Individual Contribution Standards and Enrollment Rates in Resident Medical Insurance: A Theoretical and Empirical Analysis Based on a Multiperiod Stochastic Optimization Model

This paper develops a multiperiod stochastic optimization model in which enrollment, consumption, and medical treatment decisions are made simultaneously to theoretically examine how increases in individual contribution standards affect residents' decisions to enroll in medical insurance. The study finds that, under the assumptions of a linear bequest function and that enrollment decisions do not affect treatment decisions, residents' commonly used approach to making enrollment decisions—comparing whether expected reimbursable medical expenses exceed individual contributions—is rational. Numerical simulations show that elderly residents may voluntarily withdraw from the insurance program; once the individual contribution standard exceeds RMB 450, the enrollment rate falls below 90%; and increases in individual contribution standards also raise the overall mortality rate among residents.