At the forefront of the shopping priorities for individuals in their late 20s and beyond in China is health, sports, and wellness, according to an Oliver Wyman survey conducted late last year as China began relaxing its Covid-19 restrictions.
The survey revealed that 47% of respondents in December intended to increase their spending on health insurance, up from 32% in October, highlighting heightened health concerns following the recent pandemic waves.
“The health consciousness of the Chinese consumer has significantly risen, particularly after the latest wave, and throughout the entire pandemic,” remarked Kenneth Chow, Principal at Oliver Wyman.
Even among those in their early twenties, health ranks second only to increased spending on dining. The survey categorized spending intentions based on the percentage of respondents planning to increase spending minus those intending to decrease it.
The global pressure on hospitals during the pandemic was significant, but China’s experience, particularly with the surge in Covid-19 cases in December, underscored the disparity between the local public health system and the country’s substantial economic stature, second only to the U.S.
According to the World Bank, the U.S. led global health expenditure per person at $10,921 in 2019, compared to China’s $535, a figure similar to Mexico’s.
In China, households bear a larger share of their healthcare costs at 35.2%, contrasting with 11.3% in the U.S., as indicated by World Bank data.
The surge in Covid-19 cases in December led to a peak of 1.6 million hospitalizations nationwide on January 5, according to official data, placing immense strain on public hospitals.
During the period from December 8 to January 12, nearly 60,000 Covid-related deaths were reported in Chinese hospitals, predominantly among senior citizens, according to Chinese health authorities. By January 23, this number had exceeded 74,000.
While daily new deaths have substantially decreased from the peak, the reported figures exclude Covid patients who may have died at home.
Anecdotal evidence pointed to an overwhelmed public health system during the peak, characterized by extended wait times for ambulances and healthcare staff working overtime, sometimes while ill themselves.
For further context, most of China’s 1.4 billion population is covered under social health insurance, which provides access to public hospitals and reimburses medication listed in a state-approved catalog.
Employers and employees alike contribute regular payments to this government-run system.
The penetration of other types of health insurance, including commercial plans, was only 0.8% as of the third quarter of 2022, according to S&P Global Ratings.
The survey by Oliver Wyman in December indicated that 62% of non-policyholders planned to purchase health insurance, with 44% of existing policyholders considering increasing their coverage.
Over the past 15 years, China’s government has allocated substantial financial and political resources toward enhancing the public health system, a significant topic discussed in Chinese President Xi Jinping’s report during a major political meeting in October.
However, one of the barriers to improving China’s public health system is its fragmented financing structure, according to Qingyue Meng, Executive Director at Peking University’s China Center for Health Development Studies.
In a December article in The Lancet, Meng noted that healthcare providers in China receive funding from four different sources, each managed by separate authorities without effective coordination in budget management and allocation.
In contrast, HCA Healthcare, the largest hospital operator in the U.S., reported that over half of its revenue comes from managed care and other insurers, with the majority of the remaining revenue from government-related Medicare and Medicaid health insurance plans.
United Family Healthcare’s Roberta Lipson emphasized that being a privately managed business allowed the company to respond swiftly to the pandemic’s challenges.
“We financed our own growth, allowing us to procure adequate supplies such as medication and PPE as we saw Covid-19 cases rise in China,” she explained.
While China’s tiered medical system historically concentrated specialized intensive care departments in major cities, recent developments have expanded these capabilities to smaller cities, necessitating the training of more specialized doctors.
Moreover, Jiang emphasized that China’s greater adoption of internet services for payments and other transactions positions the country to become a leading market for medical digitalization.
Already, Chinese companies like JD Health and WeDoctor are actively engaged in this space, setting the stage for continued advancements in healthcare innovation.
