In recent years, medical and health care consumption has risen, making health risk an important determinant of household spending and welfare. We aimed to examine the determinants of medical and health care expenditure to help policy-makers in the improvement of China's health care system, benefiting the country, society and every household. This paper employs panel data from China's provinces from 2001 to 2011 with all possible economic variations and studies the determinants of medical and healthcare expenditure for urban residents. CPI (consumer price index) of medical services and the resident consumption level of urban residents have positive influence on medical and health care expenditures for urban residents, while the local medical budget, the number of health institutions, the incidence of infectious diseases, the year-end population and the savings of urban residents will not have effect on medical and health care expenditure for urban residents. This paper proposed three relevant policy suggestions for Chinese governments based on the findings of the research.
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