Background <p>The presence of spatial inequity among provinces in China has led to emerging challenges regarding the utilization and sustainability of health insurance within the framework of universal health coverage.</p> Methods <p>This study employed the gradual implementation of the medical insurance integration policy across 31 provinces in China as a quasi-natural experiment to investigate the spatial impact of this policy change on equity within the healthcare sector. The analysis utilized the analysis of linked administrative data and applied the Spatial Durbin Model to assess the impact of the policy change across provinces.</p> Results <p>The findings revealed that policy integration influenced per capita benefits not only within the province where it was implemented but also extended its effects to neighboring provinces, demonstrating a general spatial siphon effect. Specifically, provinces with lower per capita benefits tended to gather with their neighbouring provinces with higher per capita benefits, and vice versa.</p> Discussion <p>This study provides empirical evidence for developing countries striving to enhance healthcare equity, highlighting its significance amid ongoing global discussions concerning spatial equity in medical insurance systems.</p>