A pilot study was undertaken in two rural counties in Sichuan Province to determine the feasibility of offering health insurance to peasant families. Models of per capital inpatient and outpatient health care expenditures were developed using self-reported utilization from a survey of 880 households, supplemented by cost and utilization data from the providers in the counties. Expenditures at a facility were modeled as a function of level of insurance in three parts: (1) as the product of the probability of any use, (2) the expected number of visits given any use, and (3) the cost per visit at the facility. Output from the model for representative insurance plans is presented.
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