The Influence of Medical Insurance on the Consumption of Rural Residents: Economic or Psychological Effects

Promotion of consumption among rural residents is an urgent requirement for expanding domestic demand and promoting high-quality economic development. This paper empirically analyzes the impact of medical insurance on rural residents' consumption based on the four-phase panel data of CHARLS. It is found that medical insurance significantly increases non-medical consumption among rural residents, with the main increase being in subsistence consumption; health shocks play a significant moderating role, leading to a notable decrease of 43.2% in non-medical consumption among rural residents; the consumption effect of medical insurance is not significant in low-income groups, and there is a phenomenon of "The more reimbursements one gets, the less willing of consumption" among hospitalized patients. Mechanism test indicates that because medical insurance does not significantly reduce out-of-pocket expenses or decrease the burden of out-of-pocket payments while promoting the utilization of medical services, the burden-reducing effect of medical insurance is not significant. The mediating effect test based on sense of security and happiness is highly significant, indicating that psychological effect is still the key mechanism for medical insurance to promote the consumption of rural residents. The article proposes that fairness should be the primary value orientation of medical insurance system reform. In the case of limited space for the improvement of the level of security, it is proposed to vigorously control the unreasonable growth of medical expenses to improve the efficiency of the use of funds, and deepen the reform of the medical and health system focusing on hierarchical diagnosis and treatment.