasks in managing relative poverty in the post-poverty reduction era is to prevent recurring poverty due to illness. Rural health insurance is an important method of preventing and mitigating disease risk and a key part of China’s poverty reduction policy, including among rural residents. However, the mechanism by which basic health insurance alleviates vulnerability to poverty, the causal effect of rural health insurance on vulnerability to poverty, and differences based on having a second health insurance policy and by age and income have not been sufficiently explored. Therefore, this study examined the impact of rural health insurance on vulnerability to long-term poverty among rural residents in China. In addition, this study evaluated the impact of having a second health insurance policy and differences in the effects of rural health insurance by age and income.MethodsThis study used data from the 2014, 2016, 2018, and 2020 China Family Panel Studies. Household-related characteristics, such as finance, education, and healthcare, were retrieved from the household database; while data on healthcare expenditures, healthcare insurance, and personal-related characteristics were retrieved from the adult database. Robustness tests were conducted with Probit models, and endogeneity tests were conducted with IVprobit models.ResultsVulnerability to poverty was significantly lower among residents with rural health insurance than those without any health insurance coverage, and this difference was observed across age and income groups. These findings were consistently robust and significant after controlling for endogeneity, considering sample selectivity, and eliminating measurement bias in the core variables.ConclusionThe findings indicate that rural health insurance is an important tool for poverty alleviation. The current results could effectively reduce the economic vulnerability of rural households facing health risks, ensuring broader economic security. Moreover, these findings provide policy references for managing relative poverty in China.