Bridging the urban–rural divide: the impact of medical insurance integration on health inequality in China

Purpose This study seeks to provide evidence that integrating two major medical insurance programs in China – the Urban Resident Medical Insurance System and the New Rural Cooperative Medical Insurance System – has enhanced medical service utilization among both urban and rural residents while also reducing health inequities across regions. Design/methodology/approach Based on the theory of equality of opportunity, this study measures health inequality as the gap in health opportunities between rural and urban residents. Using data from the 2015 and 2018 China Health and Retirement Longitudinal Study (CHARLS), we employ the difference-in-differences (DID) method to examine the impact of medical insurance integration (MII) on reducing health inequality between urban and rural areas. Findings This study suggests that the integration of medical insurance schemes for these cohorts has a beneficial impact on reducing health inequalities. An analysis of the underlying mechanisms indicates that this integration narrows the gap in medical services between urban and rural residents by increasing access to and utilization of outpatient services. Moreover, a heterogeneity analysis reveals that the effects of this integration on reducing health disparities vary across different demographic and geographic groups, with more significant benefits observed among the elderly and residents in the eastern and central regions. Originality/value This study quantifies the urban–rural health gap by distinguishing “justifiable” and “unjustifiable” disparities, examines the impact of medical insurance integration on health equity and provides a nuanced understanding of policy effects on health inequalities.