China ranks only behind the United States in total healthcare expenditures. It has at least 95% of its 1.4 billion people covered by basic, government-sponsored health insurance. But China’s annual per capita health expenditure is relatively low at around $425, or just over 5% of GDP, though it has been on the rise over the past decade.
In China, there are three types of publicly financed basic medical insurance: For the urban employed population, for the urban non-employed population, and for rural residents regardless of employment status. Funding of health coverage comes from the central government, local governments, employers, and the participants, and the level of funding varies by geographic area. On average, out-of-pocket spending accounts for 32% of China’s total health expenditures and varies greatly by geographic area.
China’s public insurance programs are facing pressure from all sides of the healthcare ecosystem. Population aging, urbanization, environmental issues, increasing disease burden due to chronic conditions and cancers, escalating unit cost in healthcare, waste, and low-value services are all adding to the growing demand for better and more efficient healthcare.
At the same time, the growth in social insurance funding, part of which is used to fund basic medical insurance, has slowed due to an aging population. And the role of commercial health insurance in China has changed significantly over the past 15 years and continues to evolve as the Chinese government implements reforms that affect the overall healthcare ecosystem.
To learn more about the health insurance market in China, read this article by Milliman’s Rong Yi and Sharon Huang, which discusses recent trends and how data and analytics could be used to address some of the challenges and support market growth.