Medical insurance, health risks, and household financial asset allocation: evidence from China household finance survey

Abstract

There is a lack of micro evidence on whether medical insurance may optimize the household financial asset allocation by transferring health risk, despite the fact that health risk is a significant component driving families’ precautionary savings. This article empirically examines the impact of health risk and social medical insurance on household risky financial asset allocation using a Probit model, based on data from the 2015–2019 China Household Finance Survey (CHFS). The findings indicate that social medical insurance, with its lower level of security, reduces the likelihood, but it can alter households’ preferences for risk by lowering marginal effect of health risk. According to the findings of the heterogeneity analysis, people who live in rural and less developed areas are more likely to experience the risk-inhibiting effects of social medical insurance and health risk. The eroding and risk-suppressing impacts of social medical insurance are likewise less pronounced for households headed by women and older people, as is the health risk’s suppressive influence on household involvement in risky financial markets. Compared with social medical insurance, commercial medical insurance with a higher level of coverage can dramatically increase household participation in riskier financial markets. This article provides micro-empirical evidence for the household asset allocation effect of medical insurance.

The impact of digital finance on young People’s health insurance participation decisions in China

“…Digital finance in general has a ‘digital dividend’ effect ( 18 , 19 ), reducing income disparities and bridging the ‘digital divide’ ( 20 ). For individuals, the increase in earning capacity and income levels, the increased awareness of self-protection and the costs of risk protection ( 21 ), the change in risk preferences and the fear of returning to poverty ( 22 , 23 ), and the pursuit of individual and structural optimisation within the framework of rational choice ( 1 ) will facilitate participation in or supplementation with health insurance ( 24 ). In addition, Wang et al ( 25 ) found a mediating effect mechanism for the income effect in the study exploring the impact of digital finance on social security from a macro perspective.…”