Pension Schemes, Healthcare Use, and Health: Evidence from China

Using a non-parametric fuzzy regression discontinuity design and leveraging data from the China Health and Retirement Longitudinal Study (CHARLS),this paper explores the role of the urban-rural split in China’s pension system in shaping healthcare utilization and health outcomes. Our estimates show that receipt of public pensions, particularly the Urban Employee Basic Pension Scheme (UEBPS),significantly improves self-reported health, mental health (CES-D scores),and physical health (ADL scales), especially among urban married males. However, there are no significant effects on healthcare utilization among urban residents. Moreover, social pensions,the New Rural Pension Scheme (NRPS),increase healthcare utilization(inpatient/outpatient)and corresponding healthcare spending of the rural population,particularly among married male residents. Additionally, these findings exhibit heterogeneity across gender, rural-urban differences, hukou status, and marital status. Furthermore, the health effects stemming from urban pension schemes can be explained by retirement, providing more leisure time for males and grandparental childcare responsibilities for females. However, the positive effect on healthcare use of rural males and the null effect for rural females are driven by the pure income effect of household joint financial pooling under the NRPS and female altruism. Finally, we find that integrating NRPS and URPS increased migration, non-agricultural employment,and health of non-pensioners, with no effect on rural pensioners.