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China Health Insurance Market Opens Up

China Health Insurance Market Opens Up

Beijing encouraging foreign private investment to relieve stressed-out healthcare sector. Foreign investors may wholly own hospitals in seven cities and provinces, opening up the country's fast-growing private hospital sector.

At a recent meeting of China's cabinet, the State Council set out plans to build new medical facilities and elderly care homes supported by investment from international private medical insurance firms. Under the plans, investors will be allowed to own 100% of facilities in seven provinces and cities.

China's population, nearing 1.4 billion, are around 90% covered by state health care, however cover is limited and often medical fees are paid out-of-pocket. There is also a large difference between the quality of health care provided in rural and urban hospitals. This is blamed on a lack of funding and administrative corruption, mostly affecting the poorest people.

In June, Deutsche Bank calculated there were 11,300 private hospitals in China in 2013, a massive increase from 3,200 in 2005. Commercial insurance premiums grew 30% compared to the state sector growing 18%. According to a McKinsey report, the country's health care spending is forecast to reach around $1trn by 2020 from $357bn in 2011. According to Reuters this may lead to a rapid increase and flow of investment from international private insurers and hospital operators.

Over the years Beijing has slowly opened the doors to overseas investment, allowing foreign investors to own 70% in past hospital joint ventures. Under the new rules, China, Hong Kong, Macau and Taiwan, will all permit foreign investors to own 100% of hospitals.

Currently PICC Health Insurance, Kunlun Health Insurance, Hexie Health and Ping An Insurance Group Co of China Ltd are the largest private health insurers China.

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