Summary of Key Points
Huimin Bao (Benefiting People Insurance) serves as a universal insurance product that bridges the gap between commercial insurance and innovative drugs, providing coverage for individuals with pre-existing conditions. However, due to its high payout rates (exceeding 90% or even 95% in many regions), several cities have begun to significantly restrict the compensation for pre-existing conditions and the coverage of expensive medications starting from 2026. To address this, operators are seeking to balance product sustainability and affordability through value-added services, differentiated pricing strategies, and negotiations with pharmaceutical companies. In the future, Huimin Bao is expected to evolve towards tiered pricing and more tailored coverage, which will also accelerate the segmentation of the commercial insurance market.
Why Does Huimin Bao Need to Be Restrictive? High Payout Pressures
Huimin Bao is not a charitable fund; it must maintain a financial balance to survive. With payout rates exceeding 90%, for every 100 yuan in premiums collected, more than 90 yuan must be paid out, resulting in almost no profit or even losses. There are three main reasons for this:
1. Increasing Use of Innovative Drugs: Policies allow commercial insurance to cover innovative drugs without affecting hospital DRG (Diagnosis-Related Group) reimbursement metrics, leading to widespread use of expensive drugs in major cities and hospitals, thereby increasing compensation costs.
2. Increased Pressure from Regional Integration: Some regions have merged multiple Huimin Bao programs into a single provincial coverage, expanding the number of insured individuals, especially those with pre-existing conditions, which further increases the financial burden.
3. Low Premiums but Extensive Coverage: Although premiums range from several dozen to over a hundred yuan, the insurance previously provided generous compensation for pre-existing conditions and expensive drugs. For example, Huimin Bao in Shanghai paid 100% for CAR-T therapy, amounting to over 40 million yuan in four years, and nearly 45 million yuan for the drug Fabrazan annually, putting significant strain on the fund.
How Are the Restrictions Being Implemented? Focusing on Pre-Existing Conditions and Expensive Drugs
The restrictions across different regions are consistent, targeting the most costly aspects of coverage:
- Reduced Compensation for Pre-Existing Conditions: Huimin Bao in Shanghai has lowered the compensation rate for hospitalized patients with pre-existing conditions from a high percentage to 30%; Chengdu's Huirong Bao has reduced it even further to 20% for repeat policyholders and eliminated coverage altogether for first-time applicants.
- Narrowing the List of Covered Drugs: Shanghai has removed two expensive drugs from the coverage list: Fabrazan, used for rare diseases, and Yikaida, a CAR-T therapy. The remaining nine drugs now have a maximum compensation limit of 200,000 yuan (which may have been unlimited before).
- Limiting New Policyholders' Coverage: Shandong's Qilu Bao has set a time threshold for certain rare disease drugs, excluding new patients from coverage and only providing coverage for those who were already diagnosed.
These measures aim to reduce excessive payouts and ensure the long-term sustainability of the insurance fund.
How Are Costs Being Managed? Finding New Balances
While restricting coverage, operators are also trying to increase revenue in creative ways:
1. Value-Added Services: Huimin Bao in Shanghai has added coverage for brain-computer interface surgery supplies and health management services (such as check-ups and chronic disease consultations) without increasing compensation costs, making the insurance more valuable to customers.
2. Differentiated Pricing: Pricing is now based on risk levels. For instance, Shanxi's Jinhuibao offers three tiers of coverage, with the lowest tier costing 69 yuan and excluding pre-existing conditions, while Shandong's Qilu Bao offers nine tiers, allowing healthier individuals to pay less and those with pre-existing conditions to pay more, thus achieving a more equitable distribution of costs.
3. Negotiations with Pharmaceutical Companies: Pharmaceutical companies are willing to lower prices or provide patient assistance in exchange for retaining their drugs on the coverage list. For example, some companies have offered to subsidize patients' out-of-pocket expenses if their drugs are not removed from the coverage.
deeper Issues: The Ambiguous Nature of Huimin Bao
The main challenge with Huimin Bao is its unclear legal status and responsibilities. It is labeled as a "universal" insurance product, which leads to expectations that it will cover more expensive drugs, but since it is essentially commercial insurance, it needs to be profitable to sustain itself. The lack of clear legislative guidelines results in conflicting goals:
- If it is positioned as a socially responsible product, it must cover more individuals with pre-existing conditions and innovative drugs, but this may be unaffordable given the low premiums.
- If it is purely commercial, its purpose of benefiting the public may be lost, potentially deterring customers.
Operators constantly struggle between moral obligations (to provide coverage for patients) and financial sustainability. For example, removing expensive drugs like Fabrazan from the coverage can cause clinical risks for patients, but doing so could deplete the insurance fund and affect other policyholders' benefits.
Impact on Patients and the Market
In the short term, these changes will have some negative consequences:
- Patients: The removal of expensive drugs like Fabrazan may force them to switch to alternative treatments with potential risks or bear higher out-of-pocket costs. The reduced compensation for pre-existing conditions also increases their financial burden.
- Long-Term Impact on the Insurance Market: The success of Huimin Bao has raised public awareness of the risks associated with expensive medical treatments, leading to a 40% increase in demand for personal health insurance (especially million-dollar and mid-to-high-end policies) that cover innovative drugs. This will foster the development of more tailored insurance products for individuals with pre-existing conditions and rare diseases, creating a multi-tiered healthcare system.
In summary, the restrictions on Huimin Bao are not a negative development but a necessary step towards more rational and sustainable growth. Its future lies in providing more targeted and affordable coverage while maintaining its universal nature.