article · PubMed
Rising healthcare costs without adequate social security create medical cost anxiety and financial strain for households in developing countries. Financial innovation, including the understanding of financial concepts and planning for medical expenses, influences how individuals manage these costs. Analysing 2021 Global Financial Inclusion survey data from China with ordered probit and linear probability regression models, the research evaluates how medical cost anxiety and financial innovation affect household income mobility. The findings reveal that individuals experiencing greater medical cost anxiety are twenty percent more likely to transition from the middle income quintile to the fourth income quintile compared to peers with lower anxiety. However, medical cost anxiety overall exerts negative effects on the probability of individuals moving from lower income quintiles to higher ones. Consequently, addressing healthcare affordability and expanding financial inclusion are critical to improving income mobility.
Healthcare costs place severe financial strain on households lacking social safety nets. Understanding how fear of medical expenses interacts with financial tools helps clarify household economic behaviour. These insights demonstrate that while anxiety may push middle earners to increase their income, medical cost anxiety generally hinders upward mobility for poorer households, underlining the need for affordable healthcare and broader financial inclusion.
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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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DOI: 10.29063/ajrh2025/v29i11.17
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