Market Behaviour of Commercial Medical Insurance in China

Abstract

Rationale: Commercial health insurance has emerged as an alternative solution to the problem of Chinese healthcare today. However, very little is known about the size of this market as well as its actuarial features. Objective: The study offers a quantitative accounting of commercial health business and identifies factors affecting the behaviour of health insurers in China given the national strategies to extend the population coverage of the medical insurance. Methodology: With the assistance of the insurance regulator, a survey of commercial insurers was conducted. A set of key indicators including premium income and loss ratios by product types was collected. Interviews and focus-groups of commercial insurers were organized to enrich our understanding behind the quantitative figures. Results: Total medical insurance premiums collected by commercial insurers were estimated to be USD1.5-1.8 million. Reimbursement plans constituted only 20% of the individual health insurance market while it is a mainstay in the group market (90%). Average claims per case and premiums per enrollee varied across different insurers. Without proper integration with social health plans organized by local governments, commercial plan does not seem to be commercially attractive, hindering the willingness of the industry to invest in the operational infrastructure. Conclusion: Public-private partnership is a global trend in healthcare reform today. Commercial insurers could offer a quick and quality solution to address the health financing problem in China. Only through removal of some obstacles in the business and regulatory environment can the private sector resources can be mobilized.