Deciphering the Relationship between Basic Medical Insurance and Commercial Health Insurance from 2016 to 2020: A Comprehensive Analysis from the Perspective of 31 Provinces in China

Background: Existing research on the interplay between Basic Medical Insurance and Commercial Health Insurance has yielded inconsistent conclusions, with some studies suggesting a crowding-out effect and others indicating a promotional relationship. Moreover, most macro-level studies treat the national sample as homogeneous, overlooking potential regional disparities in China. This study aims to fill this knowledge gap by investigating the non-linear relationship between Basic Medical Insurance and Commercial Health Insurance across different regions in China, and by examining how this relationship varies by area.

Methods: This study primarily utilizes panel data from 31 Chinese provinces spanning from 2016 to 2020 to conduct causal inference using panel regression with fixed effects on both provincial and yearly scales. The study then proceeds to explore the existence of the "U-shaped" effect, as well as the impact of regional heterogeneity on the core conclusions via total and subsample regressions.

Results: For the national sample, the coefficient of the linear term (Basic) was 3.454 (p<0.01) and that of the quadratic term (Basic²) was −0.238 (p<0.01), confirming an "inverted U-shaped" relationship. Further, the analysis of marginal effects indicates that in the eastern region, there exists a synergistic development between the two factors, albeit with a diminishing trend in the positive promotional effect. Conversely, in the western, central, and northeastern regions, as well as from a nationwide perspective, Basic Medical Insurance seems to displace Commercial Health Insurance, a phenomenon that becomes more pronounced with the increasing scale of Basic Medical Insurance.

Conclusions: In general, the improvement of China's healthcare security system faces various challenges that require the concerted efforts of both the government and Commercial Health Insurance companies. The government should leverage its subjective initiative, and Commercial Health Insurance should play a complementary role, to construct a multilayered healthcare security system that can address the diversified and fundamental healthcare needs of the populace.