Can China’s creaky health insurance scheme withstand its ageing population and coronavirus?
- The China Health Insurance Fund is under enormous strain from the coronavirus pandemic and a rapidly-ageing society
- The scheme covers 96.8 per cent of the population, but Beijing is being forced to encourage more commercial insurance
For two decades, 65-year-old farmer Che Xiuyue had been troubled by osteophytes, bony lumps that grew on her knees, causing her unbearable pain and stiffness.
In 2019, unable to stomach the discomfort any longer, she finally had surgery to treat them. But when she received the bill of 10,000 yuan (US$1,569), Che was overcome by a new wave of distress.
Though only one-tenth of the original surgery price – thanks to China’s public health care insurance scheme – the charge was nearly equivalent to the annual income of her family of four, roughly 10,800 yuan.
“We simply can’t afford the complete treatment costs by ourselves,” she said.
China spent more than 400 billion yuan (US$62.7 billion) in 2020 on coronavirus testing, vaccines and patient treatment.
Medical expenses for Covid-19 patients reached 2.84 billion yuan last year, of which the health insurance fund paid 1.63 billion yuan, official data showed.
The insurance fund had income of 2.4 trillion yuan in 2020, 1.7 per cent above the previous year. But costs were 2.1 trillion yuan, up 0.9 per cent from a year earlier. The total balance held by the fund was 3 trillion yuan at the end of last year.
While still in the black, officials are becoming increasingly alarmed about its financial health.
Shi Zihai, deputy director of the National Health Care Security Administration, which oversees the fund and is the central authority for drug procurement, said in February it was being compromised by China’s slowing economic growth, its fast-ageing society and higher-priced medical devices.
Liu Tingfang, founder of the institute for Hospital Management at Tsinghua University, said the government was increasingly attuned to the situation.
“This is not only a health care issue, but also an issue of social stability and even regime stability,” said Liu, who is also a member of the State Council Medical Reform Committee.
Between China’s 2010 and 2020 censuses, the labour force of 15-59 year olds decreased by 6.72 per cent, which means fewer workers contributing to the public scheme and a growing number of seniors to support.
The China Research Centre on Ageing said in a 2020 report that more than 80 per cent of elderly citizens suffer from at least one chronic disease – a potentially huge burden for the medical insurance scheme.
Elderly patients with chronic diseases are the main target of health insurance spending and preventing morbidity in this group has a huge impact on funds.
“Chronic diseases now account for a large proportion of medicine,” Liu said.
Since the National Health Care Security Administration was established in 2018, 534 drug varieties have been provided to the public at reduced prices through consultations with drug manufacturers, including a large number of new medicines for rare diseases and oncology.
One of the reasons the authority has been able to negotiate cheap drug prices for rare diseases is the huge market demand, Liu said.
China’s health investment accounts for 7.12 per cent of gross domestic product, below the global average of 9.9 per cent, according to World Bank data.
Data released by the China Insurance Association shows commercial insurance covers less than 10 per cent of the population. That compares to 90 per cent in the United States, according to the Congressional Research Service.
Shen Peng, CEO of insurance company ShuiDiChou, said Chinese commercial insurance mainly served middle and high-income groups in big cities, which had contributed to its low coverage, though there was huge potential.
“Insurance is a more complex product, and it is difficult to fully understand the terms and conditions for an ordinary consumer, this may lead to disputes in claims, which in turn affects the public’s trust in commercial insurance,” he said.