Health Insurance and Subjective Well-being: Evidence from Integrating Medical Insurance across urban and rural areas in China

Health insurance coverage and the risk protection it provides may improve enrollees' subjective well-being (SWB), as demonstrated for example by Oregon Medicaid's randomized expansion significantly improving enrollees' mental health and happiness. Yet little evidence from low- and middle-incomen countries documents the link between insurance coverage and SWB. We analyze individual-level data on a large natural experiment in China: the integration of the rural and urban resident health insurance programs. This reform, expanded nationally since 2016, is recognized as a vital step toward attaining the goal of providing affordable and equitable basic healthcare in China, because integration raises the level of healthcare coverage for rural residents to that enjoyed by their urban counterparts. This study is the first to investigate the impact of urban-rural health insurance integration on the SWB of the Chinese population. Analyzing 2011-2018 data from the China Health and Retirement Longitudinal Study in a difference-in-difference (DID) framework with variation in the treatment timing, we find that the integration policy significantly improved the life satisfaction of rural residents, especially among low-income and elderly individuals. The positive impact of the integration on SWB appears to stem from the improvement of rural residents' mental health (decrease in depressive symptoms) and associated increases in some health behaviors, as well as a mild increase in outpatient care utilization and financial risk protection. There was no discernible impact of the integration on SWB among urban residents, suggesting that the reform reduced inequality in healthcare access and health outcomes for poorer rural residents without negative spillovers on their urban counterparts.

Urban-Rural Health Insurance Integration and China's Rural Household Savings

Background

A linchpin to realizing the internal circulation (referring to the domestic cycle of production, distribution and consumption) is reducing residents' saving rate and expanding the domestic needs. However, rural residents in China demonstrate a strong propensity to save money.

Methods

In light of practical characteristics of urban-rural health integration promoted in different places, the three-phase data (from 2014 to 2018) and the dual difference-in-differences model of the China Labor-force Dynamics Survey (CLDS) are used to empirically investigate the impact of urban-rural health insurance integration on rural household savings.

Results

Research reveals that urban-rural health integration can reduce the health risks and medical risks facing rural households, thus weakening the motivation of precautionary savings. The analysis of heterogeneity reveals that the integration of urban-rural health insurance significantly influences the savings rates of households headed by older individuals, particularly women, with lower levels of educational attainment. Besides, the single-tier health insurance system can have a more significant impact, whereas the multi-tier insurance system may not significantly affect the savings rate.

Conclusion

Based on the aforesaid research conclusions, this article believes that in order to reduce the savings rate of rural households and expand consumption, the health insurance system should be further improved.