How to evaluate the cost and benefit in critical illness insurance?
China will expand a program that enables people with serious illnesses to get more compensation from medical insurance schemes. According to a statement issued by the State Council medical reform office on February 8, pilots of such programs should be launched in all the country's provincial-level regions by the end of June this year.
At present, China’s Medical insurance system only covers the rather basic medical expense, and could not deal with the problems raised from the treatment of critical illness. Then, six administrative units including the National Development and Reform Commission (NDRC) launched insurance pilot programs for critical illnesses in 2012, which stipulated that at least half of medical expenses exceeding the average annual disposable income must be covered.
Under the critical illness insurance system, the insurer does not need to pay extra fees while he or she could enjoy much more high percentage benefit in the medical insurance. In this case, funds running mechanisms should be more effectively, otherwise the funds will be very hard to carry on. It is just for this season why the commercial insurance companies are invited into the critical illness insurance system, as the authorities scheduled to heighten the effectiveness by market mechanisms.
Why commercial insurance companies could improve the quality and effectiveness of the service? The most fundamental reasons are as following: Firstly, as compared with governmental organizations, commercial insurance companies have much more professional preponderance, and they could establish a restrictive mechanism to the medical organizations and their expenditures. Secondly, the commercial insurance companies could take nationwide overall planning in business accounting.
It could enhance the level in taking the whole situation into account for the critical illness insurance. It could strengthen ability to resist risks, increase the service quality and level, enlarge the scale of guaranteed efficiency. Thirdly, the competition among different commercial insurance companies could help to improve the effectiveness in dealing with the affairs of essential medical insurance.
Although, we have achieved some success in implementing the critical illness insurance system so far, we still have to find the way how to cope with some serious problems. From my point of view, maybe the most serious problem is to reduce the cost of medical care under the condition of no increasing payment from insurers, and also at the same time should be considering not letting state government bear too heavy fiscal burden.
Here we take the overall people health care insurance model from Taiwan as example. The model earned international high reputation for its cheap cost and high quality service since it was launched in 1995.The magazine “The Economist” carried out an article to have honored its medical insurance system ranked as the first finest one in the world except the one of Sweden. In 2003 the American Broadcasting Company, Inc (ABC) launched a program to admire Taiwan’s medical insurance system. The program pointed out each insurer paid $20 per month, and each time paid 4 to 10 dollars for outpatient consulting fees, then the insurer could go the registered hospitals to visit any doctors. In 2008 and 2010, the famous economist Paul Krugman wrote articles twice on the “New York Times” to praise Taiwan’s medical insurance system. As you known, such a highly praised medical insurance system now has been become impoverished. Why, one of the very important reasons is the insurer paid less but enjoyed too much compensation from the system. Stimulated by this system of less paying, the insurers demanded their medical needs day by day, and on the other hand, the hospitals in Taiwan were all carrying out the policy of more work more paid for their doctors and hospital staff members, so this kind of system caused hospitals greatly increased their extra expenditures. When the un-normal excessive medical treatment requirement happened, the Taiwan authority dared not to adjust the medical insurance fees for daily increased medical expenses because they only concerned about their votes from the constituency. We should always remember this lesson drawn from Taiwan’s mistakes.
We would like to point out, in any form of a society we could not expect to solve all the problems through one system, and the critical illness insurance system is the same case. I hope every patient could be treated by the doctors, but the economic common sense tells us it is impossible that not all the expectations of the people could come to be realized. If the critical illness insurance system could help us to solve the difficulty of medical care coverage for 90% of the citizen both in urban cities and rural areas, we should say we are success in reforming. Then if we were going to deal with the last 10% problems, the marginal cost would increase dramatically beyond our imagination. Taking a look at cases from foreign countries, the reason for those unsuccessful cases are not the insurers enjoyed less compensation from their medical insurance schemes, but the system promised to guarantee too much.
Published on China Times | 2014-2-12
