Environmental Regulation, Respiratory Diseases, and Medical Costs

Abstract China implemented its Action Plan of Air Pollution Prevention and Control (APAPPC) in 2013 as a major step in national air‐quality management. This study treated the APAPPC as a quasi‐experiment, drawing on the Grossman and Cropper models, to examine how air pollution affected individual health capital and medical service demand. Using panel data from the China Health and Retirement Longitudinal Study for 2011, 2013, 2015, and 2018, the analysis applied a Heckman two‐stage model and difference‐in‐differences estimation to identify the policy's effects on medical expenditure. The results showed that the APAPPC significantly reduced annual health spending, with stronger effects among women, older adults, and rural residents. The mechanism analysis indicated that the reduction in respiratory diseases played a key role. This study provides evidence that supports further air‐pollution control in China and offers useful insights for other developing countries.