Posted on Jan 07, 2016 by Rob McBroom
China can be summed up in many words, but stagnant is definitely not one of them. The country is constantly moving forward and changing, seeing up until recently unparalleled growth in all sectors including health and insurance. The idea of health insurance in China is not a new concept, but there has been a recent change announced by Beijing that is set to bring about a massive shift in the public health insurance system that will have an impact on health insurance.
A short history of health insurance in China
Pretty much from the implementation of health insurance in China, there have been a number of different systems in place that have all been run by different government bodies. For example, when it was first introduced in China there were two completely different systems in place. These systems, according to the WHO focused on rural and urban populations, "Rural populations were covered under cooperative medical schemes managed by agricultural communes. For urban populations, the Labor Insurance System (LIS) was established in 1951 for employees of state-owned enterprises (SOEs) and collectively-owned enterprises and their dependents."
In 1952 another system was introduced for government employees, retired government staff, and university students. The key similarity between these plans is that they were all managed by government institutions.
With the adoption of the market economy in the late 1970s/early 1980s, China saw massive economic growth which also resulted in changes to the healthcare system, ultimately leading to increased costs, out of pocket payments, and fewer people being insured or being able to afford proper insurance. Throughout the 1990s China initiated a number of health reforms and mergers to address the rising costs of care, poor quality of care, and slipping numbers of insured.
These reforms gave rise to the current health insurance system in China which is comprised of three main programs or schemes:
- UEBMI - Urban Employee Basic Medical Insurance Program
- URBMI - Urban Resident Basic Medical Insurance Program
- NCMS - New Cooperative Rural Medical Scheme
Along with various government funded urban and rural medical assistance programs which are in place to help certain groups of Chinese citizens access to health care they may not be able to afford.
The recently announced change
While these insurance schemes have dramatically boosted the number of people with insurance in China to a point where it can be technically considered universal, they are not perfect. For example, many of the public plans secured offer low benefits, or have high copays and exclusions especially with costly treatments and drugs. Beyond that many out of pocket expenses are not fully reimbursed which causes issues, especially in rural areas. Essentially, the systems are disparate largely due to the fact that they fall under different regulations and funding sources which has resulted in many being unable to afford care for the more expensive diseases that are increasingly affecting the population in China.
Pundits in China have been calling for further reform for a couple of years now and it appears that the Chinese government has agreed with these calls. In early December last year (2015) the Chinese government announced that they will be merging the different public health insurance schemes into one central scheme.
According to Bloomberg, "The government-run insurance programs will be consolidated in terms of fundraising, breadth of coverage and drug reimbursement." Essentially, there will now be one organization that oversees public health insurance in China, not three. In theory this should bring about a more equal health insurance program with equal coverage and reimbursement for all parties.
What this means for businesses in China
When it comes to health insurance in China, this consolidation is a massive change that could result in an improved system, but the question many are asking is what this means for businesses in the region.
Because this is a newly announced scheme, it is hard to predict exactly what the Chinese government will do, the changes they will implement, or even when this merger will be made - as of the writing of this article, details were largely unavailable. That being said, it will happen and there are a few things that business owners or managers with operations in China will need to know about.
The first is that you can rest assured that plans will change. What we mean by this is that the coverage elements and benefits in existing public plans will change. Some benefits will be increased, while others may decrease or be removed. Pacific Prime expects more of an equalization of benefits across the country, with benefits and limits for the more prevalent and costly diseases being increased.
You can also expect that due to the different levels of funding and coverage in the existing systems, there will be a premium adjustment for certain plans, especially those in rural regions. We predict any adjustments to be largely region-based meaning that some regions will see increased premiums, while others will see decreased premiums. As above, it is hard to predict the exact changes until more information is released.
It is important that businesses with operations in China follow these changes as health insurance is quickly becoming a key benefit to attract and retain quality employees. If you offer coverage beyond the existing local plans you may find that changes made to the public offerings will overlap your existing coverage. The converse could be true in that changes made to the public health insurance scheme may result in coverage gaps. This is likely something that you would not want, therefore keeping an eye on the changes and other coverage options would be beneficial.
The health insurance experts at Pacific Prime China will be keeping tabs on this change and will provide more information in the future. In the meantime, if you are looking for a health insurance solution for your business we can help. Contact us today to learn how.