Unemployment and health expenditures in China: New evidence on the unemployment insurance and disposable income

Abstract

Abstract Background Research consistently demonstrates that unemployment significantly increases individual health expenditures; However, those unemployed people often exhibit caution in utilizing medical services. The study of the relationship between unemployment and health services utilization is limited, especially in developing countries. Therefore, the objective of this research was to analyse and understand how unemployment influenced health services utilization in the context of unequal regional development in China. Methods Provincial data spanning from 2007 to 2019 were obtained from multiple statistical yearbooks. Both ordinary least squares and fixed effectmodels were employed and adjusted to control for province-specific demographics and socioeconomic factors, ensuring a more accurate estimation. Furthermore, the study delved into the mediating role of unemployment insurance and household disposable income, examining how these factors influence the relationship between the unemployment rate and health expenditures. Rigorous robustness checks were also performed to validate the findings by replacing the explained variable and using instrumental variable method. Results We found that the increasing unemployment rate had a substantial impact on health expenditures with a significant reduction observed in China's central and western regions but not in the eastern region. This phenomenon was linked to the dynamics of household economics, which means household disposable income experienced a corresponding decline as the unemployment rate increased, then in turn depressed health services utilization. Interestingly, the study also found that unemployment insurance acted as a critical financial buffer to offset the downward trend of health expenditures, indicating the positive externality of social security policy. Conclusions Our results indicates that unemployed individuals in China exhibit a conservative approach to health services utilization, which is particularly evident in the central and western regions. During unemployment, policies should be implemented to support the low-income unemployed, especially in regions with an inadequate social security net.