Commercial Health Insurance: Set to Boom

Commercial health insurance (CHI) in China is gaining momentum, driven by significant policy reforms and structural adjustments. As China’s population ages and total healthcare expenditure continues to rise, the limitations of the Basic Medical Insurance (BMI) system – designed in the 1990s to ‘cover the basic needs’ of the wider population – are becoming evident. In this context, the role of CHI as a complementary pillar of public healthcare is becoming increasingly critical. Recent developments, including the National Healthcare Security Conference, and the adoption of the "1+3+N" Multi-Layered Medical Security System (MLSS), may signal the onset of an accelerated phase in the development of CHI.

Policy Developments

During the National Healthcare Security Conference in December 2024, CHI was mentioned multiple times?during the December conference,?underscoring its significance to the?National Healthcare Security Administration (NHSA)?agenda. Meeting highlights included:

• Encouraging CHI to complement BMI by addressing gaps in coverage and exploring innovative payment mechanisms.
• Supporting simultaneous settlements of BMI with CHI, charitable and mutual aid platforms, and other programmes.
• Advocating for the timely listing of innovative medicines into City Supplementary Commercial Health Insurance (Huiminbao) formularies and exploring ways to align the "Class C" drug list with CHI expansion.

Unveiled by NHSA commissioner Zhang Ke in September 2024, the "1+3+N" model presents an update to?China’s MLSS, emphasising the creation of a digital infrastructure based on the NHSA application programme:

• 1: Foundational infrastructure consolidating healthcare payment data.
• 3: Core pillars of medical security, comprising BMI, Critical Disease Insurance, and Health Assistance/Aid.
• N: Supplementary layers including CHI, charitable donations, and mutual aid platforms.

Since revealing the new model, the NHSA has repeatedly promoted CHI on various occasions, underscoring its pivotal role in improving healthcare accessibility and affordability.

• One-Stop Settlement for BMI and CHI: During a field trip in Beijing in November 2024, the NHSA encouraged municipal officials to take the lead in developing innovative systems that integrate settlements between BMI, CHI companies, and charitable organisations. In July, Shanghai launched a one-stop settlement system for BMI and CHI, attracting 12 hospitals to participate in the first batch, with another 100 or so hospitals showing interest in participating when the second batch is rolled out.
• High-Level Stakeholder Engagement: The NHSA held two high-level commercial insurance meetings in Shandong and Beijing in late 2024. These meetings were attended by CHI representatives and moderated by NHSA deputy commissioners. Reiterating the pivotal role that CHI has in the adoption of MLSS, authorities called for the differentiated development of both BMI and CHI to support pharmaceutical innovation.
• Data Empowerment: At those meetings, officials reiterated the need to leverage the NHSA’s extensive data resources to enhance CHI and align it more effectively with public healthcare needs. Meanwhile, Beijing?and Shanghai?completed China’s first medical data transactions in late 2024, providing valuable insights for CHI product development and biopharmaceutical innovation.

Outlook

Commercial health insurance in China is poised for significant growth, supported by favourable policies such as the upcoming Class C list, and an evolving healthcare framework that clarifies the boundaries between BMI and CHI. Officially promoting the role of CHI in the "1+3+N" model highlights its importance in addressing current challenges and ensuring the long-term sustainability of China’s healthcare system. With continued government support and industry collaboration, CHI is set to become a cornerstone of China’s healthcare security system.