Rebalancing healthcare utilization: Rural-urban health insurance integration and health-seeking behavior of rural residents in China

Abstract

The integration of urban-rural medical insurance in China aims to address healthcare disparities and improve rural medical protection. This paper evaluates the impact of the price shock due to this integration on rural residents' health-seeking behaviors. First, we establish an economic framework modeling a representative individual's medical choices based on medical prices and perceived quality. To empirically test this framework, we use four waves of the China Health and Retirement Longitudinal Study (2011–2018) and employ a multi-period DID model nested within a sample selection model. Findings indicate that the integration increases outpatient visits by 1.9 % and the likelihood of choosing primary healthcare centers (PHCs) for outpatient services by 7.2 %. This increase is driven by the targeted reimbursement for outpatient expenses exclusively at PHCs. Although hospitalization increases by 1.4 %, there is no significant change in the choice of inpatient institution, as out-of-pocket expenses for hospitalization are uniformly reduced across all levels of healthcare institutions after the integration. Heterogeneity analysis shows that younger, healthier, less-educated rural individuals and those from lower-income households are more likely to choose PHCs post-integration, with stronger effects in resource-limited cities. Further, this positive effect does not differ between chronic and non-chronic patients, even with extra insurance for chronic conditions post-integration. This study provides evidence that changes in cost-sharing effectively encourage rural patients to utilize primary care, especially outpatient services. Future policy optimization should focus on enhancing the capacity and quality of primary healthcare services to sustain these positive outcomes.