1. Introduction
In the early 2000s, the Chinese government began to increase spending to expand the social health insurance system (SHI) after two decades of retrenchment. The public spending as the share of total healthcare expenditure in 2003 was 36.2% and increased to 56% by 2012 [
1], which mostly came in the form of subsidisation for SHI contributions [
2,
3]. The increase in subsidies enabled people to gain coverage primarily from SHI schemes. Analysis of national data suggests that the overall health insurance coverage increased from 29.7% to 95.7% between 2003 and 2011 [
4]. The three main SHI schemes in China–the Urban Employees’ Basic Medical Insurance (UEBMI), the Urban Residents’ Basic Medical Insurance (URBMI) for UEBMI-uncovered urban registrants, and the New Cooperative Medical Scheme (NCMS) for rural registrants–covered around 87% of the population [
5]. Furthermore, government subsidies enabled coverage benefits to expand services in inpatient care, outpatient care, treatment of acute illness, and treatment of chronic disease [
6].
Despite the development, many households are exposed to healthcare-related financial risks as SHI policies have limited coverage for treatment and prescriptions, co-payments, deductibles, and limited reimbursement [
6] (
Table 1). The annual incidence of catastrophic health expenditure continued to increase from 2003 at 12 to 12.9% in 2011 [
4]. Furthermore, almost one-third of total health expenditure still came from out-of-pocket payments in 2013 [
7].
Private health insurance (PHI) was introduced in China during the economic reforms of the 1980s. The Chinese government has increasingly considered the role of PHI as a financial source to its health system and address the coverage gap within the current SHI system [
4,
6]. Theoretically, the expansion of PHI could improve the current SHI by 1) being a substitute form of health coverage for individuals that are unable to get coverage from an SHI scheme; and 2) being a complementary and supplementary coverage for individuals covered by a plan in the SHI scheme. PHI prevalence was initially low and limited to corporate customers, who bought PHI for their employees. Since the mid-1990s, demand for PHI increased and more commercial insurers entered [
12]. In 2003, there were only around three hundred PHI products in the market and no specialised PHI companies [
12], while in 2013, more than one hundred commercial insurers and five specialised PHI companies operated PHI business, providing thousands of products [
13].
In recent years, the PHI market has rapidly grown in terms of total aggregate premium income, whereas its compensation long accounted for a minor part of total health expenditure (
Figure 1). Government officials especially aim to support SHI and PHI to become mutually reinforcing, such that PHI helps SHI to fill the gaps in coverage depth and height, and in turn the SHI expansion boosts the PHI market by increasing the awareness of the importance of health insurance and leaving sufficient room for PHI operation [
13,
14,
15]. For example, the government has encouraged employers to purchase PHI for their employers in addition to being under the UEBMI scheme of SHI and implemented regulations to simplify the compensation process between PHI insurers and local SHI agencies [
16]. Most recently, the government has offered tax incentives for employers and individuals purchasing PHI through a series of pilot programmes in several major urban centres [
17].
While the Chinese government has increasingly considered extending the role of PHI, there are ongoing debates among global health scholars and policymakers over its effectiveness in expanding coverage and supporting the principles of universal health coverage (UHC). There is uncertainty on how effectively PHI can address the three dimensions of UHC with regards to the breadth (covered population), depth (covered benefits) and height (covered costs) of coverage [
18]. An argument about the weakness of PHI’s ability to expand coverage is its principle that aims to meet demand—a combination of willingness and capacity to pay, which may put low-income populations at risk of not being able to obtain PHI coverage due to their inability to pay [
19]. Certain groups might also be given risk-rated premiums, causing it to be unaffordable for this population to maintain and sustain their coverage [
20].
Furthermore, the PHI market is vulnerable to market failures such as moral hazard and adverse selection. Moral hazard may contribute to patients using sub-optimal high levels of care, and physicians to prescribe unnecessarily expensive medications and more intensive treatments [
21,
22]. Insurers respond to moral hazard through co-payments and/or deductibles, therefore putting beneficiaries at risk for limited financial protection [
23]. Adverse selection occurs as insurers have inaccurate information about the health status of enrolees. Insurers may set premiums based on average risks across the population (the community rating) [
23]. The premium will be worth paying only for those with above average health risks, and therefore insurers may set the higher premium than the community rating, resulting in greater adverse selection. These factors may limit PHI’s ability to meeting principles of universal coverage [
21,
24], and could even exacerbate inequities in the society [
25].
Advocates of PHI contend that PHI can potentially meet the goal of a social health insurance system to address current existing coverage gaps [
26,
27]. By introducing a different source of funding into the health system, the government can then better allocate resources to the population, improve weak administrative capability in the public sector [
28], and solve limited public fiscal space for SHI [
29]. They also argue that PHI is affordable to those who already rely on out-of-pocket payments for healthcare [
24], and government subsidies can help those who cannot afford PHI [
26]. The World Health Organization (WHO) and the World Bank have ambiguous views on extending coverage through PHI. They believe that PHI can contribute to expanding coverage prevalence and laying foundation for national insurance, but they also note its limitations [
30].
In China, there have been some studies that associated PHI’s ability to address one or two issues with coverage gaps [
14,
31,
32]. However, there is inconclusive evidence that suggest PHI can effectively extend overage and meet UHC principles. The purpose of our study was to conduct a systematic review that synthesises empirical evidence about PHI’s ability to play a role in financing China’s healthcare system and meet UHC principles. The review specifically focuses on understanding the role of PHI to expand coverage (in presence of expanding SHI), improve access to care, and provide financial protection. The current studies about PHI are still insufficient and fragmented. No study specifically and empirically associated the impacts of PHI with the three principles of UHC, and to our knowledge, no peer-reviewed systematic review on this topic has yet been published. To fill this gap, the review attempts to provide a broader understanding of how PHI have contributed to or limitedly contributed to these coverage targets by synthesising existing empirical evidence about PHI in China.
2. Materials and Methods
2.1. Search Strategy
This review focused on understanding the impacts of PHI on the UHC principles: Coverage prevalence, access to care, and financial protection [
18]. The PRISMA guideline for systematic reviews [
33] was adopted to design the search for peer-reviewed research articles in both English and Chinese that were published between January 2000 and March 2018. Three databases were selected: Web of Science (all databases), PubMed, and the China Knowledge Resource Integrated Database (CNKI), which is the largest, and most frequently updated database of Chinese-language academic publications.
We used the following search terms for all three synonyms of private health insurance in English: Private medical insurance, commercial health insurance, and commercial medical insurance. The terms used to refer to PHI in China were shangye Jiankang baoxian, and shangye yiliao baoxian. For the two English-language databases, the keyword “China” was included with each of the three search terms. This was not necessary for searches conducted in the CNKI database as all identified studies from CNKI are China-related.
Literature search was divided into three parts: 1) The coverage prevalence of PHI in China (including the impact of SHI on PHI coverage prevalence), 2) the effect of PHI on access to healthcare in China, and 3) the financial protection afforded by PHI in China. For coverage prevalence, the search terms were “prevalence”, “demand”, and “coverage” in English, and “xuqiu” (demand) or “fugai” (coverage) in Chinese. For access, the search terms were “access” or “utilisation/utilization” in English, and “keji” (access), “fuwu shiyong/liyong)” (service utilisation), “fuwu xuqiu” (service demand), “jiuyi” (using medical care), or “zhiliao” (treatment) were used in CNKI. For financial protection, the search terms “expenditure”, “expense”, “spending”, “payment”, or “cost” were used in the English language databases, while “zhichu” (expenditure), “huafei” (a less formal synonym of expenditure), “feiyong” (cost), and “jingjifudan” (financial burden) were used in CNKI. In addition, the citations of the included papers were scanned. If an article with a relevant title was cited but not identified in this search, it was added to the final review list after checking its eligibility using the criteria below.
The search strings used in Web of Science are presented here as an example of the searches used across the listed databases:
Search One: TS = ((health OR medical) AND (private OR commercial) AND (insurance china) AND (prevalence OR demand OR coverage));
Search Two: TS = ((health OR medical) AND (private OR commercial) AND (insurance china) AND (utilization OR utilisation OR access));
Search Three: TS = ((health OR medical) AND (private OR commercial) AND (insurance china) AND (expenditure OR expense OR spending OR payment OR cost)).
2.2. Inclusion and Exclusion Criteria
The following are the inclusion criteria for the studies selected for this review: (1) Empirical studies that were related to at least one of the three aspects of PHI, (2) that were conducted in China/Chinese health system, (3) that provided clear and full information of research design and methods, (4) that occurred between January 2000–March 2018, (5) and that were written in English and Chinese. The following are the exclusion criteria for the studies selected for this review: (1) Studies that examined willingness to buy PHI rather than enrolment or purchase, (2) that were based on tertiary data (i.e., those derived from other studies’ outcomes of analysing primary or secondary data) were not included, in order to avoid citing the same study repeatedly, (3) that did not examine one of the three aspects, i.e., coverage prevalence, access to care, and financial protection, (4) or that are editorials, commentaries, conference abstracts, book chapters, and discursive essays. Full text of the remaining papers was screened to exclude those that do not meet the inclusion criteria.
2.3. Quality Assessment and Risk of Bias
Two reviewers (R.W. and N.L.) independently assessed the quality of the studies included in the review using a quality-graded protocol with a 10-point scale system (see
Appendix A). This appraisal tool was adapted from existing tools in previous relevant studies [
34,
35,
36,
37], and handbooks of systematic review [
38,
39] to suit this study. Appraisal results from two reviewers were compared. If the difference in the appraisal has no more than 1 point, then the average point was taken. The two reviewers discussed studies that had more than 1-point difference to reach consensus. Studies that were appraised as being low quality (0-3.5 points) were considered to have high risk of bias and therefore excluded from the review. Only studies that were appraised as being medium (4–6 points) and high (6.5–10 points) quality were reviewed in the study. The supplemental document (
Table S1) provides a more detailed account of the appraisal process. Risk of bias across studies was considered. Since for many of the reviewed studies, PHI is not their only research objective, and thus the result about PHI may not be crucial to publication, the publication bias on PHI should be moderate. To minimise the bias, we not only reviewed the text of included articles but also directly scanned all result tables and appendices to make sure all data about PHI, regardless of statistical significance, were extracted. This could avoid the omission of data about PHI that either do not have statistical significance or do not interest the authors.
4. Discussion
In the past 20 years, the publicly managed SHI helped China move towards expanding health insurance coverage to its population. However, the extent to which the depth (services) and height (costs) of coverage was still limited due to restricted government’s financial capacity [
4,
6], which is also an international problem for many countries on the way to approach UHC [
28,
29]. For policy makers, the main goal of introducing PHI was to further assist with the expansion of SHI and extend the depth and height of coverage [
13,
27].
This systematic review found that the coverage prevalence of PHI gradually increased since 2000, while commercial insurers’ income from PHI increased to a greater extent [
45]. This suggests a rapid increase in the cost of PHI and an upmarket movement of China’s PHI market. Additionally, in China’s PHI market, many PHI plans are sold as part of a bundle package including other savings products or life and accident insurance products [
71], so it is possible that insurers’ income from the whole product bundle is counted as income from PHI premium, pushing up its costs. As a result, the increase of insurers’ income from PHI premium did not go along with a substantially larger number of people covered by PHI.
It is still unclear whether the expanding SHI coverage boosted or suppressed the coverage prevalence of PHI. The direct evidence about the impact of SHI enrolment on the uptake of PHI is mixed. On the contrary, there is strong evidence that the SHI expansion was associated with insurer’s income increase from PHI premium, controlling for economic growth and relevant population characteristics, but the evidence is indirect since insurer’s income increase from PHI premium does not equal the increase in population coverage of PHI as stated above.
One theory suggests that public health insurance programmes can crowd out PHI due to the duplication of benefits [
72,
73]. By contrast, several scholars have argued that public health insurance expansion may help boost the coverage prevalence of PHI. According to [
15], the limited coverage of SHI in China can cause PHI insurers to lower their cost and introduce additional plans to attract the uninsured to purchase coverage. Meanwhile, the introduction of SHI helps disseminate knowledge about health insurance in countries where awareness of insurance is rare, increasing the demand for PHI [
13,
14]. As a result, SHI could theoretically cause the premium income of PHI to increase. It is, however, unclear the extent of this effect on the coverage prevalence of PHI in the Chinese context, and this needs further investigation. The review found two studies suggesting a positive correlation between having PHI and the utilisation of inpatient care while one study on rural-to-urban migrants found the correlation being neutral (
Table 4). However, little evidence suggests having PHI affect the use of outpatient care. This is supported by findings from studies in other countries [
74,
75,
76]. In China, the benefits package of PHI given to beneficiaries usually includes protection for critical diseases, compensation for hospitalisation, and access to superior amenities, such as VIP (premium wards, better services, etc.) [
65,
71]. However, due to price control and actuarial difficulties, most PHI plans limitedly provide coverage for outpatient services and medications [
77,
78]. This study also found a positive correlation between PHI enrolment and the utilisation of preventative services, even if few PHI plans tend to include them [
65]. A possible explanation for this is that commercial insurers offer additional benefits for individuals that take advantage of using preventative services.
There is no evidence that suggests PHI can reduce out of pocket expenses for beneficiaries. PHI plans include various levels of deductibles and benefit packages. For example, many PHI policies compensate costs of hospitalisation but restrict covering medication costs. However, several studies have found that the majority of out of pocket expenses is attributable to medication costs [
77,
79,
80]. Therefore, financial protection of PHI was compromised. There have been findings from Brazil and South Korea that also suggest that enrolment into PHI did not reduce out of pocket expenses on healthcare [
81,
82].
There is evidence that PHI increased individual total health expenditure. This could cause more financial burden to governments, as a part of the expenditure must be reimbursed by insurers and insurers often receive governments subsidies for PHI. For the reasons of raising total health expenditure, in addition to utilisation increased by PHI, commercial insurers may have less bargaining power over the price of care than public insurers, particularly in a single-payer system such as the SHI system in China [
20], further pushing up total health expenditure. There has been supporting evidence from foreign countries [
22,
83].
In order to improve PHI’s depth of coverage and providing financial protection, the government may want to define the mandated benefits package. For example, the governments of the Netherlands, South Africa, and to an extent, the United States, have required PHI policies to provide basic services to all their beneficiaries [
84,
85,
86]. However, on one hand, effectively determining what type of covered benefits included in PHI policies needs careful consideration, and to an extent exceed the capacity of regulations. On the other hand, such policy lends itself to subsidisation. Whether it is worth subsidising PHI rather than expanding investment in SHI is open to question [
87].
There was moderate evidence that suggests the distribution of PHI in China was unequal and favoured the relatively affluent urban and eastern areas. Taking into account the well-documented pro-rich demand for PHI at the individual level together [
21,
22,
23], our findings thus suggest that PHI is not an effective form of coverage for low-income populations, especially for those living in less affluent areas, where there might be fewer PHI selling agencies, lower availability of PHI information, and poorer connection between insurers and healthcare providers, since PHI sellers tend to cluster in densely populated affluent urban areas for a prudent strategy [
75].
Consequently, a big challenge to implementing PHI as a means for improving UHC is expanding its coverage prevalence and meanwhile protecting equity. As profitability of the PHI market in China is still questionable [
13], commercial insurers hesitate to expand business to attract less affluent population groups [
65]. Government subsidisation or tax break may help its expansion. However, the benefits mainly flow to the more affluent groups, as they are more likely to have the financial means to purchase PHI. In addition, affluent regions in China may introduce additional subsidies to its residents compared to less affluent regions, thus increasing inequalities with regards to accessing PHI across the country. Scholars have suggested strong government regulations against voluntary enrolment and risk-pricing of PHI to promote equal access to PHI [
23]. For example, in countries like Uruguay and Switzerland, the governments mandate the purchase of PHI [
87], and in the Netherlands and Chile, pricing of some PHI policies is income-related rather than risk-related [
84,
87].
This study has two suggestions for future research based on the findings. First, given the inconsistency between aggregate PHI premium income and coverage prevalence, to examine the coverage contribution of PHI, only analysing premium income data is at the risk of being misleading. Nevertheless, most policy articles concerning the present development and prospect of PHI in China only used premium income data [
12,
13,
88,
89] possibly because it is relatively available and easy to use (there is insofar no official PHI take-up or population coverage data in China, except those derived from the surveys as previously mentioned).
Second, PHI plans, as voluntary for-profit health insurance schemes, are intrinsically different from SHI schemes, as SHI’s objectives are set at the system level and prioritize people’s health needs [
25]. The nature of PHI, including enrolment that is based on capacity to pay, risk pricing, and limited population coverage, raises the concern that it could undermine the essential equity objective of UHC when it benefits the enrolees at the expense of others through relocating limited health resources according to membership rather than need [
20,
25]. However, this review found that the aggregate-level evidence that addresses health equity questions is limited and tends to be inconsistent with those from the individual level. More studies at the aggregate level is needed.
This review has several limitations. There were only a limited number of studies identified in this topic and the data used is fragmented. Therefore, it was not possible to extract the data and aggregate them to conduct a meta-analysis or any quantitative analysis. Instead, this study aimed to collate the studies on this topic and present them in a narrative way, in order to better understand how PHI has been working from the perspectives of addressing the UHC objectives in China. Second, most of the reviewed studies relied on regression models on survey data. There was a lack of experimental studies. Although many of these studies suggested causality in discussion, the results, which are basically associational, need to be interpreted with caution. Third, all the studies used quantitative data with different methodologies and data sources. This review differentiated them mainly according to validity and reliability of methods and data used, and subsequently only reviewed medium- and high-quality studies. It is impossible to rule out useful information in the low-quality group. Lastly, this review included limited studies that present the current situation in China. However, it is able to reflect on PHI’s contribution to the healthcare system in place, because the basic modality of China’s healthcare financing, as mentioned in the introduction, has not changed since the late 1990s [
3,
13], and hence, data in the 2000s-2010s remain relevant to the current situation.