Government Work Report Mentions for the First Time! Trillion-Dollar Commercial Health Insurance, Where Is It Headed?

This year’s government work report proposed to “accelerate the development of commercial health insurance, promote the high-quality development of innovative drugs and medical devices, and better meet the diverse medical and medication needs of the people.” This is the first time the government work report has specifically highlighted commercial health insurance.

Background for Including “Accelerate the Development of Commercial Health Insurance” in the Government Work Report
What is the context behind this inclusion? How has the commercial health insurance sector developed in recent years? Where are the growth potential and main directions? Securities Times reporter interviewed industry insiders.

Trillion-Yuan Health Insurance Market Structural Transformation
Commercial health insurance has been highly anticipated for years.

Regulatory authorities have set specific goals for commercial health insurance. In January 2020, the former China Banking and Insurance Regulatory Commission, together with multiple departments, issued the “Opinions on Promoting the Development of Commercial Insurance in the Social Service Sector,” aiming for the market size to exceed 2 trillion yuan by 2025. In 2020, health insurance premium income reached 817.3 billion yuan.

Data shows that the actual situation over the following five years still falls short of this target. By 2025, the combined premium income of life and property insurance companies operating health insurance will be 997.3 billion yuan, only half of the 2 trillion yuan goal.

However, as commercial health insurance approaches the trillion-yuan mark, structural changes have occurred.

From industry segmentation, previously, the main operators of health insurance were life insurance companies. Driven by government initiatives and various internet businesses, property insurance companies contributed the majority of growth in health insurance. During the 14th Five-Year Plan period, the health insurance premiums of life insurers increased from 705.9 billion yuan to 769.9 billion yuan, a 9% increase; property insurers’ health insurance premiums grew from 111.4 billion yuan to 227.4 billion yuan, a 104% increase.

In terms of insurance types, among health insurance products such as critical illness, medical, nursing, and income loss due to disability, the growth driver has shifted from critical illness insurance to medical insurance in recent years. In recent years, new policies for critical illness insurance have seen single-digit growth rates, with sluggish growth and worsening disease incidence rates, signaling a “shift” period for critical illness insurance. Conversely, the medical insurance market has been quite active. In 2016, the “million-dollar medical insurance” became the first popular product category, with insured numbers rapidly exceeding 100 million; around 2018, special drug insurance was launched; in 2020, the “惠民保” (Huimin Bao) gained popularity; and in the past two years, mid-range medical insurance has also become a market trend.

The shift from critical illness to medical insurance in commercial health insurance has logical reasons. The “2024 Health and Elderly Care Insurance Protection Index Research Report” analyzes several factors: First, critical illness insurance has stronger life insurance attributes and weaker synergy with the pharmaceutical industry compared to medical insurance. Its “benefit” nature is not necessarily linked to the growth of drug and service expenditures. Second, under policy guidance, the overall environment emphasizes innovation in drugs and medical devices, as well as the empowerment of medical insurance data and settlement, opening more potential and smoother growth pathways for medical and inclusive commercial insurance, continuously challenging the dominance of critical illness insurance. Third, the sales force for commercial insurance is reaching a low point, with declining guaranteed interest rates leading to higher long-term health insurance premiums, making the high-growth model of critical illness insurance unlikely to continue.

From “Solo Operations” to Integration into “Three-Medical-Coordination”
A senior executive from a large insurance company stated that over the past 20 years, health insurance development has gone through stages of specialization, positioning enhancement, and new requirements for high-quality development. The 2019 revised “Health Insurance Management Measures” first explicitly stated that “health insurance is an important part of the multi-layered national medical security system.” In September 2024, the National Healthcare Security Administration proposed the concept of a “1+3+N” multi-layered medical security system, in which commercial health insurance should play a role; and in September 2025, the China Banking and Insurance Regulatory Commission issued the “Guiding Opinions on Promoting High-Quality Development of Health Insurance,” clearly stating that “by 2030, the important role of health insurance in the national health security system will be further exerted.”

“Recently, the value of commercial health insurance within the national medical security system has been more fully reflected and widely recognized,” said Wang Guojun, Assistant Dean and Professor at the Insurance School of the University of International Business and Economics.

Traditional commercial medical insurance mainly covers responsibilities within the scope of medical insurance, providing supplementary reimbursement after claims. In recent years, driven by customer demand, many products now include responsibilities outside of medical insurance and for innovative drugs, such as special drug insurance, million-dollar medical insurance, Huimin Bao, and high-end medical insurance, playing an important role in offsetting high medical costs.

Meanwhile, as reforms in medical insurance payment methods based on DRG (Diagnosis-Related Groups) and DIP (Diagnosis-Intervention Packet) are implemented, the medical insurance department also expects commercial health insurance to play a greater role. In December 2025, the National Healthcare Security Administration released the first “Directory of Innovative Drugs in Commercial Health Insurance” (“Commercial Insurance Innovation Drug Directory”); the same month, the National Medical Security Work Conference proposed supporting the development of commercial health insurance and improving the multi-layered medical security system. It encourages the integration and differentiation of commercial health insurance with basic medical insurance, and actively implements the innovative drug directory, encouraging commercial health insurance to cover more reasonable medical expenses outside the basic medical insurance catalog.

Wang Guojun believes that while basic medical insurance can achieve broad coverage, it cannot fully meet the higher-level health needs for specialized medical services, high-end equipment, and innovative drugs. The development of commercial health insurance can, on one hand, share the pressure on medical insurance funds through market mechanisms; on the other hand, it can also promote reforms in the medical service supply side, encouraging the development of innovative drugs and medical devices. Essentially, it is about building a “multi-layered, diversified” healthcare security system based on “covering the basics,” so that different income groups can find suitable health protection solutions.

However, industry insiders admit that commercial health insurance has yet to fully demonstrate its role in multi-level payment of medical expenses. From expanding fundraising to increasing claims payments and fully undertaking the payment functions on the medical service side, there is still a long way to go.

“A high-quality development of health insurance cannot be achieved solely by insurance companies working in isolation; it must actively integrate into the ‘Three-Medical-Coordination’ reform and development framework, starting from deep integration of pharmaceuticals, medical services, and health industries,” said the aforementioned senior executive. He emphasized that health insurance operations should shift from isolated efforts to ecological collaboration, transforming from passive payers to resource integrators and ecosystem enablers.

Senior insurance scholar Zhu Junsheng pointed out that, based on the first edition of the commercial insurance innovative drug directory and government work report requirements, the next step for commercial health insurance should focus on key aspects such as accessibility of innovative drugs, tiered protection, payment coordination, and integration of institutional markets.

The relevant person in charge of Zhonghui Mutual Insurance stated that the implementation of the commercial insurance innovative drug directory is driving a restructuring of the insurance product system: first, developing specialized special drug insurance to complement existing medical insurance and attract high-net-worth individuals; second, refining the coverage responsibilities for innovative drugs, clarifying reimbursement ratios and limits, upgrading from “vague promises” to “clear terms”; third, promoting product tiering to meet the diverse needs of different consumer groups.

New Requirements for Insurance Companies’ Capabilities
Given this context, what are the key development ideas for commercial health insurance? How can they be implemented?

“Products are the most direct carriers of insurance services and the bridge connecting companies and customers. First, product innovation must be driven,” said the senior executive from a large insurance firm. He emphasized the need to develop comprehensive health and medical products that address various health risks faced by people, covering the entire lifecycle with diverse categories. “The multi-layered, three-dimensional medical insurance space is very large,” he said, and the “15th Five-Year Plan” period also holds potential for the commercial nursing insurance market.

He also highlighted the importance of expanding coverage from “healthy individuals” to “those with illnesses,” shifting from “insuring healthy people” to “protecting people’s health.” Additionally, focusing on the entire cycle of disease prevention, control, and rehabilitation—providing proactive prevention, mid-term management, and post-treatment recovery—will upgrade disease insurance from simple payouts to comprehensive health solutions.

However, product innovation, insurance for ill individuals, and health solutions pose new challenges for insurance companies.

In terms of product innovation, insurers need to improve precise pricing capabilities. The senior executive explained that actuarial science’s key role is to manage future uncertainties. Insurers must strengthen data collaboration with medical institutions, healthcare platforms, health management organizations, pharmaceutical industries, and external agencies. Under safe and compliant conditions, they should build integrated data systems based on medical big data, health behavior data, and claims data to accurately identify risks and forecast future changes.

Regarding insurance for ill individuals, Ding Junfeng, Vice President of Taikang Online, noted that managing insurance for people with pre-existing conditions is highly challenging and cannot be effectively handled by traditional insurance companies alone. He explained that traditional actuarial models rely on the law of large numbers, focusing on disease incidence rates across age groups—more of a statistical issue. Once engaging in insurance for pre-existing conditions, it involves deep medical issues. The occurrence, progression, and treatment of each disease, including medical interventions and health management, all influence disease incidence and medical costs, affecting product pricing. Therefore, managing insurance for pre-existing conditions requires collaboration with medical service networks, pharmaceutical companies, and health management industries, with capabilities in disease management and industry integration.

“Managing health insurance requires breaking down industry barriers and actively integrating into the domestic medical, insurance, and pharmaceutical cycles to build a symbiotic and inclusive health ecosystem,” said the senior executive. This involves multiple levels: operationally, strengthening collaboration with the healthcare industry, innovating insurance products, and addressing high drug prices to support pharmaceutical innovation; financially, maintaining long-term patient capital through direct investments, holdings, and diversified investments to develop the “insurance + health and wellness” ecosystem.

Layout: Liu Junyu
Proofreading: Liu Xingying