The health care system in China is developing rapidly in the major urban centers, driven by China’s economic boom and augmented by the privatization process. As private health care and insurance expand to represent the larger portion of individuals and companies, we need to make progress in the areas of health care providers and insurance provider interaction, innovation and alignment of insurance products and services to consumer needs, and educating individual and corporate consumers in China on the importance of leveraging applicable insurance products to mitigate risk.
Insurance & Health Care Provider Interaction: Privately-funded comprehensive medical insurance programs necessarily exclude significant segments of the available consumer population due to price. However, the rapid creation of wealth experienced in China over the past 15 to 20 years, combined with the reduction of state support, has left a large number of Chinese companies and individuals in need of better health care and increasingly able to afford it. In addition, there has been an influx of foreign workers in the form of both corporate expatriates as well as independent entrepreneurs, both of whom demand higher quality health care and comprehensive health insurance. For these respective segements, several fundamentals of the traditional Chinese health care systems must be addressed by insurance providers in tandem with private heath care providers. Given the cost of care at private hospitals, the concept of "cash before cover" can create serious problems for positive customer experience, and very real problems in the case of major and minor medical emergencies. In response, direct billing arrangements between the insurance providers and hospitals are expanding rapidly. Despite this positive development, greater levels of cohesion are needed, including:
1. Integrated systems and processes for hospitals to reference a patient’s scope of coverage to ensure they are not being admitted for treatments that are not covered under their insurance plan
2. Greater transparency on cost of treatment to ensure clear cut claims adjustment
3. Control mechanisms and systems to ensure the enforcement of co-payments and deductibles
With these systems in place, and with their eventual expansion to second- and third-tier heath care facilities, other concerns will also be mitigated, including the tradition of bribing doctors for good service, partial or no claims payments, and over-servicing/over-treating patients.
Insurance Products & Services: Insurance products and services are a necessary part of an effective private health care system, but this is an area poorly understood by both individuals and many corporations. It is imperative that insurance providers continue to introduce relevant products and services for basic and advanced needs. Affordability is a critical concern for Chinese consumers when purchasing insurance, and must be taken into consideration as insurance companies attempt to increase market penetration. This does not necessarily mean that the "cheapest" offerings will be the most attractive. On the contrary, a more expensive product can easily be more desirable for the consumer if it includes better services, a reputation for paying all valid claims, and has taken the affordability of its targeted market segment into account. Quality products must be made available starting from the most basic levels. For example, in segments where average income falls at or below the urban mean, simple products with meaningful benefits must be provided to cover serious events such as accidental death, serious injury, or the diagnosis of a serious illness. As income moves up and the amount of benefits required by the individual increases, higher limit products are required to ensure protection against the loss of income. Products should therefore range from monthly paid low premium coverage for accident and serious illness, to full medical for targeted segments. More importantly, they must be delivered to the consumer in an effective manner.
Education: Given the rapid shift from state care to private care, many individuals and companies are poorly informed about how to use insurance products to mitigate financial risk and ensure quality care. Therefore, it is critical that insurance providers continue to educate Chinese consumers via innovative distribution platforms and broad media.
Adam Francis is Assistant Vice President of the Accident & Health Division for American International Group, Inc (AIG). AIG is an international insurance and financial services organizationn with operations in more than 130 countries and jurisdictions.