Chronic disease patients have long suffered from mental health problems because of the long-lasting and costly treatments. Although the multilevel social health insurance system in China attempts to provide them with full-fledged health insurance coverage, the increasing prevalence of gig economy unexpectedly disrupts this situation. As the social health insurance system in China is closely associated with employment status, unemployed rural-to-urban migrant workers/regular urban workers have to accept the transition from urban employee basic medical insurance (UEBMI) to new cooperative medical scheme (NCMS)/urban resident basic medical insurance (URBMI). This study investigates the influence of this involuntary health insurance transition on the mental health of chronic disease patients. Empirical results show that the experience of transition from UEBMI to NCMS would significantly deteriorate the mental health of chronic disease patients, while the transition from UEBMI to URBMI would not. Accordingly, chronically ill rural-to-urban migrant workers are vulnerable to the involuntary health insurance transition that further deteriorates their mental health, and the multilevel social health insurance system in China cannot cope well with the emerging phenomenon of frequent employment change in labor market.