Personal income tax reform and health insurance purchases: Evidence from a quasi-natural experiment in China

This study examines the effects of China’s 2018 personal income tax reform on residents’ health insurance purchasing behavior by analyzing nationally representative household survey data. Employing a quasi-natural experiment approach, the study finds that the reform significantly increased both the likelihood of Chinese households purchasing health insurance and their expenditure on health insurance premiums. This effect is primarily attributed to the reform’s enhancement of household disposable income. Heterogeneity analyses further demonstrate that the impact of the personal income tax reform on health insurance purchases is more pronounced in economically developed regions, among debt-free households, and in households with limited financial literacy. Notably, the reform has no significant effects on other types of insurance. This study offers a novel microeconomic perspective on how Chinese fiscal policy influences insurance purchasing behavior and provides valuable insights for the growth of the commercial health insurance market.