Editor's Note: In this article, originally published in BRINK Asia, Mercer's David Anderson explains what's driving China's rising medical care costs, and what insurance strategies will ensure China's employees receive low-cost, high-value care.
Medical insurance premium rates are on the rise around the world, and are pushing employers to play a more strategic role in shaping the healthcare market. This is especially true in China, where a population of 1.4 billion ensures that the country has the largest representation of universal health insurance in history.
The rarity of universal health insurance coverage in growth economies makes China’s achievement even more remarkable. However, while studies conclude China’s experience is exemplary for nations seeking to follow in its footsteps, the limitations of publicly provided care cannot be ignored in a world where medical costs are on the rise.
In the span of just one year, 2016 to 2017, China has seen increases in both inpatient and outpatient medical trend rates. Medical costs are increasing at an average annual rate of 10 percent — more than four times the rate of local consumer price inflation (2.4 percent). The medical insurance arranged by the Chinese government falls short of meeting these evolving needs. Deductibles, copayments and coverage limitations have created a need for employees to turn to supplemental insurance to cover their risks.
In response to the added burden on operating expenses and employee purchasing power and gaps in publicly provided care, Chinese employers are increasing their investments in employee commercial insurance. China’s commercial healthcare insurance market has seen a growth rate of approximately 25 percent since 2000. More than 100 insurance companies are now providing commercial healthcare products in China, and this number is growing. Through commercial insurance, employers can capitalize on cost saving opportunities and have some influence on the healthcare market.