Does chronic disease coverage for outpatient care affect healthcare utilization and expenditures in China? Evidence...

In developing countries, chronic patients face dual challenges: high healthcare expenditures coupled with inadequate utilization of outpatient services. Leveraging an administrative claim dataset and applying a two-way fixed effects approach, this study makes one of the first attempts to examine the impacts of chronic disease coverage, which extends additional insurance benefits for outpatient care, on healthcare utilization and expenditures among enrollees diagnosed with hypertension or diabetes in China. The empirical results reveal a dual effect of chronic disease coverage: (1) enrollees with hypertension or diabetes experienced a substantial reduction in outpatient cost-sharing rates, leading to a significant increase in both outpatient service utilization and associated expenditures; (2) concurrently, we observed decreases in general outpatient visits without this special coverage, inpatient utilization, and corresponding expenditures. Notably, the magnitude of expenditure reduction in these non-targeted services was outweighed by the increased spending on covered outpatient services, resulting in a net increase in total healthcare expenditures. Heterogeneity analysis further demonstrates that the impacts were more pronounced among older adults, those with more comprehensive insurance benefits and residents in areas with better-endowed medical facilities. This study offers empirically validated insights for enhancing chronic disease management within medical security systems and establishing age-friendly medical insurance schemes in China as well as other developing countries.