Tuesday, January 17, 2017

Private health insurance: lacking impact - Jeffrey Towson

Jeffrey Towson
While health care insurance has been high on China´s political agenda, the impact of private insurance is still very limited, writes Peking University professor Jeffrey Towson in the Asia Nikkei. Before turning to possible solution, he paints the grim picture.

Jeffrey Towson:  
Local and foreign insurers are lined up to fill this gap but the opportunity remains tantalizingly out of reach. Efforts in private health insurance have been stymied by regulatory constraints; by too few real private secondary care hospitals; by poor consumer awareness of health insurance; and by inaccessible, limited and non-standardized medical data for underwriting and pricing. 
Chinese consumers are becoming wealthier and more sophisticated in their expectations for healthcare. A survey last year by consultancy McKinsey & Co. of some 10,000 Chinese consumers found an increasing focus on eating healthier and safer food, practicing preventive medicine and playing sports. This growing focus on healthy living is great for healthcare and hospitals even if bad for KFC. 
Healthcare demand is also increasing as the population ages. Plus, as China develops, chronic diseases common to developed countries, such as diabetes and obesity, are becoming more common. Overall, the demand for healthcare keeps growing. 
Meanwhile, Chinese public hospitals remain overcrowded, have questionable financial incentives and are often criticized for poor service. While public insurance extends to 95% of the population, this coverage is actually very patchwork. Users are frequently required to pay 10%-35% of the cost of inpatient care. Coverage is limited with most private facilities and many treatments and medicines, especially for cancer, excluded. So despite "universal" social insurance, Chinese consumers still pay over 50% out of pocket for their care. 
There is a "significant increase in the awareness and demand for private medical treatments in China," said Neil Raymond, CEO of Pacific Prime, an insurance advisory company based in Hong Kong. "This means if you have the money, and more and more people do, then you will pay to go to good private facilities." 
This growing gap between supply and demand can be seen in the long lines outside of top Chinese hospitals virtually every day. It can be seen in the numbers traveling to Hong Kong, Singapore and California for care. It can be seen in families' continued hoarding of cash for medical emergencies. It can also be seen in the record number of attacks on hospital workers every year in China.
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