The swiss healthcare system without the health care finances
CARE EXPO 2015: Healthcare Reform and Insurance Perspective in China
1. CARE EXPO 2015
• INSURANCE IN CHINA
• INSURANCE EFFECT ON HEALTHCARE INDUSTRY
• RISK ANALYSIS AND PROTECTING INVESTMENT
2. Healthcare Reform China
Insurance Perspective
• The key driving force behind change is the Central Government and in the
past 15 Months huge emphasis has been placed on Health Care and
Insurance Industry. Lets start with the reform and statements being made:
•
• October 2013 Healthcare Reform Key Points
•
• On Oct. 14, 2013, Some Opinion of the State Council on Promoting Health
Service Industry; specifically made Health Insurance one of its 8 arms.
• http://www.gov.cn/jrzg/2013-10/14/content_2506400.htm
•
• August 13, 2014, Some Opinion of the State Council on Accelerating the
Development of Modern Insurance Service Industry this is also called the Xin
Guo Shi Tiao
• (“New 10 Guidance Points of the Country” for insurance) specifically made
Medical and Pension Marketization as first one. Setting up the pace for the
reform.
• http://www.gov.cn/zhengce/content/2014-08/13/content_8977.htm
•
• On Oct. 27, 2014, Some Opinion of the State Council on Accelerating the
Development of Health Insurance; sets the complete and specific target and
agenda.
• http://www.gov.cn/zhengce/content/2014-11/17/content_9210.htm
3. Key Points from Reform
• Better role of insurers for the public sector development
• Insurers to get more involved in all administration levels across the Country
• The Government believes there is a gap between the current level of the Insurance Industry and its needs in the near future.
• Currently the insurers do not have excess capacity to help develop the needs of the Chinese Society
• The Insurance industry has to be modernized by 2020
• The government wants the majority of the population to be insured at some levels by 2020
• Higher Service Capabilities must be built
• Policies and the Industry must be able to compete on coverage and pricing with International Policies
• 5% of GDP spent on personal insurances is a goal by 2020
• Average premium paid per person should be 3,500 RMB a year (would mean a total premium collected of 490,000,000,000 per year)
• Both Companies and Individuals should increase their purchasing allowing the Government to increase their investment into the Health Care Sector and
Social Services
• Encourage foreign investment to improve products and services
• Use of Insurance to build better Social Security and Benefits
• Private Insurance to be the main carrier of risk rather than State benefits
• Most important area of concentration should be the Health Insurance and Income Protection
• Diversify Health Insurance Products to cover Elderly, Disabled, Children, Long Term Care, Mental Illness, Disease Prevention, Chronic Diseases, and
General Health Management and Education
• Public Education of Insurance
• Develop Better communication between Government Sectors such as Ministry of Health, Tax Bureau, Chinese Insurance Regulatory Commission, and
Education Ministry.
• To leverage public policies to develop health insurance such as taxation.
4. Healthcare Industry from 2000
Insurance Perspective
• Since 2000 – “All Changed but No Change”
• 2000 – 1 high level medical product in Market
• 2015 – Still limited choice
• No investment into the education about insurance
• International PMI policies include lifetime coverage and cover
hospice care, but no local insurances
• All investment costs are the huge licensing fees
• Obsession with Market Share and short term profitability
5. Healthcare Industry from 2000
Insurance Perspective
• Limited Cost Containment
• Un Qualified Distribution
• No Tax Incentives
• Poor Employee benefits
• Approx 100 Million people in China buy personal insurance /
less than 50,000 have a Health policy to cover Hospice Care
or Private Medical Facilities
6. Key Facts
• More than 2300 Health Related products are filed with CIRC but only 4
Specialized Health Insurance Companies are registered.
• Of the 2300 it is estimated less than 300 are products that will cover
costs of treatment away from the General population areas at state
hospitals.
• Also as many of the insurers are not specialized Health Insurers, there
are few whom are innovative on the new product development for the
rest to follow.
http://www.39yst.com/xinwen/20141215/204985.shtml
• The total premium figures for any Health related products, for Jan-Nov
2014, is 147.5 billion RMB, an increase of 44.47% compared to 2013.
• less than 2.5% is for Stand Alone Medical Insurance products
• The aim by 2020 is to have 100 Billion + RMB spent on stand alone
Medical Insurance that can be used away from General Population
area’s of State Hospitals.
http://www.circ.gov.cn/web/site0/tab5257/info3945103.htm
8. Total premium figures for any Health related products
¥0 ¥50 ¥100 ¥150 ¥200
2014
2013
2014
2013
Million
9. Figures for stand alone medical insurances
97.5% 2.5%
others
Stand alone medical
insurance
10. Challenges
• So far foreign invested facilities too costly except for very
wealthy
• Insurers charging too much for premiums
• No stable pricing across the Medical Providers
• Limited Growth with current pricing of insurance and poor
policies
• Chinese buying low cost insurance and thinking they will be
fully covered
• Limited understanding of Healthcare and Insurance
11. Education
• Very little money is being investing in educating the
population of China on how “Private Medical Insurance”
works and how the “Private Medical Sector” will benefit all if
utilized correctly.
• Lack of referral of patients to other facilities which best suit
the needs.
• The Sales Personnel of the larger Insurance Companies /
major distribution channels etc. are poorly trained.
12. What for the Future?
• Well a lot depends on the implementation of the Health
Care Reform and primarily on the Investment into the
industry.
• Investment has to be long term by Medical providers and
Insurance companies
• Chinese Insurers have always looked at immediate
profitability
• Within the next 10 years the demographics of the population
will change dramatically, and over 50% of the population will
be retired and a life expectancy of 85+.
• Medical facilities will be at breaking point
13. A Winning Formula?
• New Products
• Insurers and the Health Care Providers engage the Ministry of Health
• Insurers and the Regulators have to find better and more efficient payment methods for insurance.
• If all the requirements are to be met, Insurers should really concentrate on insuring the risk and
allowing Third Party Administration of the policies and also the claims.
• Tax Incentives
• Qualified Distribution Channels
• Education of “How does Insurance Protect and its Values”
• Key Services and Client Servicing with 24hr Assistance and Advice
• Working relationships with the Ministry of Health and the best practice hospitals and Senior Care
Living Facilities.
• Improving the Administration efficiencies
• Lower their risk index for Medical Insurance
14. What Role Will Insurance Play in Healthcare
Development?
• Private healthcare is driven by affordability of population
• Private Medical Insurance can limit cost impact of treatment
for insured
• As number insured grow investment follows
• Insurance in conjunction with State Benefits will help relieve
cost burden of State and allow more to enjoy better
healthcare
15. Should be State
Responsibility
*
Would buy Insurance to cover
If available
Would pay for parents
if available
Felt home care family responsibility
No opinion
Survey on
needs for
Senior
Care Living
Facilities
Sources: McKinsey Global Institute report on “Addressing China’s looming aging population” and confirmed by Shanghai foreign
investment association .. 1000 interviewed
Opinion on Senior Care Living
16. Investment Regulation Changes
• The regulation for WOFE healthcare organization is issued on August 27,
2014, by the Ministry of Health and Ministry of Commerce.
• The main issue is releasing the limit of share of 70% for foreign entity to
100%. Of course there are requirements for the foreign entity, i.e., qualified
with experience in healthcare or invest in similar organization.
• 6 provinces, Beijing, Shanghai, Tianjin, Guangdong, Jiangsu, Hainan, are
the pilot for setting up WOFE. Provincial government is authorized to
approve such projects.
http://www.nhfpc.gov.cn/yzygj/s3577/201408/73f1ec5b56304347aa3436a08e3
9ddfa.shtml
• There are talks lately to expand the area to all 2nd tier cities or even wider.
17. Main Risk Concerns for Healthcare Investors
• Patient Safety
• Employee Safety
• Allegations of Abuse
• Staff Medical Costs
• Ability to attract and retain staff
• Corporate Governance
• Social Media
• Increasing Competitiveness
• Attracting Patients
• Brand Reputation and Damage Limitation
• Staff Competencies and Skills
• Theft or Fraud
• Protecting IP
• Increasing Litigation
• Property Damage or Loss from Flood or Fire
18. MANAGING RISK
• Employer Liability Insurance
• Patient Accident Insurance
• Public Liability Insurance
• Professional Indemnity
• Medical Malpractice
19. CONSULTATION ON RISK
It is important to employ the professional services of a specialised broker
that can ascertain the risks for a project or facility. Each facility in differing
parts of China will encounter different aspects of doing business.
