Analysis of the long-term impact of public health expenditure and health insurance policy on the physical and mental health of urban and rural residents in Shandong Province

Persistent urban–rural disparities in healthcare access, financial protection, and health outcomes remain a major challenge in China despite substantial public health investment and insurance reforms. Existing research has largely focused on short-term or cross-sectional effects, with limited evidence on long-term policy impacts across both physical and mental health domains. Grounded in the Andersen Behavioral Model and Health Equity Theory, this study examines how public health expenditure and integrated insurance reforms are associated with health outcomes and financial burden in Shandong Province from 2010 to 2025. A longitudinal mixed-methods design was applied using panel data from the China Health and Retirement Longitudinal Study (CHARLS), China Family Panel Studies (CFPS), provincial yearbooks, and insurance records (n = 8,789), complemented by qualitative interviews (n = 50). Outcomes included chronic disease prevalence, hospital admissions, outpatient visits, and mental health measured using CES-D and GAD-7 scales. Fixed-effects regression, difference-in-differences, and propensity score matching were employed. Rural residents exhibited higher hypertension prevalence, greater hospital admissions, and poorer mental health. Public health expenditure and insurance coverage were positively associated with improved outcomes, while out-of-pocket costs were negatively associated. Policy reforms were linked to reductions in hospital admissions, depression scores, and financial burden, although disparities persisted. Qualitative findings identified continued barriers in access, reimbursement timing, and service availability in rural areas. These findings indicate that policy reforms improved financial protection and health outcomes but did not eliminate structural disparities, highlighting the need for targeted rural investment, improved reimbursement mechanisms, and strengthened primary healthcare systems.