Selecting Private Healthcare Coverage in China

Selecting Private Healthcare Coverage in China

China’s private health care industry is on the cusp of a boom. Much of this boom stems from demand that is driven by an incredibly high rate of dissatisfaction among Chinese citizens who feel that their state-run insurance scheme simply does not meet their needs—and they want more options. This demand for private health insurance in China is an alluring prospect for insurance providers and, with a population that is projected to reach 1.4 billion by 2050, the prospects for setting up shop in China are some that will likely bring in trillions of yuan. The projections are so high that, if current conservative estimations are correct, private health insurance providers’ revenues will by 2020 eclipse RMB5 trillion, or over USD 757.5 billion. And, with private insurers eyeing China as the next country in which to begin operating or significantly expand operations, Chinese citizens could soon have more options for selecting coverage.


Stretching Healthcare Coverage and Increasing Costs

China currently has three public health insurance plans. These plans cover 97% of the population—but are being stretched to provide coverage for all. What coverage does exist from these three plans does little to provide full coverage; out-of-pocket expenses are sizable, coverage is often minimal, and care is severely limited. The Chinese government subsidized for 30 years over half of hospital and clinic costs, allowing for a 15% profit margin on drugs, was instrumental in providing diagnostic services above costs, and created an environment for healthcare providers to pass along the costs to patients. The shortcomings of the state healthcare system are being reflected in the out-of-pocket expenses many Chinese citizens are paying. More are choosing supplementary private insurance to meet their needs, but only about one in 20 Chinese have this type of insurance. What’s more is that these reimbursement plans are largely for wealthy or higher-income individuals and families, meaning many who need more affordable health insurance options are unable to pay for such schemes. This is expected to change as a middle class continues to emerge in China. However, even those who can currently afford reimbursement plans often find that their plan does not cover or minimally covers the latest drugs or treatments. But, as China continues to industrialize, the pollution caused by this industrialization, automobile exhaust, and other sources of CO2 and methane release, will spell higher rates of respiratory problems for the hundreds of millions of people in Chinese cities. Combatting the effects of pollution (among many other factors) will challenge the country’s Healthy China 2020 initiative that aims to improve medical facilities and create a healthier environment for all Chinese citizens.

Population, Urbanization, and Age

China is getting older. And older populations tend to require more healthcare spending. China can now lay claim to one of the largest increases in healthcare spending as a percentage of GDP, growing from 3.7% in 1994 to 5.6% in 2013—and the current public health coverage cannot sustain the needs of its growing population. At present, 55% of China’s population lives in urban areas, but that percentage will jump to 73% by 2050, further stretching China’s ability to provide affordable healthcare in its urban centers.

Shifting to Private Health Insurance in China

Private health insurance options in the country are growing. In fact, the industry has seen premiums increase by 41% in 2013-2014, and on to 52.5% in 2015—and foreign insurers are taking notice of the market. Twenty of the largest multinational insurers operate in China. But many insurers are burdened by the Chinese government’s regulations that make profiting a challenge, targeting high-income individuals to drive these profits. Coupled with a lack of standardization and fluctuating costs between different cities and provinces, insurers are still exploring ways to expand coverage while turning a profit.

Health Care Tech

Mobile devices and access to reliable Internet connectivity has allowed for new health care technologies. Chinese citizens can access new, digital health care innovations that provide them with 24-hour access to doctors and specialists via their smartphones. This service is so popular that, within its first six months, 25 million signed up—and 300-500 million subscribers are the parent company’s target by 2019.

Why Expats Should Consider Private Health Insurance in China

China’s public health care system offers care and facilities that are often not on par with Western standards. To receive Western facilities and treatment, Chinese patients need to go to either private or international hospitals. The former often provide both traditional and Western medicine and function similarly to care facilities in the West. The latter are also private, but meet the standards Westerners are used to and have English-speaking staff with a greater degree of attention and service. However, this premium service is offered at a premium price. If you are living, working, or studying in one of China’s largest cities, you may have the option of your insurance company paying at the international hospital, removing the need to pay at the hospital each time you visit. If you are considering sending and employee to China or are making the move yourself, get in touch with Velocity Global to learn how we can assist you in ensuring your health care needs are met.

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