The Spillover Effect of China’s Outpatient Mutual Aid Policy on the Hospitalization Sector

The rapid growth in healthcare expenditures in China over recent decades can be partially attributed to outpatient inefficiencies in risk-sharing and the lack of effective mutual aid mechanisms, which have driven overutilization of inpatient services. This study investigates the impact of China’s outpatient mutual aid policy on inpatient medical expenditures. Exploiting a quasi-experimental design centered on outpatient mutual aid reform, we employ a difference-in-difference (DiD) methodology to analyze the policy effect. Our analysis, which utilizes inpatient medical records, demonstrates that the mutual aid policy significantly reduces total inpatient costs and out-of-pocket expenditures. This effect is particularly significant in cases involving ambulatory care-sensitive conditions (ACSCs), highlighting the potential for primary care to prevent unnecessary hospital admissions. Furthermore, our findings suggest that the magnitude of expenditure reductions is more substantial among older patients, particularly those seeking treatment in tertiary hospitals. Our projections further reveal that while the reform leads to a net increase in overall medical expenses through enhanced outpatient utilization, this growth is fiscally sustainable and reflects improved healthcare access rather than inefficient spending.