Background. The challenges of modern medicine in addressing chronic diseases necessitate a shift of attention towards traditional medicine (TM) and other supplementary care systems. China has prioritized the strengthening of traditional Chinese medicine (TCM) in the health system reform since 2009. This study sought to assess the effects of the reform on TCM and the resultant effect of a strengthened TCM on health outcomes and financial protection. Methods. Longitudinal data were obtained from the China Statistical Yearbook, China Health Statistical Yearbook, China Population Statistical Yearbook, and Statistical Extract of Traditional Chinese Medicine in 31 provinces of mainland China between 2002 and 2016. Dependent variables included health outcomes measured by age-standardized excess mortality and life expectancy at birth and financial protection measured by the proportion of health expenses in total consumption expenses. The independent variables consisted of the number and proportion of TCM physicians. The fixed effects (FEs) models were established to identify the effect of the independent variables on outcomes. Results. From 2009 to 2016, the number and proportion of TCM physicians increased from 22 to 36 physicians per 100,000 population and from <12% to >15%, respectively. The changes were more rapid and higher than that in the period before the reform. An increase of 1 TCM physician per 100,000 population was associated with a decrease of 1.944 excess deaths, a 5.84-day increase in male life expectancy, and a decrease of 0.051% of health expenses among both urban and rural residents. An increase in proportion of 1% of TCM physicians was associated with a decrease of 5.097 excess deaths, a 17.52-day increase of life expectancy (both genders), an increase of 21.535-day in life expectancy (males) per 100,000 population, and a decrease of 0.082% of health expenses among rural residents. Conclusion. During China's health system reform, the increased physician number has strengthened TCM. Higher TCM physician supply was associated with improved health outcomes and financial protection, which implies that the reform may have important implications on health system performance in China.