Prof. Feldstein1 recently advocated the develoment of private health insurance in China as a remedy for high saving rate and poor health care.
But the main reason why Chinese households save so much of their relatively low salaries is to ensure that they have the funds to meet high medical costs if a family member requires surgery or other inpatient care. People save so much because insurance is so inadequate. The government’s universal health-care insurance is very rudimentary, and private health insurance is not widely available. So households accumulate large amounts of cash as a hedge against the possibility that those funds will be needed some day for hospital care.
- Martin Feldstein (2014). A healthy path to Chinese consumption growth. Project Syndicate, March 31, 2014 [↩]