Objective: Healthcare security is a major institutional arrangement to reduce the burden of medical treatment on the public, enhance people’s well-being, and maintain social harmony and stability. This article aims to analyze the impact mechanism and governance path of the "discontinuation of basic medical insurance" for urban and rural residents from both theoretical and practical perspectives, providing a theoretical basis for consolidating the achievements of universal participation in basic medical insurance. Method: This study used M Town in Chongqing City as a sample and conducted on-site interviews with local directors of healthcare security administration, village committee staff, and rural residents to construct a four-dimension analysis framework covering idealized policies, implementation subjects, target groups, and implementation environments. Result: There is a correlation between the behavior of "discontinuation of insurance" among urban and rural residents and factors such as insufficient mobilization and publicity of medical insurance, high economic pressure on rural residents, individual cognitive biases, and informal cultural environment constraints. Conclusion: It is recommended to implement systematic measures in promoting insurance participation legislation, optimizing financing mechanisms, enhancing institutional inclusiveness, improving public medical insurance services, and deepening policy awareness to drive the formation of a stable and sustainable insurance order for urban and rural residents.