Jiyang Li, Rui Pan
The findings suggest that healthcare payment rules may have household-welfare spillovers by improving the capacity to cope with medical expenditure risk and strengthening household financial resilience. The mechanism results are interpreted as channel-consistent evidence rather than causal mediation.
OBJECTIVE: This study examines whether China's diagnosis-related group/diagnosis-intervention packet (DRG/DIP) healthcare payment reform changes household financial asset allocation and explores the institutional and household pathways associated with that response.
METHODS: We link official 2019 and 2021 pilot designations to five waves of the China Family Panel Studies (CFPS) from 2014 to 2022 and estimate a staggered difference-in-differences model with individual and year fixed effects and city-clustered standard errors.
RESULTS: In the fully adjusted specification, reform is associated with a 0.3952 increase in ln(1+household financial product value) (SE = 0.1301; p < 0.01), equivalent to an approximately 48.5% increase in 1+reported portfolio value. The result is robust to PSM-DID, an inverse hyperbolic sine transformation, exclusion of cross-city movers, and 5,000 city-level placebo permutations. In a pre-trend diagnostic comparing the 2021 cohort with never-treated cities, the 2014, 2016, and 2018 coefficients are jointly indistinguishable from zero [F(3, 64) = 0.442; p = 0.724]. Exploratory two-step tests are consistent with changes in household consumption expenditure, the mode of government intervention, and industrial upgrading; the estimated effect is stronger among households without a spouse, lower-expenditure households, and households with internet access.
CONCLUSION: The findings suggest that healthcare payment rules may have household-welfare spillovers by improving the capacity to cope with medical expenditure risk and strengthening household financial resilience. The mechanism results are interpreted as channel-consistent evidence rather than causal mediation.