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Increased Medical Awareness in China Causes 25.8% Growth in Health Insurance Premiums

Successful marketing campaigns on the importance of major illness lead to significant growth of health insurance premiums in China.

It has recently been reported that health insurance premiums in China have grown 25.8% to CNY58.65 Billion (US$9.6 Billion) in the first half of this year, already surpassing the entire previous year's growth of 24.6%. The developing areas in the west of China, in particular, have seen a significant 42.8% growth between January and July this year, nearly doubling the 24.4% growth in the eastern cities. This significant level of growth throughout the country is likely a result of the increased marketing efforts that insurers have been displaying in recent months. Although the available cover is beneficial for citizens, there are some issues of cost that the government will need to consider.

The Chinese government has specifically been focusing on bringing medical insurance to a greater portion of Chinese citizens, with many reforms being made to improve the level of coverage that a client can receive. China reached an impressive milestone in 2011 with 95% of the population being covered, a considerable increase since 2004 when only 10% of the population had access to any form of medical coverage at all. This dramatic growth in premiums has been further driven by several major commercial insurance companies that have launched educational marketing campaigns about the importance of having coverage for major illnesses.

The added cover for major illness would be in extension to the existing coverage made available to the wider population through government schemes, which were initiated in the last decade to increase the coverage for those with little or no income, particularly in rural areas. Such government schemes include Urban Employee Basic Medical Insurance, a mandatory cover funded by both employees and employers, as well as the Urban Resident Basic Medical Insurance Scheme and the New Rural Co-operate Medical System, two voluntary schemes funded by individuals and the government. All of this is part of the Chinese government's overall plan to have comprehensive universal healthcare by 2020.

The rural areas of China have benefited greatly from these reforms. However, this is only half the battle of ensuring a sustainable universal healthcare system for the future, with the government making reforms to tackle two major hurdles:

  • 80% of the hospitals in China are located in city centres.
  • The quality of treatment at facilities in rural areas is dramatically lower than in the big cities.

According to the Organisation for Economic Cooperation and Development, in 2011, almost half of China's 2.7 million doctors were considered to be under-qualified, with several cases of doctors having only undergone a 3 year certificate. Despite 90% of the doctors in China being trained in Western medicine and not just in traditional Chinese methods, there are only a handful of universities in the whole of China that are able to provide the full 8 years of training required to become a General Medical Practitioner Doctor in most western countries.

Although this drive to provide better healthcare is beneficial for the Chinese population, it will also result in a costly issue that the government will need to face in the future. An improvement in general health care is systemically linked to an increase in life expectancy, resulting in a greater demand for elderly care. Although the issue of adequate senior care is a problem shared around the globe, there's one uniquely Chinese consideration that will add more pressure to the Chinese government relative to other countries. China's markedly endemic 1 Child policy has created what is commonly referred to as the "4-2-1 problem", where one child has to support two parents and four grandparents. In a culture where elderly parents have historically been dependent on their children, there will be considerably more pressure placed on today's generation as they have no siblings to ease the financial burden.

Raising and maintaining the levels of health and well-being is a big task for any country, let alone the world's largest population – one that was considered to be third world only one generation ago. However, the economic boom that China has enjoyed in the past few decades has enabled the government to create remarkably effective reforms, with the last ten years seeing close to a billion people being given access to healthcare where they had nothing before.

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