|City Supplementary Commercial Health Insurance (CSCHI) is part of China’s medical security system. In recent years, awareness of public health security has dramatically increased and CSCHI provides promising results. The program has gained popularity due to its “low premiums, wide thresholds, and high insurance coverage,” helping to fill the gap between basic medical insurance (BMI) and commercial health insurance. CSCHI is expected to meet the needs of a wider population while becoming an inclusive commercial insurance under the health insurance reform.
The Development History of “CSCHI”
China’s medical security system has grown to provide wider coverage for a larger number of Chinese citizens. Although universal health coverage exists at the institutional level, there remains the problem of uneven distribution of medical resources and high out-of-pocket (OOP) costs. The combination of the basic medical security system and commercial insurance is not effectively covering the entire population. Under China’s multi-layered medical security system, the basic medical security system covers only minimal medical expenses, while the coverage of severe diseases is limited with a low reimbursement rate. Although pure commercial insurance can be a supplementary solution to a certain extent, it is difficult for the portion of the population with substandard risk to be well covered. In addition, the relatively high premium for commercial health insurance discourages the low- and middle-income populations from enrolling. In 2017, the penetration rate of commercial health insurance in China only accounted for 9.1% of the population.
Under such circumstances, in 2015, the Shenzhen government launched a pioneer CSCHI product called “Shenzhen Supplementary Medical Insurance for Major and Serious Diseases“. The local government initiated the project, took part in product design, issued relevant policies, and allowed residents to purchase the product with funds from their personal BMI accounts. “Shenzhen CSCHI” was designed to employ with tacit consent which the residents needed to manually cancel if they didn’t want to be automatically enrolled in the plan, improving the participation rate to a certain extent. The data shows that from 2015 to 2020, the number of insured people increased from 4.86 million, 5.04 million, 6.25 million, 7.05 million, to 7.52 million, respectively, covering up to 50.4% of the city’s BMI participants. However, this government-led CSCHI required policies and resources that made it difficult to replicate and popularize.
Since the National Medical Insurance Bureau’s establishment in 2018, the multi-layered medical security system has been gradually improved. Even though the CSCHI had been introduced to Nanjing, Zhuhai, Guangzhou, and Foshan from 2018 to 2019, the overall development speed was slow and most projects were led by the industry. “Guangzhou CSCHI”, for example, was mainly initiated by the insurance company, while the government merely provided guidance and supervision, utilizing official media to facilitate publicity and promotion. Under the insurance industry-led CSCHI mode, third-party companies like Pharmacy Benefit Management ( PBM ) were introduced to participate, thus providing exceptional medical services, assisting in product design, and operation services. However, this mode has higher requirements for underwriting loss and insurance supervision. Market data showed that the participation rate of most products was usually 5%-10%, which is considered relatively low.
In February 2020, the Central Committee of the Communist Party of China and the State Council issued “Opinions on Deepening the Reform of Medical Security System”. It clearly stated that “by 2030, China will build a medical security system with basic medical insurance as the main body, medical assistance as the backing, supplementary medical insurance, commercial health insurance, charitable donations, and mutual aid in an all-round way“. Among those identified, supplementary medical insurance and commercial health insurance are defined as significant components of the multi-layered medical security system. CSCHI witnessed explosive growth in 2020.
The Latest Trend of CSCHI
The Fudan University’s “Past Life, Present Life, and Future of CSCHI——‘CSCHI’ 2020 Summary and 2021 Outlook” states that as of December 31, 2020, a total of 111 products were launched in 23 provinces and 82 regions across China, with a total of over 40 million people insured and the accumulated premiums exceeding 5 billion Yuan. Most of the products on the market adopted the “One City, One Policy” model, closely integrating the local economic conditions and BMI fund expenditures, with the differentiated price based on the various coverages. This, however, created difficulties when attempting to manage the insurance reimbursement in a unified manner amidst increased market costs. As a result, CSCHI gradually began to develop out of this customization at the city level to the provincial level, adopting the model of “One Province, One Policy”.
The “One Province, One Policy” CSCHI products piloted in some provinces, considers the income gap of urban residents across the country and has adopted gradient fees according to age groups. Although this model appears easy to manage, it is still meeting quite a few challenges, such as the uneven distribution of medical resources and the significantly different income per capita. These issues make it difficult to set prices uniformly and create coverage that can meet most users’ needs. As a result, the current mainstream development model remains as the “One City, One Policy”.
The Product Design of “CSCHI”
The intention of CSCHI is to provide residents with an extra layer of financial protection that connects the government BMI with purely commercial insurance. At present, the products include outpatient hospital reimbursement outside the BMI catalog and some new specialty drug reimbursements, just to name a few. The difference between products are the deductibles and reimbursement ratios, specialty drugs, payment methods, and special diseases that are suggested to be included in different regions.
Most products also introduce value-added services to provide more comprehensive and convenient health services for the insured population, such as health checks, online medical consultations, critical illness outpatient green passes, and speciality drug delivery. On this basis, the government is making a large effort to regulate the CSCHI market, ensuring the standardization of product design and promoting the development of supplementary medical insurance.
Resource： “Huhuibao” product manual, ACCESS Health analysis
Evaluation of “CSCHI”
The CSCHI consists of three significant aspects:
Alternatively, CSCHI currently has a few problems that will need attention in the future:
CSCHI assumes the role of filling the gap between the basic medical security system and pure commercial insurance, playing an essential supplementary role in China’s multi-layered medical security system. It helps to ease the pressure on basic medical insurance and promotes the reform and innovation of the medical security system. There are strengths to both the government-led and insurance industry-led insurance modes. Each region selects suitable product types based on local government intentions, regional differences, and other factors to promote market development and medical insurance reform to satisfy more people’s health protection needs.
Authors: Xiaoqiao Fan | Program Analyst of the Innovator Alliance｜Social Impact Programs and Alliance, ACCESS Health International China