China to encourage private health insurance

Posted on Jun 30, 2015 by Rob McBroom

Healthcare reform in China is nothing new, in fact it really started when the communist party came to power in 1949 with the adoption of the now infamous three tier health system that saw many inhabitants in China gain access to modern health care for the first time. While there has been setbacks (like in any system), the general health of the Chinese population has increased dramatically over the past 70 or so years.

One of the main ways the government has been able to achieve this is through an ever increasing availability of health insurance. These days, almost everyone in China, expats included, have access to health insurance plans which while a great boon for many, does put a considerably large strain on the government to maintain these plans while keeping the costs of healthcare low.

Because health care reform and health insurance are a top priority for the Chinese government - which has been striving to meet the ambitious goals set out in their ‘China Healthy 2020’ plan - we have seen some interesting changes to the overall system in the past five years. One of the latest changes announced is a new beta project that aims to increase private insurance usage in the country.

About the new pilot program

Officially announced in May 2015, this as of yet to be named project is a joint operation by the CIRC (China Insurance Regulatory Commission), the State Administration of Taxation, and the Ministry of Finance aimed at encouraging people in China to buy private health insurance.

The crux of this pilot project is that people who spend more than RMB 2,400 a year on private health insurance will only pay individual income tax on income over RMB 3,700 a month, compared to the current rate of RMB 3,500 per month.

This project, which is currently being tested in Shanghai, Beijing, Chongqing, Tianjin, and one large city in every province, is expected to see an overall increase in the number of citizens with private health insurance. Because this tax incentive has just been announced there is no official word on when this will be implemented throughout the whole country but experts predict it to be within the next couple of years.

Pacific Prime’s view of this new program

On this new program and what it will mean for Pacific Prime clients Pierre de Mirman, Country Manager (China) at Pacific Prime commented, “This incentive is a great first step at not only ensuring all people in China have access to health care, but also is a great way to begin to alleviating the pressure on the current public system. When it comes to expats however, we predict that the current scheme may not have a large impact as most already have private health insurance.  One thing we do predict will happen however is an increase in the competitiveness of insurers which means better plans being developed and made available which can be a real boon to expats considering China. In general, Pacific Prime is eager to see how this trial plays out and believes the outcomes will be largely positive.”

To learn more about this incentive and other ways you can reduce your health insurance costs, please contact our experts today.