Integrating public and commercial health insurance

At the end of 2024, the National Healthcare Security Administration (NHSA) introduced new policies to “vigorously empower commercial insurance” through public health insurance, marking a new phase in the co-ordinated development of China’s healthcare security system and commercial insurance. As a key component of the multi-tiered healthcare security system, commercial health insurance plays a supplementary and optimising role.

However, it currently faces challenges such as information asymmetry, high underwriting costs, low claim settlement rates, and difficulties in preventing insurance fraud. To further leverage the advantages of China’s public health insurance, the NHSA plans to explore initiatives such as enabling commercial insurers through public health insurance data, synchronised settlement between public health insurance funds and commercial insurance, and other related policies. These measures present unprecedented development opportunities for commercial insurers.

From a practical demand perspective, the operational pressure on China’s public health insurance fund is increasing. According to NHSA data, in 2024, expenditure from the employee health insurance fund grew by 7.6% compared to the previous year. Driven by factors such as an ageing population, rising medical demand, and the application of innovative medical technologies, the long-term balance of the fund faces severe challenges.

The participation of commercial insurance broadens the sources of funding for healthcare security, and also utilises its actuarial expertise, risk management, and service innovation to enhance the operational efficiency and sustainability of the overall security system.

Settlement breakthrough

Since the NHSA proposed, in 2024, to “actively explore the empowerment of commercial insurers through public health insurance data and achieve synchronised settlement between public health insurance funds and commercial insurance”, and initiated the settlement mechanism, public health insurance authorities in regions such as Shanghai, Zhejiang, Shandong and Liaoning have promoted the upgrade of settlement processes from a “series” to a “parallel” model at the regional level.

The national mid-year healthcare security work symposium, held on 15 August 2025, also identified “actively advancing synchronised clearing and settlement of ‘public health insurance + commercial insurance’” as a key reform development in the first half of the year.

Recently, the country’s first one-stop clearing and settlement centre was launched in Xicheng district, Beijing. Relying on NHSA data, and adhering to personal information protection and data security laws and regulations, the centre ensures that “original data does not leave its domain; data is usable but not visible”, enabling interconnection between basic public health insurance and commercial insurance data.

With patient authorisation, medical expenses and treatment data generated during public health insurance settlement can be directly matched in real time with commercial insurance settlement rules through the centre, achieving unified settlement between public health and commercial insurance.

This eliminates the cumbersome process of patients making advance payments and subsequent claims. The clearing and settlement centre also employs privacy preserving computation and blockchain technology to ensure the security of data.

Data-driven integration

Public health insurance data, as the largest and most continuous medical and health database in China, provides fundamental support for commercial insurance in areas such as product development, underwriting, and claims settlement due to its authenticity and completeness.

Product development and actuarial pricing. The data enables commercial insurers to identify disease incidence rates, medical expense distributions and treatment patterns, facilitating the industry’s shift from “experience-based pricing” to “data-driven pricing”. The data also empowers commercial insurers to identify coverage gaps, develop differentiated models between public health and commercial insurance, and promote the integration of multi-level medical security systems.

Underwriting and anti-selection prevention. The data provides commercial insurers with medical information about applicants, helping them identify pre-existing conditions or other factors not meeting coverage requirements, thus mitigating anti-selection risk.

Improving claim settlement efficiency. Traditionally, commercial insurance claims require patients to submit multiple documents, such as medical records and expense statements, resulting in lengthy processes. On a one-stop settlement platform, treatment data is matched in real time between the public health insurance system and commercial insurance settlement rules, enabling automatic claims processing and the identification of fraudulent activities such as false invoices and duplicate reimbursements.

Public health insurance data constitutes sensitive personal information under China’s Personal Information Protection Law, and data compliance is a core challenge for commercial insurers in the process of leveraging this data. First, in the data acquisition stage, it is essential to ensure the legality of the sources of data ownership and usage rights. During processing and use, strict adherence to the principles of minimum necessary and purpose limitation is required. Technically, robust data desensitisation and security protection are necessary. In addition, when co-operating with third parties, commercial insurers must elevate data protection to a strategic level, achieving compliance first through investment in technology and internal control management.

Co-ordinating drug catalogues

The NHSA and the National Health Commission have jointly issued the Several Measures for Supporting the High-quality Development of Innovative Drugs, launching the addition of a commercial insurance innovative drug catalogue on 1 July 2025. This move is an important supplement to the dynamic adjustment mechanism of the national health insurance drug catalogue. The basic health insurance catalogue emphasises “basic coverage” and cost-effectiveness, but many high-cost innovative drugs are difficult to include promptly. The commercial insurance innovative drug catalogue, by contrast, focuses on high-value innovative drugs, orphan drugs, and advanced medical technologies that are not yet covered by the basic catalogue. This approach delivers differentiated coverage, allowing more patients to afford breakthrough clinical innovations.

Beyond data compliance challenges, commercial insurers must design policy terms to clearly define coverage and set pricing in line with reforms to public health insurance payment methods. They must also enforce strict suitability requirements during the sales process.

The integration of public and commercial health insurance marks a systemic transformation driven by institutional innovation. By aligning payment mechanisms, enabling data sharing, and developing complementary products, it is reshaping both the efficiency of health resource allocation and the structure of protection.

This integration not only injects sustainable vitality into the healthcare security system, but also lays a stronger foundation for achieving the goals of a fair, efficient and high-quality “Healthy China” strategy.

Xiang Fubin is a senior partner at W&H Law Firm. He can be contacted by phone at +86 186 1637 0176 and by mail at xiangfubin@weihenglaw.com
Zhang Xinyi is an associate at W&H Law Firm. She can be contacted by phone at +86 159 2167 1960 and by mail at zhangxinyish@weihenglaw.com