Has volume-based procurement reduced household catastrophic health expenditure in rural patients with chronic disease?—Evidence from CHARLS 2018 and 2020 in China

BACKGROUND: The volume-based procurement aims to reduce drug prices, alleviate the burden of medical costs on residents, and improve public health and well-being. METHOD: This study uses data from the China Health and Retirement Longitudinal Study (CHARLS) to evaluate the impact of Volume-Based Procurement (VBP) on household catastrophic health expenditures (CHE) among rural patients with chronic diseases. A household-level difference-in-differences (DID) model is constructed, and PSM-DID is applied to control for potential selection bias. The analysis further examines heterogeneous effects across regions and population subgroups, and explores the potential mediating role of health service utilization. RESULTS: The baseline DID estimates indicate that VBP is associated with a reduction of approximately 3.33% points in the probability of household CHE, corresponding to a reduction of about 13-14% relative to the average CHE incidence of 24.65%. The PSM-DID robustness checks yield broadly consistent results. Heterogeneity analyses show that the policy effect is strongest among households in central and western regions, elderly households, and households without a spouse. Mechanism analysis suggests that health service utilization does not constitute a significant mediating channel, implying that the reduction in CHE is unlikely to operate through changes in healthcare utilization. CONCLUSIONS: The findings suggest that the VBP policy may help reduce the risk of catastrophic health expenditures among rural households with chronic disease patients and contribute to alleviating household medical financial burden.