China seeks to expand the insurance sector through the establishment of a modern commercial health insurance industry by 2020. The nation's State Council in a statement released on Monday said that commercial insurance institutions are being encouraged to actively develop an enriched portfolio of commercial health insurance products targeting different market segments.
Private investment in health insurance is now being pushed by the government as part of a plan to take some load off the country's overburdened health care sector. According to a McKinsey & Co. report cited by Bloomberg, health care spending in China is set to hit $1 trillion by 2020, driven as it is by an aging population and government efforts to broaden insurance coverage.
Back in August, the State Council released a set of guidelines to prompt insurance companies to play a basic role in controlling risks and managing the assets of the government, enterprises and regular citizens.
According to the guidelines, commercial insurance serves as an important pillar of social security for individuals and households. Incorporating more and better varied commercial health insurance products in their current portfolio will be keeping with their mandate.
The government then also announced that it will support private insurance firms in the building of new medical facilities and elderly care homes.
The large, almost triple yearly increase in China's health care spending is conducive to attracting a rapid inflow of money from private investors, including foreign investors who are now allowed to wholly own hospitals in seven cities and provinces. Among them are the private health insurance companies which as a sector has been seen growing at a fast rate.
In 2013, commercial insurance premiums grew 30 percent, faster than the 18 percent for the state-backed sector, according to a Deutsche Bank report in June cited by Reuters. Currently, the largest private health insurers in China, said the news agency, are Ping An Insurance Group Co. of China Ltd., PICC Health Insurance, Kunlun Health Insurance and Hexie Health.
China's state-supported insurance coverage extends to more than 95 percent of the population. However, coverage remains limited to basics and a large part of the medical expenses and fees still have to be paid out of pocket by the patients themselves.