Abstract: Health inequality among the middle-aged and elderly in China is increasingly prominent, hindering economic and social development. Based on the data from the four waves of the CHARLS, the impact of the urban-rural basic medical insurance system on health inequality was examined. The health composite index was used to measure overall health, the concentration index was used to assess inequality and influencing factors were analyzed. Results show that the insurance system significantly exacerbates health inequality, favoring higher-income groups. High-income individuals benefit more in terms of economic burden and healthcare accessibility, while low-income groups benefit less. The study also reveals variations in impact across age, gender, household registration, and education level. This study provides an in-depth analysis of the aforementioned empirical results, emphasizing that public health policies should take into account differences in population characteristics to achieve more equitable health services.