The impact of air pollution on outpatient medical service utilization and expenditure in a clean air city

Although there's increasing research on the health effects of air pollution in China, its direct influence on health-related expenditures, particularly during less severe pollution episodes, is still not well-understood. This study aims to quantify impact of three air pollutants (sulfur dioxide, nitrogen dioxide, and particulate matter) on individual healthcare spending in a city with relatively clean air. Using transaction-level medical social insurance data and temperature inversion as the instrumental variable, we estimate the current and cumulative effects of air pollutants on outpatient visits and medical expenses in an eastern city in China. We find a significantly positive effect on outpatient visits for 15-day moving average, and a significantly positive effect on outpatient expenditure for 25-day moving average. Therefore, the cumulative effect of pollutants on medical expenditure should not be ignored. The effects on total outpatient expenditure are larger for the elderly and men. The cumulative pollution exposure increases the visits to respiratory department but also increases the expenditure on non-respiratory diseases in the long term. Our findings provide empirical evidence that even for cities with good air quality, further improvements can improve patients' quality of life and lessen the expenditure burden on medical insurance.