The Impact of Public-Private Partnership Health Insurance Plans on Private Insurance Decisions

This paper examines the impact of public-private partnership (PPP) insurance plans on private health insurance by leveraging a unique natural experiment: the staggered introduction of China's Urban-Customized Supplemental Medical Insurance (UCSMI) across cities. Utilizing a novel transaction-level dataset of private health insurance in China – we identify notable spillover effects of UCSMI on both the extensive and intensive margins. The introduction of UCSMI leads to a substantial crowding-out of private insurance purchases at the extensive margin, while at the intensive margin, it reduces coverage amount and annual premiums paid. Notably, two-thirds of the reduction in premiums is driven by consumers opting for narrower coverage. These findings offer valuable insights for a more comprehensive understanding of PPP insurance programs