Impact of China's Urban Employee Basic Medical Insurance on Health Care Expenditure and Health Outcomes

At the end of 1998, China launched a government-run mandatory insurance program, the Urban Employee Basic Medical Insurance (UEBMI), to replace the previous medical insurance system. Using the UEBMI reform in China as a natural experiment, this study identify variations in patient cost sharing that were imposed by the UEBMI reform and examine their effects on the demand for health-care services. Using data from the 1991-2006 waves of the China Health and Nutrition Survey, we find that the increased cost sharing is associated with decreased outpatient medical care utilization and expenditures but not with decreased inpatient care utilization and expenditures. Patients from low- and middle-income households, or in less-serious medical situations are found to be more sensitive to prices. We observe little impact on patient health, as measured by self-reported poor health status.