Private health insurance demand in China set to increase
Reimbursement insurance is something that's growing significantly in demand in China, and for good reason. When things go wrong, these types of policies kick in to reimburse policyholders for the costs associated with seeking care; the most common type of insurance plan available and what many people think of when they hear the phrase “health insurance”. However, there's more to these policies than that.
What exactly is reimbursement insurance?
In China there are three main levels of reimbursement/medical insurance plan available:
1. Supplementary medical insurance – These are plans that are available to all residents in China, and are in fact mandatory for most residents to secure, as they are one of the five major social insurances that you contribute to each month. As such, limits are usually quite low and care is restricted to public hospitals only.
2. Low to mid-range medical insurance – These plans are not linked to your social insurance, but rather are developed to offer coverage in China only. As such, they are usually only sold by local (China-based) insurers and will offer adequate coverage for most common medical concerns. That said, they will usually also have low limits and stricter terms and conditions, which could limit where you receive care e.g., only a set number of hospitals and clinics.
3. High-end medical insurance – These plans were historically designed for expats and high networth individuals looking to receive care from the best private hospitals in the country. As such, they offer high limits and will often cover almost all medical conditions. Beyond that, many are international in nature, meaning care will be covered outside of China.
Of the three levels of plan above, the second and third are considered to be private health insurance while the first is considered to be public health insurance. The main difference being that at the private level, plans are not in anyway subsidized by the government and there is no requirement (in China at least) that you secure private health insurance.
Growth of private health insurance in China
Historically speaking, the private health insurance market in China has been dominated by critical illness policies. According to a Boston Consulting Group report, the market value of private health insurance in 2015 was RMB 241 billion, with critical illness making up over 70% of the total amount sold. Whilst reimbursement plans made up a lower number of those sold, their growth is expected to outpace critical illness sales.
How fast? Well, based on data from the report, it is predicted that reimbursement plan premiums will increase from RMB 72 billion in 2015 to RMB 400 billion in 2020. If these numbers play out, this equates to a 456% increase in premiums. Compare this to a predicted 314% increase incritical illness insurance premiums.
Why is this going to happen?
Industry experts including Pacific Prime China believe that this growth is possible, as there are three current conditions in place that will enable growth including:
The number of private hospitals is growing - The number of private hospitals in China has increased from 3,200 in 2005 to just over 12,500 in 2015. Despite this boom in numbers, private hospitals are reluctant to accept public insurance plans meaning private insurance is the only way to access their more advanced, higher quality facilities.
The government is introducing policies to encourage people to buy private insurance - Early last year the government introduced a pilot scheme that gives people a tax rebate if they secure private health insurance.Schemes like this are sure to help drive demand for private insurance.
There is an increasing demand for better quality care - Constant perceptions of public hospitals being lower quality and having long wait times has also driven more people to seek out private insurance to access the private healthcare sector.
What does this mean for people securing health insurance?
There are two key benefits that these changes will likely to hold for Chinese consumers. First is that the total number of private health insurance plans on offer will increase dramatically as insurers rush to take advantage of the demand. Secondly, the market shift to demanding better healthcare facilities should spur better investment into more effective and efficient care in China's health sector.
With a larger number of plans and hospitals to select from,health insurance in China will likely become an even tougher market to navigate.To help ensure you get the highest quality plan, it is going to be more important than ever to work with a broker like Pacific Prime China. Contact us today to learn how we can help.