Japan Medical Association (JMA), a lobby of physicians, went on strike in July 1971 against the medical reform led by the government. While physicians of JMA resigned from the health insurance doctor, they continued to provide medical care, and even virtually continued to provide the health insurance treatment in some areas. This paper uses the regional difference of resignation as a natural experiment to examine the effect of payment method of health insurance on medial service utilization and health status. Our results suggest that the resignation substantially decreased the medical service utilization, but not affected significantly health status measured by gross mortality rate and infant mortality rate.