China's health protection gap largest in Asia

China has a health protection gap of an estimated US$805 billion, a Swiss Re survey has found.

Dragged by its large population and lower aggregate income levels, China's estimated health protection gap is the largest in Asia.

The study, done by Swiss Re Management Ltd and the Swiss Re Institute, said that the combined health protection gap in 2017 of the 12 Asian countries surveyed is estimated to stand at US$1.8 trillion.

More than 16,000 consumers, from emerging economies like China and developed markets like Japan, participated in the research, which gauged respondents’ views on current health care, stress caused by out-of-pocket expenditure on treatments, and awareness and ownership of medical insurance, among other topics.

By country, the estimated health protection gap is largest in China (US$805 billion), followed by India (US$369 billion) and Japan (US$218 billion).

The Swiss reinsurance company said that most of the gap — US$1.4 trillion — originated from emerging Asian nations and is driven by large populations, low disposable income, high out-of-pocket medical expenses and low health insurance ownership levels.

Out-of-pocket spending on health care constituted almost 18 percent of net household income in emerging Asian countries, and more than half of that spending was a source of financial stress, according to the survey.

The study estimates that 1 out of 24 (more than 40 million) households in Asia could not afford necessary treatment, with China and India accounting for more than 75 percent, or 32 million, of the total non-treatment cases in the area.

Unexpectedly, in most countries, middle-income households account for most of the estimated nationwide health protection gap, while lower-income households are the most vulnerable, the study noted.

Swiss Re added that young and healthy households are more likely to skip treatment, especially households that have family members suffering from chronic diseases, who are of middle-income class status.

Swiss Re expects that the health protection gap across Asia will widen in the coming years given the ageing societies in many markets, and the high growth of medical inflation relative to average incomes.

To close such gaps, the reinsurer calls for coordinated efforts from multiple parties, including underwriters, governments and health care providers, to explore new partnerships that minimize risk efficiently by sharing market development costs.

Insurers, in particular, will play an important role in helping make society more resilient, as they are a key participant of the health care industry value chain.

The report also noted that insurance companies need to extend their roles. 

Now and in the future, insurers need to become “users of data” in order to develop products that better meet consumers’ protection needs, build awareness of the risks and help people make informed health care-related decisions.