The impact of hospital bed supply on medical insurance expenditure in China (2011–2024): evidence on Roemer’s Law and threshold effects

The rapid expansion of healthcare infrastructure may exert increasing pressure on the sustainability of social health insurance. China’s concurrent pursuit of universal coverage, coupled with extensive hospital construction, offers a valuable context for examining whether the patterns observed in China align with Roemer’s Law (1961), which is often summarized as ‘a hospital bed built is a bed filled’ within an insured population. This study investigates the relationship between hospital bed density and insurance expenditure to deepen our understanding of the factors associated with the growth of healthcare costs. We compiled a panel dataset encompassing 31 Chinese provinces covering the period from 2011 to 2024. To strengthen identification and address potential endogeneity concerns, we employed two-way fixed effects models alongside instrumental variable (IV-2SLS) estimation. Mediation analysis was employed to investigate potential pathways, while panel threshold regression was utilized to examine nonlinear patterns in the relationship between supply and expenditure. The baseline estimates indicated a positive association, suggesting that higher provincial bed density correlates with increased province-level insurance spending. Mediation analysis revealed that the Average Length of Stay may serve as a potential aggregate pathway, accounting for 17.8% of the estimated relationship. Furthermore, threshold regression analysis indicated a possible nonlinear pattern, with an estimated threshold of 7.271 beds per 1,000 population. Below this threshold, hospital bed density is positively related to insurance spending (β = 0.217); however, above this threshold, the association loses statistical significance. Regional analysis demonstrated that the positive association was most pronounced in the western region, while no statistically significant association was observed in the northeastern region. Our findings support a conditional, province-level interpretation of Roemer’s Law within the Chinese context, indicating that the association between bed density and insurance expenditure varies across institutional and capacity settings. Specifically, higher provincial bed density is more strongly associated with a longer average length of stay at the provincial level than with increased admission volumes. Beyond the exploratory threshold estimate, the marginal association between additional bed supply and insurance expenditure appears to weaken. These results suggest that payment reform, length-of-stay management, and regulatory oversight should be prioritized alongside careful capacity planning.