Hu Kaihong (host):

Ladies and gentlemen, good morning. Welcome to the State Council’s policy briefing. The State Council’s executive meeting this week decided to introduce the medical insurance scheme on serious illness across the nation, which has created a buzz among the public. Today we’ve invited Liang Wannian, who is vice-director of the medical reform office under the State Council and a senior official with China’s National Health and Family Planning Commission, to help us better understand the issue. Mr. Liang is a familiar face to the media and he frequently appears in news reports. Let us welcome Liang to take the floor and answer questions.

Liang Wannian:

Good morning, friends from media. I’d like to start by thanking you all for your interest in the work of the national medical insurance scheme for serious illness. The State Council’s executive meeting on July 22 decided to apply a medical care scheme on a national level and approved related government documents.

The medical insurance scheme on serious illness is an extension of the basic medical insurance and a new institutional arrangement to protect the interests of seriously ill patients. Local governments have, along with six ministry-level government organs, started trials of the medical insurance scheme on serious illness since 2012. By April this year, 31 provincial areas have all started such trials. Of these, the medical scheme has been put into full operation in 16 provincial areas, covering about 700 million people from both rural and urban areas. Patients in these areas can reimburse their medical bills by 10 percent to 15 percent higher than their peers who only have the basic medical insurance — an effective solution to reduce the number of people being impoverished due to serious illness.

Meanwhile, problems have emerged in the trials. Some patients still have to pay heavy medical bills since the medical insurance on serious illness is not fully introduced in those areas. In a bid to solve these problems and connect the serious illness medical insurance with basic medical insurance and the disease emergency rescue system, the State Council decided to apply the medical insurance on serious illness across the nation, which is also a commitment in the annual government work report this year. By the end of this year, the medical insurance on serious illness will cover all residents, no matter in rural or urban areas, as long as they have taken part in the new rural cooperative medical care scheme or the urban medical care system. The burden on seriously ill patients will be effectively reduced, and by 2017, China will establish an efficient medical care scheme on serious illness as a supplement to medical assistance, disease emergency rescue, commercial medical care and social charity. All this will protect families from dramatic medical bills and improve the fairness of medical care.

Liang Wannian:

Next, we will do the work in the following fields:

First is to improve the security level. A certain amount of money will be drawn from the urban and rural resident basic medical insurance and the New Rural Cooperative Medical System fund. The money will be used as critical illness insurance covering the treatment costs for the insured people who suffer from critical illness. It will be guaranteed that the insurance for this is over 50 percent of the treatment fees in 2015. The proportion will continue to rise with the improvement in administrative ability.

Second is to strengthen the link between different security systems especially in policy making, management and services.

Third is to regulate the service range of critical illnesses insurance. In principle, the government selects commercial insurance institutions through a bidding process. If this does not work, local governments should clarify the selection method. The profit margin of commercial insurance institutions should be controlled in a proper range.

Fourth is to enhance supervision and administration. This means strengthening the management of the insurance capital and the supervision of medical institutions and medical services. Unreasonable medical fees should be removed. Commercial insurance institutions should publish the signed agreements, related regulations, payment procedures, receipts and payments.

Hu Kaihong (host):

Questions, please.

China National Radio:

You just mentioned that major-illness insurance covers 700 million people. Could you elaborate which specific groups of people it covers? Will the individual pay some bills?

Liang Wannian:

All participants in the country’s basic medical insurance system for urban and rural residents will be covered by the major-illness insurance. In other words, when the patients’ medical bills for necessary treatments using the existing basic medical insurance system exceed a certain level within a year, they can receive reimbursements from this insurance. They don’t need to pay when using the major-illness insurance. Funds for the insurance come from urban residents’ basic medical insurance and the new rural cooperative medical system. Individuals don’t have to pay again.

China Central Television:

Critical illness insurance will cover all insurants of the urban and rural resident basic medical insurance at the end of 2015. But there are still some people who will have difficulties paying the amount that isn’t covered by the critical illness insurance. Are there any official policies and detailed measures to help the people who suffer critical illness to cover the part that they need to pay themselves? Thank you.

Liang Wannian:

According to the requirement, critical illness insurance will be carried out nationwide to cover all insurants of the urban and rural resident basic medical insurance. If the self-paid part exceeds a certain amount, the critical illness insurance will cover more than 50 percent of it.

How to define the amount? According to the policy, principally the local government can measure the amount on the basis of annual data of per capita disposable income published by the statistics department. If it exceeds a certain amount, then it will be reimbursed.

The reimbursement varies with the medical costs, which means the higher the medical costs are, the greater the reimbursement the patient will get.

According to trials held over several years, it ranges from 50 percent to 80 percent. Of course, the self-paid part will be covered by at least 50 percent after the reimbursement, which will effectively reduce the patient’s economic burden, preventing them from being burdened by the heavy medical costs.

In the meantime, there remains a group of people who have special difficulties. The policy explicitly requires the local governments to figure out specific measures to offer them appropriate help, increasing the availability of the critical illness insurance.

In addition, the General Office of the State Council recently issued specific measures on how to effectively coordinate urban and rural resident basic medical insurance with the critical illness insurance when subsistence allowance receivers, who are facing special difficulties, have to pay high medical costs.

Economic Daily:

Just now you mentioned that more than 50 percent of the expenditure, which was previously paid by the patients, will be reimbursed by the major-illness insurance. What are the considerations in setting this goal? With medical insurance varying in different areas and the capability to raise money is also different, how can you ensure this proportion? And what’s this percentage based on?

Liang Wannian:

The main purpose of major illness insurance is to solve the problem of poverty caused by disease. There is a concept internationally of “Household Catastrophic Health Expenditure”. The denominator is the household’s total income subtracted by necessary subsistence expenses such as food, and the numerator corresponds to total household health expenditure in a year. Households with catastrophic expenditures were defined as those with health expenditures equal or above 40 percent of the household’s capacity to pay. In other words, the illness caused the household’s poverty. We used this concept as a major reference and came to the proportion of 50 percent by considering the financial capacity of the local households, their medical expenses and the capacity to pay.

Why we say that more than 50 percent of the expenditure will be reimbursed? If the proportion is too low, it will be impossible to solve any problem and the household’s healthcare expenditure will be more likely to be “catastrophic”.

I think the proportion will be gradually higher, with the country’s economic and social development as well as the increasing financing capability of basic medical insurance. It could be 60 percent or 70 percent. That’s why we have required a dynamic adjustment mechanism to be set up at all levels.

China Radio International:

How to deal with management problems of commercial insurance companies?

Liang Wannian:

The critical illness insurance program will be run by commercial insurance agencies chosen by the government through a bidding process. Such agencies will be required to achieve a balanced budget and make a small profit, and the capital safety and payment capacity should be ensured. In the case of the profit rate exceeding the contractual stipulation, the money should return to the basic medical insurance funds.

In the same way, urban and rural residents’ basic medical insurance funds and the commercial insurance companies will share the deficit that is caused by policy changes, the specific proportion should be defined clearly in the contract.

Keeping the profit rate in a proper scale is of great importance, which can make sure the program benefits civilians.

As the population density, structure and quantity vary from one area to another, therefore, the profit rate of commercial insurance companies in pilot areas has been generally controlled between 2% to 5% of the basic insurance medical insurance total funds.

China News Service:

The State Council executive meeting decided that insurance for major illnesses will cover all residents in urban and rural areas. Could you explain how major illnesses will be defined?

Liang Wannian:

In general, there are various categories of major illnesses. For example, a major illness may concern a life-threatening disease, or one that is very expensive to treat, or an illness that requires complicated treatment at a major hospital.

Regarding this insurance, a major illness refers to one that is very expensive to treat, and may concern a family unable to afford further treatment after initially paying the fees — leading to a disastrous situation affecting the whole family.

Cancer is classified as a major illness, but a chronic disease can also be a major illness because its accumulative expenses can be very high.

However, the new rural cooperative medical system (NCMS) of the Ministry of Health only includes 22 kinds of illnesses, such as childhood leukemia and congenital heart disease (CHD). We will thus promote the smooth transition of the NCMS to the major illness insurance.

Hu Kaihong (host):

That is the end of today’s briefing. Thank you.