Policy Evaluation on the Integration of Urban and Rural Residents Basic Medical Insurance in China

Background China’s health system has been undergoing a series of major reforms, covering various areas such as drug pricing, hospital management, and health insurance. The health insurance system, which existed in three distinct forms for employees, urban residents, and rural residents, underwent a series of crucial reforms at the turn of the 21st century. The recent advancement in these reforms involved the integration of basic medical insurance for urban and rural residents. This integration process began with extensive pilots and was completed in 2020 after a nationwide rollout in 2016. Previous research has primarily examined the impact of insurance enrolment, including improved patient accessibility of healthcare, reduced out-of-pocket (OOP) expenses for patients, and equitable care provision among diverse insured groups. However, these studies were either limited to a specific type of insurance or involved comparisons among different insurance types. There were only a few studies available that focused on integrated insurance in pilot areas. To the best of my knowledge, there is a lack of comprehensive research on the entire integration process and its policy effects on health service use and/or health expenses. Objective This research aims to understand China’s urban-rural health insurance integration policies and to evaluate their effects. Specifically, this comprehensive evaluation of the policies includes: 1. To summarise the different regional integration policies and to discuss the potential benefits and problems of integration; 2. To estimate the effect of integration on health service use and costs, at the national level; 3. To explore the differences in policy effects among different populations in socio-economic subgroups, at the national level; 4. To assess the impact of different integration policies on health service use and costs at the city level, using ischaemic heart disease as an example; 5. To investigate the mechanisms of action of different integration policies at the city level and how they differ, using ischaemic heart disease as an example. Method: In this thesis, a mixed methods approach is employed, combining both qualitative and quantitative methods. The qualitative part involves document analysis, which focuses on the first objective of the thesis. Policy documents are gathered from public government sources and websites, and a summary and comparison of these documents are conducted. Specifically, the timing of policy implementation is summarised for 338 cities in China, along with the timeline of implementation for 25 provincial capital regions. Furthermore, the insurance terms for urban and rural residents before and after the integration are detailed, summarised, and compared for four selected cities (Beijing, Tianjin, Chengdu, and Shanghai). These terms include premiums, deductibles, reimbursement rates, and ceilings for outpatient and hospitalisation reimbursements. The first quantitative analysis part focuses on the second and third objectives of this thesis. Data from the China Health and Retirement Longitudinal Study (CHARLS), a national survey of middle-aged and elderly individuals, are used to analyse the nationwide average policy effects and to examine population heterogeneity based on socio-economic factors. The staggered Difference-in-Difference (DID) method is employed as the main analytical approach, while the Difference-in-Difference-in-Difference (DDD) method is used as a supplemental analysis approach. Subsequently, the second quantitative analysis part addresses the fourth and fifth objectives of this thesis. Data from Electronic Medical Records (EMR) of Ischemic Heart Disease (IHD) patients are used to examine variations in policy effects across cities. The DID method is employed as the main analytical approach, and Propensity Score Matching (PSM) combined with DID is used as a sensitivity analysis approach. Additionally, analyses of dynamic effects and quantile effects are conducted to explore the mechanisms of policy action at the city level. Findings The qualitative analysis shed light on the implementation process of the integrated urban and rural resident health insurance scheme. It was found that the integrated insurance was initially introduced in 2007 and subsequently underwent a gradual pilot phase across the country until 2016. Following this pilot phase, more than half of the cities completed their integration in 2017 and 2018. Finally, by the end of 2020, the integration was fully implemented in all cities. The varying timing of integration among cities is likely to be a significant factor contributing to the variations in integration terms and potential effects. In the four case cities examined, findings indicated that the insurance premiums increased rapidly, which might weaken the willingness of rural residents to enrol in the insurance and might decrease their satisfaction with it. One possible reason is that on average, the difference in expenses between insured individuals (insurance fee) and uninsured individuals (treatment fee) is not great. Moreover, there are various limitations on the actual reimbursement of insurance, such as deductibles, ceilings, and whether certain drugs used are included in the reimbursable list. As a result, many insured residents may experience a disparity between their initial expectations and the actual reimbursement amount when making claims. The changes in outpatient reimbursement terms are more consistent across cities, which are likely to encourage more visits and reduce costs. Another notable benefit of integration is the substantial increase in the number of institutions and reimbursable drugs available to patients. However, changes in outpatient reimbursement terms also indicate that integration may be more advantageous for urban than rural residents. Regarding hospitalisation reimbursement, there are fewer commonalities in the integration terms across cities. Therefore, differences in terms across cities, between urban and rural, as well as variations in health status and economic conditions among different population groups, may all contribute to insignificant integration effects on hospitalisation at the national level. In the survey-based quantitative analysis, the results demonstrate that integration has a positive influence on the probability of outpatient visits and reduces the OOP costs of individuals in both outpatient visits and hospitalisation at the national level. However, it is notable that the integration policy effects vary significantly among different socioeconomic subgroups. Specifically, rural residents experience greater benefits compared to urban residents, and residents with higher incomes benefit more than those with lower incomes. Furthermore, in the EMR-based quantitative analysis, the results reaffirm the conclusions drawn from the qualitative analysis. It is that integration policies in various cities similarly affect outpatient fees. However, substantial differences merge when considering the impact on hospitalisation services and fees. In the subsequent two deeper analyses, the results of dynamic effect analysis point to three different patterns: policy effect delay, reversal, and recession. These effects may be a result of various interactions among hospital administrators, doctors, and patients. When examining the effects across patients with different quantiles of total fees, the results show that the policy effects grow stronger as patients’ pre-integration total fees (which reflect the severity of their disease) increase. This finding supports the notion that integration helps address the unmet medical needs of patients who face financial constraints. Additionally, the results also suggest that there may be cases where some cities’ policies have increased the deductible and reduced treatment for patients with milder conditions. Conclusion This thesis provided a comprehensive evaluation of China's latest completed reform, the integration of urban and rural basic medical insurance, by combining quantitative and qualitative analyses. The thesis highlights five key findings: 1. The integration policies and effects of outpatients were similar across cities, but the integration policies and effects of hospitalisation were even more different; 2. Nationally, the integration policies promoted outpatient visits and reduced outpatient and hospitalisation OOP costs; 3. Urban-rural healthcare inequality was reduced through integration, but inequality among different income groups was expanded; 4. Differences in the impact of integration in different cities on hospitalisation may be attributed to differences in doctor behaviours, reimbursement terms, and reimbursement catalogues; 5. For hospitalisation, integration effectively released patients' unmet medical needs constrained by economic factors. This research offers several advantages compared to previous studies, such as the use of mixed methods and more advanced and comprehensive causal identification methods and analysis frameworks. However, certain limitations exist, such as the omission of considering the medical supply side and the interaction of multiple policies, and the inherent defects of data types. Future research endeavours could concentrate on expanding data sources, improving causal identification methods, and examining the interaction between different policies.