# Unexpected consequences of community-based integrated care services reform: increased hospitalization expenses among older adults in China, 2011–2018

## TL;DR

A healthcare reform in China aimed at older adults unintentionally led to higher hospitalization costs, especially in primary healthcare facilities.

## Contribution

The study reveals that community-based integrated care services increased hospitalization expenses among older adults in China.

## Key findings

- Hospitalization expenses for older adults increased by CNY 1,971 total and CNY 1,096 out-of-pocket after the CBICS reform.
- The cost increase was mainly observed in primary healthcare facilities, not higher-level institutions.
- Improved health outcomes from the policy led to increased medical service use, raising expenses.

## Abstract

As a result of the increasingly aging population of China, the development and implementation of effective public older adult care service strategies for older adults with nursing and medical needs have become pressing priorities. In this context, China launched a community-based integrated care services (CBICS) reform in several cities in 2016. This study evaluates the impact of the CBICS reform on hospitalization expenses among older adults.

Using 2011–2018 China Health and Retirement Longitudinal Survey (CHARLS) data, we applied the difference-in-differences (DID) method to identify the causal impact of the CBICS pilot policy on the inpatient medical expenses of old adults. In addition, we robustly estimated the net effect of the CBICS reform on hospitalization expenses among older adults by combining propensity score matching (PSM) with DID while excluding other policy disturbances and adjusting the sample size.

Following CBICS implementation, the total hospitalization expenses and out-of-pocket hospitalization expenses increased significantly among older adults, rising by approximately CNY 1,971 and CNY 1,096, respectively. Further analysis revealed that the substantial increase in hospitalization expenses was concentrated primarily in primary healthcare facilities, and the increase in higher-level medical institutions was not statistically significant. The structural impact of the CBICS policy on inpatient cost growth offers a plausible explanation for this observed increase in medical spending. Additionally, we identify health and release effects: improved health outcomes among older adults increase the use of medical services, which, in turn, contributes to higher medical expenses. Moreover, the CBICS policy had more pronounced effects on the rural-dwelling, older, and disabled subgroups.

The increase in hospitalization expenses for older adults resulting from the CBICS pilot policy was essentially driven by the release of medical demand that had been previously suppressed. Therefore, if the CBICS reform is aimed at simultaneously achieving both health improvement and cost control, a hierarchical medical system with two-way linkage between community and hospital should be established in the course of policy promotion. In addition, in the promotion of CBICS policy, priority must be given to the accessibility and equity of services to ensure timely access to services for vulnerable groups.