More Chinese companies and individuals are subscribing to private health insurance policies to cover their medical needs. These consumers are taking into health insurance because their government insurance policies fail to cover their needs.
According to a report released by VC Beat, 29 private companies have invested in health insurance providers since 2015.
Income of private insurance providers jumped to 92 percent from last year's 52 percent, according to the China Insurance Regulatory Commission. More affluent families are reported to take on insurance policies to cover chronic illnesses.
Luo Ying, partner and managing director at consultancy Boston Consulting Group, said, "The growth is sustainable because all the drivers will continue to be there, especially the demand for health care services."
Research from McKinsey and Company in 2012 stated that "Patients still need to contribute out-of-pocket sums. Inpatient costs can easily add up to several times the average income levels, especially if they involve complex procedures, expensive devices or patented drugs."
Many Chinese citizens experience heavy expenditures in times of sickness and due to the lack of government's ability to cover expenses, they are burdened to produce cash.
The report also stated that there are "low caps for total reimbursement likewise increase the risk of patients with acute or chronic conditions will end up paying the 1large portion of their hospital bills out-of-pocket."
Zhao Heng, the founder of a local health care consultancy called Latitude Health, said that many of the health insurance providers struggle with the kind of care package to offer. These companies want to offer a larger scope of coverage and diversify into other services.
McKinsey reported that "approximately 30 percent of China's urban population currently possess some kind of private care insurance while another approximately 20 percent are planning to buy some sort of health insurance in the near future."