Yue, a 38-year-old mother in Beijing, knows all about the limitations of health insurance in China. Her public insurance allows her to go to public hospitals to get routine care, but those hospitals are crowded and confusing to navigate. She has often been unhappy with the quality of doctors and the overall experience. Indeed, when her son was suffering from a fever, she decided against taking him to a public hospital and instead brought him to a highly regarded private hospital. After two days, her son’s condition improved. But the private hospital didn’t accept public insurance, and Yue ended up paying RMB 10,000 ($1,500) out of pocket.
Not long afterwards, Yue bought a supplementary private reimbursement policy. Only about one in 20 people in China owns such a policy, so Yue was doing something out of the ordinary. But as China’s middle-class and wealthy populations grow, tens of millions of people will be turning to reimbursement policies in search of improved care, a more satisfactory experience, and a better chance of ensuring their families’ health.
The growing interest in reimbursement insurance among Chinese consumers is creating an opening for private health insurance companies, both local and foreign, that want to do more business in China. And as private forms of insurance gain a toehold in China’s vast market, others in the ecosystem—including private hospitals—are likewise taking note.
Today, the vast majority of people in China are part of a public insurance system that is inefficient in many ways. The system pushes people to public hospitals for every sort of ailment—and once in a hospital, people often have to endure long waits to meet with a doctor who doesn’t have much time, in a setting that doesn’t offer much privacy. In lieu of individualized care, the default is sometimes to administer drugs or an IV saline solution and see how the patient fares.
There is also widespread dissatisfaction with reimbursement practices. About 50% of individual health care spending in China is out of pocket. So if a family member has a health problem that results in RMB 1,000 in medical bills, the family will pay an average RMB 500 out of pocket. If the cost of treatment is beyond a family’s means, the patient may receive inadequate treatment—or even none at all.