Impact of Social Health Insurance Reforms on Income Inequality: Evidence from China’s Urban-rural Residents’ Medical Insurance Integration Scheme

Abstract

The relationship between social health insurance reforms and income inequality has not been thoroughly examined with the domain of social policy research. This study employs data from the China Family Panel Studies spanning 2014 to 2020 and employs a staggered difference-in-difference model to examine the association between China’s Urban-rural Residents’ Medical Insurance Integration reform and the urban-rural income disparity, as well as related changes in household health and income. Our findings indicate that the reform has significantly reduced the income gap, a result that is consistent across multiple robustness checks. Notably, the improvement in the health status and economic conditions of rural households is consistent with the reduction in urban-rural income inequality, while no comparable changes were observed among urban households, which were not directly affected by the reform. Furthermore, the reform’s effectiveness was most pronounced among households with lower dependency ratios and those with lower incomes. The impact of the policy was particularly significant in regions characterized by advanced healthcare infrastructure and higher levels of economic development. This study contributes to the literature by providing empirical evidence on the relationship between social health insurance reform and income inequality, while offering suggestive insights into how changes in health and economic conditions may be associated with this relationship.