However, China\u2019s annual per\ncapita health expenditure is relatively low at around $425, or just over 5% of\nGDP, though\nit has been on the rise over the past decade. The Chinese government is working\non providing affordable basic healthcare to all residents by 2020. <\/p>\n\n\n\n
Recently, the demand of health insurance increased because of an aging population, changing consumer habits, digitalization, and greater private sector offerings. There are three<\/a> types of governmental basic medical insurance: For the urban employed population, for the urban non-employed population and for rural residents, regardless of employment status. Funding of health coverage comes from the central government, local governments, employers, and the participants. <\/p>\n\n\n\n The New Rural Cooperative Medical System (NCMS) aims to\ndecrease the financial burden and improve the health of rural areas.<\/p>\n\n\n\n In 1998, Urban Employee Basic Medical Insurance (UEBMI) was\nintroduced to provide healthcare access to urban working and retired employees\nin public and private sectors as well. 8% of the employee’s wage contributes to\nthe fund: Within that, 6% are paid by employers and 2% by in employee\ncontribution, yet now these rates vary by time and companies. UEBMI is a\nmandatory program for every employee. <\/p>\n\n\n\n In 2007, Urban Residents Basic\nMedical Insurance (URBMI) started to provide healthcare access for those who\nare not eligible for UEBMI: children, students in schools, colleges and\nuniversities and other non-working urban residents. In 2015, 376 million urban\nresidents (over 95%) took part in URBMI.<\/p>\n\n\n\n Funds of URBMI includes personal contribution and company contribution.\nAdditional government contributions are given to undeveloped central and\nwestern regions and poor or disabled individuals. Some suggest URBMI is\na substantial step towards a universal healthcare system in China.<\/p>\n\n\n\n China\u2019s commercial health insurance<\/a> sector covers out-of-pocket cost and serious illness costs. Commercial health insurance<\/a> in China serves as a complementary good for the public insurance sector. PICC Health, China\u2019s first commercial health insurance company, was established in 2005. It was marked as the (first) spring of commercial health insurance in China, expecting tremendous growth in commercial health insurance similar to that of the US. Playing a minor role relative to the public program, commercial health insurance in China has been offered through supplemental policies purchased to cover deductibles, co-payments, and other cost-sharing, as well as coverage gaps in public programs. Commercial health insurance premiums account for 14%<\/a> of the total insurance premium income in China in 2018. However, in recent years, commercial health insurance in China has been growing rapidly, significantly outpacing other types of insurance. <\/p>\n\n\n\n From 2014 to 2018, the compound annual growth\nrate of China\u2019s commercial\nhealth insurance was 36%<\/a>, whereas it was 17%\nfor life insurance, and 11% for P&C insurance. This is because of two reasons:\neconomic development and limitations of the national medical insurance.<\/p>\n\n\n\n First, as China\u2019s economy is developing, more people are\nwilling to spend more money on health care, including the private health\ninsurance. Specifically, the rise of\nmiddle-class<\/a> stimulates the growth of the commercial health insurance market. The McKinsey\nGlobal Institute (MGI) projects that 61 percent<\/a> of China\u2019s inhabitants will live in\nurban areas by 2020, up from 52 percent in 2012, as 142 million people migrate\nfrom the countryside to cities. <\/p>\n\n\n\n Second, within the medical insurance market in China, the national medical insurance\nsystem is beneficial yet limited in budget. Urban resident medical insurance is\nexperiencing budget deficit because of China\u2019s aging population<\/a>. . Although China has a relatively complete public health\ninsurance system, it has its limitations, including the limitations for\ncritical illness, the limited access of private facilities and the self-pay\nportion is still high. Even patients enrolled in a government-run scheme have to make\nconsiderable co-payments. Also, some other cases could be like foreign\nemployees neither contribute to social security, nor are they entitled to any\nbenefits. <\/p>\n\n\n\n Some\nconsumers are not satisfied with public health insurance and some are worried\nabout long-term health consequences due to environmental pollution. Some Chinese worry about the high cost of unexpected\nserious illness. These are two\ndrivers of commercial health insurance in China. <\/p>\n\n\n\n [source: asianinsurancereview \u201cChinese medical insurance market\u201d]<\/p>\n\n\n\n Figures\nfrom the China Insurance Regulatory Commission show total overall gross premium\nincome for China\u2019s insurance market was RMB 3.66 trillion<\/a> (US$550 billion) in 2017, with health insurance premium\nincome accounting for RMB 439 billion or 12% of the market. <\/p>\n\n\n\n There are several groups of potential consumers of health insurance market in China.\nFirst, the growth of middle\nclass in China is increasing demand for high quality and diversified\ncommercial health insurance. As previously mentioned, the population of the middle class in China\nis growing as millions are\nlifted out of poverty.\nIn the middle class\ncommunity in China, highly educated and typically married with children\nusually show the intention to spend the most on private health insurance:\nbetween RMB 10,000 and RMB\n20,000<\/a>\nannually per person, and between RMB 30,000 and RMB 60,000 ($4,550 to $9,100)\nfor a family of three, according to Boston Consulting Group. The middle class\nexpects and aspires to have a hassle-free and generally more pleasant medical\nservice than the one typically associated with public insurance, including\nhigh-end private hospitals, convenient outpatient services, and direct billing\n(as opposed to being required to pay upfront and then chase down the insurer to\nrecover the benefit).Additionally, there are some other service\noptions which might include dental care, maternity services, and routine\ncheckups.<\/p>\n\n\n\n [source: ping\u2019an insurance \u201cMedical insurance for the\nelderly\u201d]<\/p>\n\n\n\n Another potential group of consumers\nin medical insurance market in\nChina is the silver\ngeneration<\/a>. By the end of 2018, China had nearly 250\nmillion people aged 60 and above, accounting for 17.9% of the total population.\nEvery year, 8-10 million Chinese people turn 60 years old. By the end of 2025,\nthere will be around 300 million Chinese senior citizens, accounting for\none-fifth of the total population. By 2035, China is one track to become a hyper aged city<\/a> as predicted. The silver generation has more demands to\nhealth products. Considering China\u2019s one-child policy, household with the\nelderly are expected to buy private health insurance to lessen the financial burden<\/a> of their care needs on their sole child. This population\nstructure will also project an increasingly strong demand <\/a>for\ndisability insurance and long-term care insurance in the health insurance market in China . At present, China\u2019s disability insurance and long-term\ncare insurance only occupy a very small share of the market. <\/p>\n\n\n\n Consumers who have increased consumer awareness is another\ngroup of target consumer. More Chinese citizens have more health awareness to chronic\ndiseases and serious diseases. Because\nof the change of lifestyle and living conditions, chronic conditions like diabetes and hypertension are\ndeveloping faster than ever in China. The New\nEngland Journal of Medicine<\/em> reported in 2010 that\nthere were already 92<\/a> million\ndiabetic patients and a further 150 million pre-diabetics in China, while in\nthe United States has almost 27 million diabetic patients. Additionally,\nconsumers also have more awareness to serious diseases in\nChina. Many highly prevalent and burdensome conditions<\/a> (such as cancer, depression, and\nrespiratory illness) remain underdiagnosed and undertreated in China. Medical\ninsurance related to this could be insurance assisting in providing better and\nearlier diagnosis or easing the burden for consumers if they get serious\nillnesses in the future. Thus, they choose to purchase private health insurance as a\nway of risk control. Critical diseases commercial insurance was the largest and\nfastest growing segment in 2017, accounting for 56.8%<\/a> of the medical insurance market in China , up 14.8\npercentage points from 2016. Its premiums of RMB 249.4 billion reflect a\nyear-on-year increase of 46.9%.<\/p>\n\n\n\n The number of foreign companies in the Chinese market is\nincreasing, but the dominant players in China\u2019s private health insurance market\nare large domestic insurers. The three largest health insurers in the medical insurance market in\nChina are Ping An Health Insurance Company and PICC Health Insurance\nCompany and China Life Insurance . China Life is the largest domestic life\ninsurance company (and the world\u2019s largest life insurer), with 10% of its total\npremium income derived from health insurance. Other large Chinese health\ninsurance companies include Hexie Health Insurance Company, which is part of\nthe Anbang Insurance Group and Kunlun Health Insurance Company.<\/p>\n\n\n\n Although traditional sales channel remains focused on\nindividual agents, medical\ninsurance market in China has also entered the digital market<\/p>\n\n\n\n Nowadays in China, purchasing insurance through acquaintance\nis still a popular sales channel among all. According to one survey conducted\nby EY about health\ninsurance market in China, about 54 percent <\/a>of the interviewee purchases medical\ninsurance from acquaintances, and about 33 percent of the interviewee purchases\nmedical insurance from agents working in different insurance companies, while\nonly a small portion of the consumers purchases medical insurance through\ncomputer or phone, respectively 8 percent and 4 percent. <\/p>\n\n\n\n However, as China\u2019s consumer shift their focus to the digital market<\/a>,\nthe medical insurance market\nin China also shifts to accommodate online market\u2019s needs, including 500\nmillion people online, 180 million internet shoppers and 300 million consumers\nusing social media. For example, Chinese insurer Ping An, a global health\ninsurance firm, invest in so-called InsurTech<\/a> start-ups which is\nahead of any other market players in emerging markets. Insurance companies nowadays have developed\nnew digital distribution channel<\/a> based on that. Digital distribution channels are increasingly important\nfor insurers\u2019 market growth, although traditional channels will not be\neliminated any time soon in the health insurance market in China.<\/p>\n\n\n\n Internet medical\nservices are also becoming more and more popular in the recent years. Because\nof that, the traditional insurance companies are pursuing similar things. For\nexample, Taikang Life<\/a>\ncollaborated with We Doctor\u2019s guahao.com (an online medical service platform)\nto launch a special protection plan. In the future, we can project that commercial\ninsurance paying to internet hospitals directly will become a major trend.<\/p>\n\n\n\n Recently (October 2019), The state council of\nChina revised the Regulation of the\nPeople\u2019s Republic of China on the Administration of Foreign-Funded Insurance\nCompanies<\/a>. It lessens the entry level of foreign-funded insurance\ncompanies by deleting two rules \u201c(Companies should have) run their businesses\nmore than 30 years\u201d and \u201chas a representative office for more than 2 years\u201d. <\/p>\n\n\n\n Overseas insurance company that wish to enter the medical insurance market in\nChina have to understand the\nstrength, weakness, opportunity and threat embedded within. The health insurance market in China\nis currently in between the introduction and growth stage, in which a positive\nfuture outlook and chances to take market share may be foreseen. <\/p>\n\n\n\n [source: bupa.com.cn \u201cBupa health China\u201d]<\/p>\n\n\n\n Since 2006, Bupa<\/a> has had a Representative Office in Beijing, serving primarily to understand the market, build relationships and explore opportunities for building our domestic presence in China. <\/p>\n\n\n\n Bupa China adjusts<\/a> Elite Health plans according to the market situation of China. In 2017, Bupa China made some significant changes focused on maternity and dental\/optical benefits. These two areas are usually ignored by the public health system in China.<\/p>\n\n\n\n Bupa localized its company in China by collaborating with local big name insurance company. Starting in 2011, Bupa International has announced a partnership<\/a> with the Chinese insurer Alltrust. Alltrust offers health insurance products while Bupa International will be the group who administer Alltrust. Later, Bupa launched<\/a> localized insurance plans with Alltrust. In 2018, Bupa Global announced health insurance plans which is tailored to Chinese customers. Specifically, this plan includes a lower premiums, second medical opinions and global access to hospitals and clinics. Bupa opened two wholly-owned integrated medical centres<\/a> in Guangzhou in 2017 as to enter China\u2019s healthcare provision sector. <\/p>\n\n\n\nThree major types of government provided medical insurances in China<\/h3>\n\n\n\n
New Rural Co-operative Medical Scheme<\/a> (2002\u2013present) <\/h4>\n\n\n\n
Urban Employee Basic Medical Insurance<\/a> (1999\u2013present)<\/h4>\n\n\n\n
Urban Residents Basic Medical Insurance <\/a>(2007\u2013present)<\/h4>\n\n\n\n
Commercial health\ninsurance in China<\/h1>\n\n\n\n
The\ngrowing demand of private health insurance in China<\/h2>\n\n\n\n
Commercial\nhealth insurance premiums in China<\/h2>\n\n\n\n
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<\/figure><\/div>\n\n\n\nConsumers of health insurance market in China<\/h2>\n\n\n\n
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<\/figure><\/div>\n\n\n\nMarket competition of health insurance market in China<\/h2>\n\n\n\n
What to expect as a new entrant\nin the health insurance\nmarket in China?<\/strong><\/h2>\n\n\n\n
Case study: Bupa<\/a><\/h3>\n\n\n\n
![\"Bupa](\"https:\/\/daxueconsulting.com\/wp-content\/uploads\/2019\/11\/daxue-consulting-chinese-medical-insurance-dapu-800x543.png\")
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\n\n\n\nLet China Paradigm have a positive impact on your business!<\/strong><\/h4>\n\n\n\n
![\"China](\"https:\/\/daxueconsulting.com\/wp-content\/uploads\/2019\/11\/China-Paradigm-Promotion_Best-China-business-podcast.png\")
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