Does health insurance matter? Evidence from China's urban resident basic medical insurance

In 2007, China launched a subsidized voluntary public health insurance program, the Urban Resident Basic Medical Insurance (URBMI), for urban residents without formal employment. We estimate the impact of the URBMI on health care utilization and expenditure by a fixed effects approach with instrumental variable correction, using the 2006 and 2009 waves of the China Health and Nutrition Survey. We explore the time variation of program implementation at the city level as the instrument for individual enrollment. We find that this program has significantly increased the utilization of formal medical services, including both outpatient care and inpatient care, but it has not reduced total out-of-pocket health expense. We also find that this program has improved medical care utilization more for children, members of the low-income families, and the residents in the relatively poor western region.