On November 14

2012

"Opinions of the Ministry of Human Resources and Social Security

the Ministry of Finance

and the Ministry of Health on the Control of the Total Payment of Basic Medical Insurance" (Human and Social Ministry issued [2012] No. 70) was promulgated. All regions in China have since launched the Total Budget Management Reform for the payment of medical insurance. In 2019

97.5% of the medical insurance coordinating areas across the country have completed the Total Budget Management Reform. In order to verify whether the Total Budget Management Reform has improved the efficiency of medical services

based on the theoretical analysis of relevant economics models

this paper takes the natural experiment of a provincial employee medical insurance changing from the Fee for Services System to the Total Budget Management Reform as the research object. Empirical tests are conducted through OLS mixed models

static individual effect panel models and regression discontinuity models. Results show that the Total Budget Management Reform does not lead to a general decline in hospitalizations

and does not cause an increase in hospitalizations for minor illnesses

and effectively reduces the overall average hospital stay

especially the average hospital stay for severe diseases. It proves that the Total Budget Management Reform has achieved good results in improving the efficiency of medical services. However

the Total Budget Management Reform alone is not perfect as a medical insurance payment method. For example

the Total Budget Management Reform has led to a decrease in the hospitalizations for severe diseases to a certain extent

indicating that patients with severe diseases might have been refused for hospitalization.