Health Insurance’s Challenge of Balancing Cost Controls and Quality (AI Translation)
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文｜财新周刊 吴雨俭
By Wu Yujian, Caixin Weekly
医保要控费、企业要利润、患者要服务，似乎构成了医疗行业的“不可能三角”。中国自2018年起开始推行DRG（疾病诊断相关分组）等医保支付方式改革，通过医保控费剑指过度医疗，也缓解了“看病贵”的问题，但医疗质量也引发了社会的担忧。如何破局？
The healthcare industry appears to be grappling with an "impossible trinity"—with healthcare insurance needing to control costs, companies pursuing profits, and patients demanding quality service. Since 2018, China has been implementing reforms in healthcare payment systems such as Diagnosis-Related Groups (DRG) to curb excessive medical treatments and alleviate the burden of expensive healthcare. However, these cost-control measures have sparked public concern about the quality of medical services. How can this impasse be resolved?
商业健康险被寄予厚望。
Commercial health insurance is highly anticipated.
一个明显的信号是，中国保险行业协会在2025年2月19日组织部分保险公司召开座谈会，围绕商业健康保险药品目录（下称“商保目录”）体系建设展开深入研讨。据悉，2025年上半年或将有目录雏形，年底可能发布示范条款。
A clear signal is that on February 19, 2025, the Insurance Association of China organized a symposium with several insurance companies to conduct in-depth discussions focused on the establishment of the Commercial Health Insurance Drug List system (hereinafter referred to as the "Commercial Insurance List"). It is reported that a preliminary version of the list might emerge in the first half of 2025, with model clauses potentially being released by the end of the year.
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- The healthcare industry faces challenges balancing cost control, profitability, and quality service due to reforms like Diagnosis-Related Groups (DRG) in China and commercial insurance's limited role.
- Commercial health insurance development is anticipated, with discussions ongoing about a comprehensive Commercial Insurance List set to emerge in 2025, covering a wider range of drugs than basic medical insurance.
- The challenges include commercial insurance's small market share, difficult drug access due to policy constraints, and the need for increased collaboration among healthcare, insurance, and regulatory bodies to ensure effective healthcare delivery.
[para. 1][para. 3] The healthcare industry is struggling with an "impossible trinity," where healthcare insurance must control costs, companies pursue profits, and patients demand quality services. Since 2018, China has implemented reforms like Diagnosis-Related Groups (DRG) in healthcare payment systems to curb excessive treatments and alleviate healthcare costs, sparking public concern over service quality. Resolving this issue could involve engaging commercial health insurance.
[para. 1][para. 2][para. 3] On February 19, 2025, China's Insurance Association showed interest in a Commercial Health Insurance Drug List system, aiming to finalize a preliminary list in the first half of 2025. The newly released "China Innovative Drug and Device Multi-Payment White Paper (2025)" suggests that commercial insurance, being more flexible than basic medical insurance, offers the potential to support innovative drug payments significantly. Xu Jinghui from the insurance industry emphasized the concurrent progress of healthcare reform and commercial insurance mobilization. Commercial insurance could surpass basic medical insurance, offering "open-ended and all-inclusive" coverage for drugs approved by domestic and international authorities.
[para. 4][para. 5] For commercial health insurance expansion, collaboration with health and drug authorities is essential. Commercial insurance's low share in healthcare payments poses a challenge, where a mere 7% was accounted for by commercial health insurance in China's 2024 medical expenses. Conversely, commercial insurance in the USA constitutes nearly 40% of healthcare expenditure.
[para. 6][para. 7] Efforts to establish a commercial insurance directory have accelerated recently, aiming to provide better access to commercial insurance services. A multi-tiered protection system categorized into five levels (A-E) is proposed, where each class offers varying degrees of drug and service coverage.
[para. 7][para. 9] The planned commercial insurance directory may contrast with the National Healthcare Security Administration's proposed Category C list. Categorized under Class A and B, the existing medical insurance lists face constraints in funding for innovative drugs. Commercial insurance could play a vital role by expanding beyond these limitations and engaging in complex market relationships.
[para. 9][para. 10][para. 11] The White Paper outlines commercial insurance-enabled accessibility enhancements. The commercial insurance directory aims for comprehensive inclusion, providing wider drug choices and fostering enhanced cooperation between insurance and pharmaceutical industries.
[para. 13][para. 14] Practical challenges persist, notably in drug accessibility. Cases like the Heilongjiang Province incident highlight issues where commercial insurance coverage doesn’t ensure drug availability in hospitals. Building effective communication and coordination among stakeholders is vital to overcome access barriers.
[para. 15][para. 16][para. 17] The macro challenge for commercial health insurance is its limited premium scale and low contribution to medical institutions. Since 2009, despite rising growth rates, health insurance's momentum has slowed significantly since 2017. Commercial health insurance premium size in 2024 was 970 billion yuan, falling short of the 2 trillion yuan target for 2025.
[para. 18][para. 19] Strengthening policy support for commercial health insurance expansion is crucial, recommending increased societal education, tax incentives, and enterprise-level insurance engagement to enhance both the understanding of insurance necessity and individual purchasing willingness. Expanding commercial insurance's role aligns basic medical insurance with comprehensive care access.
[para. 20] According to the White Paper, addressing these bottlenecks is imperative for a sustainable health insurance ecosystem that empowers commercial insurance as an essential payer and regulatory frameworks for innovative drugs. Building partnerships across industries and bolstering policy support can drive effective market development and integration.
This summary captures the key points discussed, with paragraph indicators aligning content sources to the original text's corresponding sections.
- China Re Life Insurance
中再寿险 - China Re Life Insurance played a key role in the development of the commercial health insurance drug directory, participating in policy formulation and market practices. It emphasized the necessity for coordination between the National Healthcare Security Administration and the National Financial Regulatory Administration. As an important participant in creating both "Class C" and commercial insurance directories, the company promotes a complementary relationship between commercial insurance and China's basic healthcare system, focusing on medium to high-end healthcare markets.
- Megaheath Technology
镁信健康 - Megaheath Technology, along with China Reinsurance and Boston Consulting Group, co-authored the "2025 White Paper on Diverse Payment for Innovative Drugs and Devices." The white paper highlights commercial insurance's growing role in funding innovative drugs amid China's tight healthcare budget constraints.
- Boston Consulting Group
波士顿咨询 - According to the article, Boston Consulting Group collaborated with Zhong Re Life Insurance and Meixin Health to co-author the "China Innovative Drug and Device Multi-Payment White Paper (2025)" which highlights the cautious payment approach of basic medical insurance towards innovative drugs amid tight fund operations. The white paper points to the significant role of commercial insurance in innovative drug payment beyond basic medical insurance, due to its leverage capacity for large coverage with small premiums.
- Ping An Health Insurance
平安健康险 - Ping An Health Insurance is working on building a comprehensive "commercial insurance drug directory" to expand beyond basic medical insurance limitations. The aim is to offer products that cover all domestically and internationally approved drugs, giving customers choices based on their payment willingness and needs. This initiative is part of broader efforts to integrate commercial health insurance with innovative medical products while promoting multi-level coverage.
- UnitedHealthcare
联合健康保险 - UnitedHealthcare is mentioned in the article as an example of a commercial insurance company in the U.S. experiencing issues related to claims processing. It's noted for having one of the highest claim denial rates at 32%, double the industry average of 16%. The article also highlights that UnitedHealthcare has effectively reduced claims payments through AI, maintaining profitability from $13.8 billion in 2019 to $22.38 billion in 2023, across the COVID-19 pandemic period.
- Founder Securities
方正证券 - The article mentions a report by Founder Securities, noting that the insurance category and funding of medication are different under the basic medical insurance directory mode and the commercial insurance small directory mode. The basic directory aims at reducing drug prices to reach more patients, while the commercial directory sells future drug usage rights to healthy individuals without forcing a significant price reduction.
- Since 2018：
- China has been implementing reforms in healthcare payment systems such as Diagnosis-Related Groups (DRG) to curb excessive medical treatments and alleviate the burden of expensive healthcare.
- By 2024：
- The drug list under basic medical insurance is adjusted annually, reaching a total of 3,159 drugs.
- End of 2024：
- A meeting was held where it was decided to accelerate the development of the commercial insurance directory.
- January 17, 2025：
- At a press conference, it was stated that the first edition of the Class C drug list is scheduled to be released within this year.
- February 19, 2025：
- The Insurance Association of China organized a symposium to discuss the establishment of the Commercial Health Insurance Drug List system.
- February 21, 2025：
- The home of a CEO of an insurance company in Oregon, USA, was the target of a shooting.
- February 27, 2025：
- The 'China Innovative Drug and Device Multi-Payment White Paper (2025)' was officially released.
- First quarter of 2025：
- The relevant departments mandated that the preliminary completion of the commercial insurance directory should be achieved.
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