Whether fiscal decentralization helps to provide public services that match local residents' preference remains inconclusive. By virtue of the quasi natural experiment of "county administrated by province" reform, this paper aims to investigate the impact of local decentralization on the improvement of public services from a perspective of micro demand. It makes an empirical analysis of the relationship between "county administrated by province" reform and public medical services satisfaction by using the county-level macro data in 2005 and CGSS2005 micro survey. Logit model results show that the implementation of "county administrated by province" system has failed to make local governments provide residents with more satisfying medical services, but worsens residents' satisfaction on public medical services. After excluding the interference of "reform illusion", "expectation effect" and "lag effect", the conclusions still remain robust. This paper argues that the expansion of economic rights intensifies local government competition, and offers local governments with greater incentives to use fiscal funds in infrastructure field rather than people's livelihood field, leading to relatively insufficient supply of medical services and thereby the reduction in satisfaction. The medium analysis confirms the inference. It is beneficial to the analysis of public welfare effect of fiscal decentralization reform from a micro perspective.