Managing financial risk in healthcare: Medical cost anxiety, financial innovation, and income mobility in China

Xindan Zhang(1), Musa Abdu(2), Romanus Osabohien(3), Mihajlo Jakovljevic(4),


(1) College of Finance & Information, Ningbo University of Finance & Economics, Ningbo, 315175, Zhejiang, China
(2) Department of Economics, Gombe State University, Gombe, Nigeria; DEPECOS Institutions and Development Research Centre (DIaDeRC), Ota, Nigeria;
(3) DEPECOS Institutions and Development Research Centre (DIaDeRC), Ota, Nigeria; Department of Economics, Monarch University, Iyesi-Ota, Nigeria
(4) UNESCO-TWAS, Trieste, Italy; Shaanxi University of Technology, Hanzhong, China; Department of Global Health Economics and Policy, University of Kragujevac, Serbia
Corresponding Author

Abstract


As healthcare expenses continue to rise without social security, many households in developing countries, are grappling with financial strain and uncertainty, leading to a growing concern known as medical cost anxiety. The level of financial innovation among individuals plays a critical role in how they navigate and manage healthcare costs. Understanding financial concepts, making informed decisions, and effectively planning for medical expenses can significantly impact an individual's ability to cope with medical cost anxiety. This study examines the relationship between medical cost anxiety, financial innovation, and household income mobility in China. Using the 2021 survey data obtained from Global Financial Inclusion (Global Findex) for China, we employed the Ordered Probit Regression and Linear Probability regression models to analyse the impact of medical cost anxiety and financial innovation on household income mobility. The results show that individuals who experience greater medical cost anxiety are 20% more inclined to move from the middle 20% income quintile to the fourth 20% income quintile than those with lower levels of medical cost anxiety in the same income quintile. This indicates that medical cost anxiety drives middle-income individuals to strive for a higher income group more strongly than it motivates low-income individuals to move to a middle-income group. Overall, medical cost anxieties have negative effects on the probability of individuals to move from lower income quintiles to higher ones. These findings highlight the importance of addressing healthcare affordability and promoting financial inclusion to enhance household income mobility in China.

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