BUPA and Health Insurance in China since 1949

The People's Republic of China (PRC) branch of the British United Provident Association International (BUPA) was established in 2006 and has been continuing to expand in the fast-paced development and modernization of Chinese healthcare since.

Established in the United Kingdom (UK) in 1947, BUPA has become a US$12 billion industry and one of the world's largest health insurance providers. Over the last 60 years it has grown to handle over 10 million customers worldwide and is based in 190 countries over three continents.

As a provident association, BUPA reinvests all of its annual profits back into the company; this allows them to continue to improve their healthcare services, which, worldwide, has expanded from health insurance to various health and community products and services. In 2010 alone, BUPA announced a total revenue figure of nearly US$12 billion, which reflected an increase of nearly 9 per cent from the previous year.

The number of BUPA customers worldwide continues to grow, with nearly half a million new members joining in 2010. Customers of BUPA range from single individuals to large corporations. One of the most recent areas of BUPA's expanding international presence and growth has been in China, where just recently, BUPA formed a business partnership with the Chinese insurer Alltrust Insurance Company of China Limited. That joint-venture, signed in early 2011, has given BUPA a strong foothold into the Chinese market of nearly 1.3 billion people, while Alltrust received BUPA international's expertise in insurance and healthcare coverage. As one of the largest networks of multi-lingual doctors and advisers, BUPA's China members are able to receive medical advice and guidance 24 hours a day.

Alltrust is as joint-stock insurance company, which, in 2004, was established by a handful of large electricity conglomerates and industrial investment groups in China. After receiving approval by the China Insurance Regulatory Commission (CIRC) they were authorized to trade as a general insurer. Although looking to expand around the world, Alltrust still mainly operates in China, specializing in property, vehicle and life insurance. They have invested huge sums of money in the expansion of their business, from the construction of new offices locations and buildings, to the upgrading of their computer networks to bring speed and efficiency to their customers through an e-business platform.

Establishing their headquarters in Shanghai in 2004, Alltrust has since opened 20 offices in major cities in China. Today, the company has a registered capital of close to RMB 1 billion (US$150 million). The prosperous development of China's stock market has brought the company numerous business opportunities. This has allowed them to announce a plan to establish a further twenty branches in other major cities around China. The company is also looking to become a listed company on the Shanghai Stock Exchange (SSE).

While the Chinese market is making progress in allowing investment by international companies, currently, all foreign insurers that wish to establish a presence in China must enter into a joint-venture with a Chinese insurer. They then must obtain permission from the China Insurance Regulatory Commission (CIRC). The CIRC is a state-run ministerial institution responsible for the regulation of Chinese insurance products and services, and is charged with maintaining legal and stable operations of the insurance industry. It was founded in 1998 and has an office in every province and municipality in China.

Once approval of a joint-venture has been given by the CIRC, the insurer must still receive a separate license to operate in one of China's 22 provinces, 4 municipalities and 5 autonomous regions. The insurer is also required to build hospitals and health clinics, as well as provide medical professionals and establish IT systems to keep patient's records electronically.

This setup more often than not allows for Chinese insurers to have the final say on who they enter into business with. After a rigorous search Alltrust chose BUPA's extensive experience, international network and accredited customer services.

With over 1.3 billion people in China, the medical system can be, to locals and expatriates alike, a daunting experience. The overall medical figures of China are impressive; the country sports nearly 61,000 hospitals and has close to 1.97 million doctors, the highest of any country in the world. This is roughly 17 doctors per 10,000 people, compared to 25 per 10,000 people in the United States. However, despite the high numbers, the quality of hospitals and doctors ranges greatly from hospital to hospital.

There are numerous reports that among some hospitals, healthcare can be incredibly inefficient. It is common for queues to form as early as 3am due to the process being systematic and very crowded. It is also common for a trip to hospital to often be a "family affair" with, for example, a child being accompanied by both parents, at least one set of grandparents and a few aunts or uncles when visiting hospital. There are anecdotes that the process is similar to that of a department of motor vehicles, with patients (and their family) having to line up at several different windows for a lengthy amount of time. Both result in it taking several hours before a patient is actually seen by a doctor.

Despite the long wait to patients, hospitals are frequently overstaffed and medicine often wasted. A report conducted by the world bank suggests that more than 40 percent of total health spending in China goes to medicines, which is a disproportionately high amount compared to most other countries. This is due most likely to the fact that doctor's basic salary is still relatively low but they often receive cash incentives by selling or over-prescribing drugs, wherein they receive money from the government insurance for the drugs or a percentage amount of the prescription sold to those uninsured.

On the other side of the spectrum, there are high quality hospitals with international staff available in Beijing, Shanghai, Guangzhou and a few other large cities that are home to a large number of foreigners. Hospitals in other major Chinese cities often offer "V.I.P. wards". These wards feature reasonably up-to-date medical technology, and physicians who are both knowledgeable and skilled in the latest western medical practices. Most V.I.P. wards also provide medical services to foreigners and have English-speaking doctors and nurses.

Due to the large discrepancy between hospitals, BUPA has developed a quality accreditation program to determine which hospitals and health care facilities in China are within BUPA's standards; sharing and updating this information with all of its members.

The history of the Chinese healthcare system is among the most unique in the world.

At the end of the Chinese civil war and the founding of the People's Republic of China in 1949, the Communist government became responsible with picking up the pieces after over twenty years of war in the country. At that time, the average life expectancy was 39 years, with diseases running ramped among the population. It therefore became necessary for public healthcare and preventive treat to become one of the leading policies of the new government. Over the following 40 years healthcare took two forms in China, the preventative care policies called mass "patriotic health campaigns", which were aimed at improving the low level of environmental sanitation and hygiene among the Chinese population, and rural and urban government health insurance. However, while the civil war was over, there was still a large split among the population. The two split into the rural population, who relied on agriculture for their wellbeing, and were the backbone of the Communist Party, or those in cities, which had more of a Nationalist leaning, but now worked for the state enterprises or in government agencies. The public healthcare for both rural and urban citizens was similar and consisted of three basic tiers:

1. The first tier consisted of what were called "barefoot doctors", these doctors worked out of village medical centers and provided preventive and primary-care services. These "barefoot doctors" averaged two per 1,000 people.
   
   
2. The second tier were the township health centers, which functioned primarily as out-patient clinics, each serving about 10,000 to 30,000 people. These centers had about ten to thirty beds, and were a staffed by doctors with limited medical training.
   
   
3. The final tier, which was only for the most seriously ill patients, were the county hospitals that served 200,000 to 600,000 people each and were staffed by doctors who held 5-year medical schools degrees.
   
   

The Rural Cooperative Medical System provided most of the funding for the program. The system was financed through three main sources: a collective fund established by production brigades and teams (the organizational structure of the collective farming of people’s commune), a premium deducted from resident salaries, and subsidies from the government.

The system was in theory the same for urban residents:

1. First tier were paramedical personnel (similar to barefoot doctors), which were assigned to factories and neighborhood health stations
   
   
2. If more professional care was necessary, the patient was sent to tier two, which was a district hospital.
   
   
3. While tier 3 was, again, for the most serious cases, which were handled by municipal hospitals.
   
   

However, a number of state enterprises and government agencies sent their employees directly to district or municipal hospitals, circumventing the "first tier" to ensure a higher level of care.

These urban workers had healthcare consisted of two options:

1. Labor insurance scheme (LIS), which was an insurance system provide by state-run industrial enterprises that covered medical costs for the workers and their dependents.
   
   
2. Government employee insurance scheme (GIS) which covered employees of the government and state institutions.
   
   

Like the rural healthcare programs, the urban schemes relied on contributions by the government, the enterprise (or agency), as well as the individual.

Both systems were prone to the whims of the central or local government, and during the 30-year period between 1950 and 1980, China experienced several political reforms that had great effect on the Chinese population’s personal wellbeing. The Great Leap Forward for example led to the starvation of the almost 20 million people, while the Cultural Revolution led to a weakening of the “patriotic health campaigns” that saw epidemics and malnutrition return to much of the population. However, with the launch of Deng Xiaoping’s economic reforms in 1978, China’s overall public health and public healthcare would get worse before it got better.

While the wealth of Chinese citizens was growing during the economic reforms, the healthcare began to diminish, particularly as government industry began to revert to privately owned companies and much of the rural population moved into the cities putting the system in disarray, this and an apparent lack of government interest (and funding). As a result the system began to massively deteriorate.

The system had to also deal with the increasing population and longevity put a strain on the medical system. The Ministry of Public Health sought to greatly increase the amount of medical professionals in the hope of alleviating the problem. While the number of medical professionals working in hospital did increase dramatically from the 1950s - nurses by nearly two-thousand percent and by four-hundred percent for doctors. The large numbers and relatively low government checks allowed for greater corruption and disregard for patients rights.

While there were several small reforms to both rural and urban medical programs that tried to stem the deterioration, they had little effect. The government knew that massive reform was needed to both systems, and in 1998, the Central Government established a social insurance program for all urban workers, including those in the private sector.

The Urban Employee Basic Health Insurance Scheme (UEBHIS) is a one-tier system that uses a cost-sharing structure in which the government, employers and employees share the costs of healthcare. Like the previous system, much of the finer details are left to the local government, with some minor differences, like the amount of contribution paid, or the choice of hospital (public or private). Typically, the employer contributes 6 per cent of their total wages, while the employee contributes 2 per cent of their yearly salary into two funds, which the local governments are responsible for the managing. Those funds are:

1. A general medical trust fund, of which 70 per cent of the employer contributions is collected.
   
   
2. Individual employee accounts, which is all of the employee contributions and 30 per cent of employer contributions.
   
   

The system, unlike the previous one, only covers those employed (including retirees), and does not cover dependents or those self employed. This left dependents on their own to use commercial health insurance or pay costs individually. However, in 2007 the government launched a pilot program of the Urban Resident Basic Medical Insurance (URBMI) which was geared toward the four hundred twenty million urban residents without formal employment, particularly the primary and secondary school students who were not covered by the UEBHIS. This directive from the Central Government required local provinces to give those under the URBMI a total annual government subsidy of no less than 40 RMB per enrollee.

The urban reforms of 1998 were a direct result of the sharp rise in the “middle class” during the economic market reforms, which benefited those in urban areas a great deal more. It however meant that much of the rural population, the base of the Communist Party’s power in 1949, was beginning to be left behind, particularly with affordable healthcare. A study in 2000 found that 87 per cent of sick people in rural areas paid their own medical expenses in full, and 25 per cent had to borrow money in order to cover the costs.

In 2003, China introduced reforms to improve the healthcare system for its rural citizens, launching the New Rural Co-operative Medical Care System (NRCMCS), primarily to make it more affordable for the rural poor. They government invested nearly RMB 20 billion (US$2.4 billion) into the new reform. Under the NRCMCS, the annual cost of medical coverage is 50 yuan (US$7) per person. Of that, 20 yuan is paid in by the central government, 20 yuan by the provincial government and a contribution of 10 yuan is made by the patient. However like the “patriotic health campaigns” of the past, the system is tiered.

1. If patients go to a small hospital or clinic in their local town, the system will cover roughly 70-80per cent of their bill.
   
   
2. If the patient visits a county clinic, the percentage of the cost covered about 60 per cent.
   
   
3. If the patient requires a specialist in a modern city hospital, the plan would cover about 30 per cent of the bill.
   
   

While the NRCMCS is voluntary it has been well-received by its target audience. It was estimated that close to 97 per cent of the rural population was coved by 2010. This was helped by a clause that if one member of a family joins, they all must.

The Nationals People’s Congress decreed following this that, all people in urban and rural areas of the country will enjoy basic medical care and health services by 2020.

Despite concerns about China’s healthcare gaps, the overall population of the Chinese population enjoys relatively good health. As one of the world’s oldest civilizations, China holds over two thousand years of recorded medical remedies with Western medical theories and practices only making there way to China in the nineteenth century. Beginning in the 1970s, Western medicine gained increasing acceptance throughout medical care in China. Today’s medical professionals in China attempt to synthesize the best elements of traditional and Western approaches. However, this combination has not always worked smoothly with those trained in traditional medicine and those trained in western medicine often remaining in separate groups, and can often be unwilling to accept each others practices. However, it is not uncommon for a traditional physician to be the primary care givers in the clinics and pharmacies in rural China after receive some western medical training.

Unlike many Western countries, China still has a relatively low number of General Practice physicians. It is much more common for citizens to use hospitals as primary care providers. This is believed to have stemmed from the use of hospitals (particularly in Urban environments) to treat health concerns over the past 60 years in China. However that is changing, with several international cities like Beijing, Shanghai and Guangzhou seeing an increase in GP physicians outside of hospitals.

The increase in the quality of healthcare in China has led to a rise in the average life expectancy to 73 years from the mid-50s in 1960. It has also resulted in the alleviation of several chronic diseases. However many still remain, including Tuberculosis, which continues to be a major problem in China. A recent study revealed that an estimated 500 million Chinese citizens (45 percent of the population) are TB carriers, accounting for 14 percent of the world's TB carriers - second only to India. This is only worsened by the high-rate of cigarette smoking, which only increases the spread of the disease. TB is one of the biggest health concerns facing China, as typically a country that begins to develop and grows wealthier sees its TB problem drops dramatically. This is has not been the case with China.

While the HIV/AIDS rate is similar to other nations, particularly those with very migrant populations, it is still another health concern. Although in mid-2010 China lifted the ban of foreigners with HIV/AIDS from entering China, foreigners are still asked if they are HIV positive. The exact figures are difficult to confirm as officials at local levels are often resistant to report on actual cases. It is estimated that between 560,000-920,000 are living with HIV, with an average 48,000 new infections taking place in this year. While these numbers are still relatively low, experts do fear an explosion of the virus if prevention and acceptance are not educated to the general public

Other health concerns stem from China’s rapid economic growth, particularly pollution related illnesses, as the air and water quality has been severely impacted by the economic expansion and lack of environmental protection. Obesity and mental health are also issues in China, both of which remain mostly untreated. Mental illness has, in fact, become an increasingly serious issue in recent years, with several reports of middle aged men attacking groups of people, particularly school children.

China has also had its fair share of communicable disease, the most serious of which in past years has been the Severe Acute Respiratory Syndrome (SARS) which is believed to have jumped from an animal host to a person in a rural area of the southern province of Guangdong in 2002. Within three month, the disease had affected over 300 people. While the World Health Organization (WHO) declared China to be SARS free in 2004, the WHO was concerned over the secrecy of the Chinese government with reporting cases of SARS. The most serious of which were reports of the Chinese authorities moving patients suffering from SARS into different locations, or even having them driven around in ambulances while they conducting an investigation of the outbreak at hospitals.

With such a large geographical area and such a diverse and massive population, China will understandably have health concerns. The difference with China now, compared to 1949, is that it is now appears both financially able and socially ready to provide quality healthcare. Not only does the Central Government seem committed to provide affordable and high quality healthcare to its citizens, but its citizens are now demanding access to affordable high quality healthcare, especially as their overall wealth increases. Foreign investment by international reputable insurance companies, such as BUPA, will only increase the quality of that healthcare in China.