Using the data fromtwo issues of China Family Panel Studies (CFPS) carried out by the Institute of Social Science Survey of Peking University, this paper makes the counterfactual analysis by DID-PSM to estimate the effects of basic medical insurances on household expenditure in urban and rural China. The results show that medical insurance has positive effect on boosting household expenditure and causes heavier economic burden to rural families by promoting the rural consumption. From perspective of different income levels, the effect of medical insurance on low-income families is forward and stronger than that of the families in urban areas.