New program 'to benefit commercial insurers'

Wang Xiaodong

(China Daily USA)

Updated: 2015-07-25

Commercial insurers are expected to benefit from a major medical insurance program that will cover almost all residents in China by the end of this year, despite restrictions on their profit margins.

Profit margins of the insurers for the program will be controlled at a reasonable level so the medical fund can be "effectively utilized and benefit the residents", Liang Wannian, deputy chief for the Medical Reform Office of the State Council, said on Friday.

The program, currently in the pilot stage in many areas of China, will cover all subscribers to the basic medical insurance system in the country - more than 95 percent of the total population - by the end of this year.

Under the program, basic medical insurance subscribers will have at least 50 percent of their expenses on medical care that are not covered by the basic medical insurance reimbursed, and local governments will select commercial insurers for the program through bidding, the State Council, China's Cabinet, announced on Wednesday.

The program is aimed at easing financial burdens for patients suffering from diseases whose costs of treatment are higher than ordinary diseases, even after some expenses are reimbursed by the basic medical insurance. Those conditions include some cancers and serious diabetes, Liang said.

Individuals don't need to pay for the program, because money will come from the basic medical insurance fund, Liang said.

Commercial insurers normally see profit margins between 2 to 5 percent in the areas where the program is being tried out, Liang said.

Liu Yuanli, dean of the School of Public Health at Peking Union Medical College, said the government can shift risks to commercial insurers in the program, since medical bills for some serious diseases can be very high.

"Medical care should not be an industry of high profit, and investors should aim for steady long-term return," he said.

Despite restrictions on their profits, commercial insurers participating in the program can still receive many benefits, he said.

Facing an overall slowing national economy, some big insurance companies have seen a decline in revenue, and the opportunity to enter the huge market of basic medical insurance could be attractive to them, Liu said.

Wu Ming, a professor of public health at Peking University, said many insurance companies may compete for the business despite lower profit margins, since it can bring many potential benefits.

"Participation in the program can pave the way for the insurers to enter further into the medical care sector in the future," she said.

"In particular, they will have access to the information of the vast number of subscribers, which will help them in market promotion and exploration," she said.

wangxiaodong@chinadaily.com.cn

(China Daily USA 07/27/2015 page4)