Health Care Utilization after Economic Reform in Mainland China: A Multinomial Logit Approach

Abstract

The support and expansion of traditional Chinese medicine as a policy directive since the early 1950s resulted from the fear on the part of the Chinese government that Western medicine would supplant Chinese medicine. The Chinese government expanded Chinese medicine by subsidizing traditional hospitals; however many of these hospitals have been operating at a deficit since the institution of economic reforms in the early 1980s. There is a concern that many traditional hospitals lose large numbers of outpatients to competing modern Western hospitals, which have better equipment and more qualified staff. The objective of this paper is to examine whether a reduction in Chinese medicine outpatient services is a result of people’s preferences. A multinomial logit model is applied to data from a 1989 China Health and Nutrition Survey. The major finding is that most demographic factors do not cause significant variations in Chinese medical service choices. Even when suffering a serious illness, people do not appear to prefer Western medicine to Chinese medicine. A potential counter-hypothesis offered is that a decrease in Chinese medicine use may be due to inefficient management.