China's National Health and Family Planning Commission said medical spending grew by an average of 19.9% in 2009–14, putting increasing pressure on the country's health insurance fund.
IHS Life Sciences perspective | |
Significance | China's National Health and Family Planning Commission said medical costs grew at an average of 19.9% in 2009–14, putting increasing pressure on the country's health insurance fund. |
Implications | China's health spending continues to outstrip growth in the country's basic medical insurance fund, after the country's basic medical insurance fund balance grew by 15.8% annually on average from 2009–2014, compared to an average annual increase of 20.6% in health spending. |
Outlook | As China's health spending continues to soar, the sustainability of public health insurance will continue to be tested, with private health insurance expected to play a much larger role. |
China's National Health and Family Planning Commission (NHFPC) said medical costs grew at an average of 19.9% in 2009–14, putting increasing pressure on the country's health insurance fund, according to its China Social Insurance Annual Report (2014). In 2014, China's basic medical insurance expenses came to CNY708.3 billion (USD114 million), an increase of 15.2% over the previous year.
Fudan University's Collaborative Innovation Center says the projected annual growth rate of per-capita healthcare costs in 2015 is 14.3-18.2%, significantly higher than China's 2013 per-capita GDP growth rate of 8.97%. However, China's health spending continues to outstrip growth in the country's basic medical insurance fund. In 2014, the basic medical insurance pool fund balance accumulated CNY553.7 billion, an increase of 15.2% year on year (y/y). This also represented an increase of CNY287.6 billion compared to 2009, representing an annual average increase of 15.8%.
In contrast, spending by China's basic health insurance fund reached CNY669.7 billion in 2014 – an increase of 14.9% y/y and 1.1 percentage points higher than revenue growth. The fund's spending has grown 20.6% on average annually since 2009.
However, some Chinese provinces are finding it increasingly difficult to meet the 6-9-month funding requirements of their health insurance funds. According to the source, in 2014 three provinces (Tianjin, Hubei and Guizhou) experienced difficulties in reaching funding goals according to the required 8:5 ratio of insured individuals to overall fund expenditure.
In 2014, Tianjin's health insurance fund had outgoings of CNY18.5 billion compared to an increase in fund balance of CNY200 million. Hubei province's health insurance fund spent CNY21.7 billion compared to an increase in fund balance of CNY7.9 billion. Guizhou's health insurance fund spent CNY8.7 billion, compared to an increase in fund balance of CNY2.3 billion.
Outlook and implications
As China's healthcare spending continues to soar, the sustainability of the country's public health insurance will continue to be tested. According to a report by Huazhong University of Science and Technology, if current trends continue, by 2024 China's basic medical insurance fund could potentially be in deficit by up to CNY753.3 billion.
One solution to alleviate pressure on public health insurance is the increased involvement of the private insurance sector. A more comprehensive healthcare system would be expected to help supplement patients' medical insurance, as well as boost access to healthcare and lead to strengthened supervision of China's insurance sector. Currently, commercial health insurance claims in China accounted for 1.3% of total health costs, compared to an average level of over 10% in Germany, Canada and France and up to 37% in the United States.
As China increasingly encourages private investment in its healthcare sector (see China: 9 June 2015: China to allow patients to claim insurance for private hospital visits), private health insurance has also grown, with over 100 private insurance providers offering over 2,200 products related to health insurance, illness insurance, nursing insurance and disability income insurance, with premium income of over CNY112.35 billion.
According to the Economic Times, China's private health insurance sector is expected to grow by 25% on average per year and reach CNY1 trillion within 10 years.