Does Free Healthcare Affect Children's Healthcare Use and Outcomes?

We investigate the extent to which the subsidy for children's healthcare in Japan affects children's healthcare use and outcomes using multiple nationally representative data sources. The subsidy, which made children's healthcare services essentially free for patients, was introduced and expanded to preschoolage children in the 1990s. We use a difference-in-differences framework by exploiting unique variations in subsidy status, as the introduction timing and age of eligibility differ across municipalities. We find that the subsidy significantly increased the use of outpatient care measured by visit intervals, the number of repeat patients, and monthly spending. However, we find little evidence on the overall use of inpatient care, while we observe a significant increase in the length of stay only for infants under the age of one who undergo surgery. Further, we find that the subsidy significantly improves children's subjective health (i.e., the probability of having symptoms, such as fever, cough, and nasal discharge, as measured by parents). However, we find little evidence regarding its effect on overall objective health (i.e., cured outcomes, as evaluated by a physician at discharge, and the mortality rate), while we observe significant improvements in these objective health outcomes only for infants under the age of one. The subsidy may significantly contributes to reducing the mortality rate for infants under the age of one by 0.79 per 1,000 individuals. In summary, this study indicates that free healthcare for children improves their access to healthcare as well as health outcomes, thus prioritizing this investment as part of national healthcare plans.