On June 4, 2021, Frost & Sullivan (hereinafter referred to as 'Frost & Sullivan') co-hosted with the Organizing Committee of the Boao Forum for Global Health the second session of the Boao Forum for Global Health's Global Health Policy Symposium, themed 'Health Integration into All Policies - Health Insurance Promotes Health Management'.
Dr. Wang Xin, Global Partner and President of Frost & Sullivan Greater China, released a white paper at the sub-forum
Dr. Wang Xin, Global Partner and President of Frost & Sullivan Greater China, delivered a keynote speech titled "The Development Model and Strategies of the Health Insurance Industry from the Perspective of Health Management" at the sub-forum, and officially released the "White Paper on Promoting Health Management in China's Health Insurance Sector 2021" (hereinafter referred to as the "White Paper").
1
China has entered a phase of normalized epidemic control, and the healthcare industry continues to be highly prosperous.
The COVID-19 pandemic hit the world in 2020, but China has now entered a phase of normalized epidemic control, and its impact on China is diminishing. The Chinese economy has recovered to lead the global recovery, being the only major global economy to achieve positive economic growth. Data from the National Bureau of Statistics show that China's GDP reached a total value of 1,015,986 billion yuan in 2020, a year-on-year increase of 2.3%, breaking through one trillion for the first time.
Dr. Wang Xin believes that the pandemic has triggered a boom in online consumption, which has also driven up the popularity of remote medical and health services such as online appointments, telemedicine consultations, mobile payments, and online pharmacies. The service model and competitive landscape of healthcare are undergoing changes. At present, China's industrial structure is accelerating optimization, the new economy is growing rapidly, technological innovation is steadily strengthening, and the healthcare industry index has also reached an inflection point, showing a recovery.
2
In the context of China's basic medical insurance system, a multi-level social and commercial integrated medical security system has been basically established.
Since the Third Plenary Session of the 18th Central Committee in 2016, which first elevated the construction of a 'Healthy China' as a national strategy, the development concept of the healthcare system has shifted from 'disease treatment-centered' to 'health promotion-centered', and clear requirements have been put forward for the reform of China's medical security system.
At present, China has formed a multi-level social medical security system that takes basic medical insurance as the main body, medical assistance programs as the foundation, and is supplemented by civil servant subsidies, enterprise supplementary insurance, special population insurance, commercial health insurance, etc. Health insurance has a protective nature and plays an important role in China's medical security system.
Dr. Wang Xin pointed out that in modern health concepts, health insurance is an effective tool for dealing with health risks, with two basic functions: compensation and payment. It plays a significant role in promoting political, economic, social, and individual development. Since the resumption of insurance business in 1982, China's health insurance industry has gone through four major stages: early sprouting, initial development, specialized development, and rapid development, gradually moving towards a path of standardization, specialization, and diversification.
3
With the continuous rapid growth in premium income from health insurance, the depth and density of health insurance have increased simultaneously.
The scale of health insurance premium income has been continuously expanding, with significant fluctuations in growth rates. From 2010 to 2020, China's health insurance premium income increased from 677 billion yuan to 8173 billion yuan, with an annual compound growth rate of 28.3%. Affected by policy adjustments, the premium income growth rate fluctuated greatly over the past decade. It showed a continuous rapid growth trend from 2012 to 2016. However, due to the regulation of medium and short-term life insurance products and restrictions on fast-returning products, the growth rate of health insurance premium income slowed down. The outbreak of the COVID-19 pandemic has promoted the enhancement of people's awareness of health protection, and in 2020, health insurance premium income was significantly higher than that of other types of insurance such as life insurance.
The depth and density of health insurance continue to increase, and market maturity has been improved. From 2010 to 2020, China's health insurance density (calculated as the average insurance premium per resident within a defined statistical area) increased from 51 yuan per capita to 575 yuan, while the insurance penetration (defined as the proportion of premium income to the country's gross domestic product) increased from 0.16% to 0.74%. During this period, China's health insurance depth and density maintained a relatively rapid growth rate.
4
Driven by multiple factors such as policies and the market, health insurance and health management are accelerating their integration.
Driven by multiple factors such as policy orientation, market development, and technological progress, insurance companies have begun to explore health management services. They integrate health management services into health insurance products to improve the quality of insurance services and enhance user experience.
The government and insurance companies are two major entities driving the integrated development of health insurance and healthcare management. Insurance companies establish health management institutions through equity investments, directly providing healthcare management services, or by collaborating with pharmaceutical enterprises, biotechnology companies, and medical institutions to obtain health data and technical support. They combine healthcare management services with health insurance products to enhance their capabilities in healthcare management. In addition, the government plays an important role in promoting the integrated development of health insurance and healthcare management. By cooperating with insurance companies, it jointly launches inclusive health insurance products to create 'people's livelihood projects' that benefit the people.
Dr. Wang Xin believes that compared to developed countries such as Germany, Japan, the UK, and the US, China's health insurance industry started relatively late and urgently needs to explore development paths that suit its national conditions. Drawing on mature overseas health insurance development models and experiences will help China improve its multi-level medical security system and regulate the health insurance market.
5
Under the background of national health, three strategies for health insurance to promote the development of health management
Dr. Wang Xin pointed out that based on the health insurance regulatory environment, current market situation, and the phased characteristics of the health management market, there are three major strategies for promoting the development of health management through health insurance:
Policy 1: Adopt the 'Health Insurance + Medical Health' model, integrating medical resources such as physical examinations, screenings, and rehabilitation to create a closed-loop health management system for the entire life cycle.
"Data + technology" is an important support driving the development of the healthcare industry. In the future, the health management industry will rely on technological innovation to lead the way and achieve breakthroughs in areas such as health insurance, artificial intelligence, big data, and telemedicine, bringing about tremendous changes to the field of life sciences.
The advantages of 'Health Insurance + Health Care' can create a closed-loop health management system throughout the entire life cycle, including prevention, examination, diagnosis, treatment, and wellness care. It integrates professional screening and testing institutions, professional physical examination service agencies, professional health management service agencies, professional medical and rehabilitation institutions, as well as insurance service institutions, to create a complete health management plan.
Strategy 2: Drawing on the development experience of health insurance in the United States, adopting a mixed development model to boost the upgrading of the health management service industry with dual attributes
China's health insurance industry is in its infancy, mainly serving the high-end private market. The market demand is potential and a mixed development model is advisable. Drawing on the development experience of health insurance in the United States, during the early stages of industrial development, the government establishes a pay-as-you-go system based on employment through tax incentives, while also taking into account the reform of the insurance payment system.
Based on the dual attributes of health management services as both public and private products, different development strategies are adopted according to different customer groups. For public products, which were originally funded by government taxes and formed social demand, a mixed development strategy can be adopted, focusing on exploring public-private cooperation. For diverse private health management service needs, the dominant role played by the market is emphasized, aiming for market-oriented and large-scale development.
Strategy 3: Implement a differentiated positioning strategy to enable the enterprise to gain more market opportunities while effectively controlling costs
For products positioned differently, health management services can be designed to match the cost of health management with the dimension of customer health status. Under this strategy, health management companies will have many ways to obtain direct and indirect revenue through differentiated product pricing, while effectively controlling costs and expenses during the process.
At the meeting, Frost & Sullivan's 'White Paper on Promoting the Development of Health Management through Health Insurance in China 2021' was officially released. The white paper aims to analyze the institutional and mechanism challenges and opportunities faced in constructing a multi-level and diversified medical security system under the basic medical insurance environment in China; explore the industry trends and driving forces for the integrated development of health insurance and health management; assess specific implementation suggestions for social-business integration, and play the role that health insurance should play in health management and health promotion.
