Insurance to cover serious illnesses

China on Thursday announced a decision to expand the coverage of the country's healthcare insurance system to include the treatment of critical illnesses, aiming to prevent patients from being reduced to poverty by necessary healthcare costs.

The new arrangement will further increase the level of protection that China's healthcare insurance system can offer, according to a document co-issued by the National Development and Reform Commission and five other central government departments.

Sun Zhigang, head of the health reform office under the State Council, said it aims to ensure that each patient's total medical expenditure is no more than the "household expenditure for healthcare," which is set at the level of the regional annual per capita disposable or net income.

In an interview with Xinhua News Agency, Sun said when patients' medical bills for necessary treatments under the existing basic healthcare insurance system exceed that level, they will be reimbursed by the newly launched critical illness insurance project.

Though around 1.3 billion people, or more than 95 percent of China's population, were covered by the healthcare insurance system by the end of last year, medical expenditure burdens incurred by patients with severe medical conditions remain heavy, Sun said.

"The new move targets the widely recognized problem of 'people falling into poverty because of illnesses', and aims to ensure that most people won't become impoverished because of diseases," Sun said.

Local governments have been asked to design regulations on fundraising, reimbursement and other details regarding the new insurance plan in line with local conditions, according to the document.

Since July 2011, Taicang, a city in Jiangsu province, has allocated 21.68 million yuan ($3.41 million), or 3 percent of the surplus from the basic medical insurance fund, to establish coverage for severe and chronic diseases, benefiting 2,604 patients.

Authorities backed for commercial insurance companies to widen the coverage of serious illnesses, especially for rural households unable to afford high medical costs.

Qualified commercial insurers will be selected to operate the critical-illness insurance program through bidding, the document said.

As China is undergoing reform in its healthcare system, one direction is to explore ways to let commercial insurance companies operate medical insurance services.

Commercial insurers have to meet requirements, such as having operated related business with an established service network in China for more than five years; following strict management in operating the fund; and making efforts to improve its service to ensure efficiency and convenience for the insured, Sun said.

Li Xinsheng, vice-president of China Life Insurance Company's branch in Zhengzhou, Henan province, said a new, voluntary serious-illness insurance will be available in Zhengzhou next year for rural residents.

Different places have adopted various medical insurance policies that are tailored to the local economic condition and residents' demands for healthcare services. Some places have abundant funds for basic medical insurance and use part of the money to cover serious illnesses. Some places have limited funding for basic medical insurance and must find new ways to raise money for serious-illness coverage, Li said.

With a government subsidy of 1 yuan per person, each rural resident pays 9 yuan and can claim reimbursement for serious illnesses such as leukemia and cancer. They make the payment together with the premium for basic medical insurance, Li said.

Some rural residents used to complain about rising insurance fees and having to pay two premiums, one for basic medical expenses and one for serious illnesses. Now with ministries backing commercial insurers' involvement, Li said he hopes more people will understand the reason for the two fees.

Li's company has covered serious illnesses for urban residents in Zhengzhou for years, with reimbursement as high as 200,000 yuan a year.

Chang Zan, who sells watermelons in Zhengzhou to raise money to treat his wife, who was diagnosed with lymph tumor in 2008, received 180,000 yuan in compensation from Li's company in July,, far more than what was covered by basic medical insurance.

Mao Zhengzhong, a professor of public health at Sichuan University, said insurance products offered by commercial providers have a big role to play when the country's social security network falls short.

The commercial insurers' role should be restricted in fundraising, management of the fund, and participation in setting the reimbursement policies. The best places to introduce commercial insurance for serious illness are economically more developed cities, Mao said.