There are some companies providing health products but they turn out to be life insurance, instead of real medical insurance.

Just take a look at the strict requirements these companies laid down: those who can buy the insurance must be healthy, as a physical examination is first conducted on each client in order to sift out anyone sick.

The companies also draw up a list of diseases they are willing to insure against. If the client gets a disease on the list, they are entitled to their cover, but after this one-time pay-out, the insurance ends, so it actually functions as once-and-for-all life insurance.

Real business medical insurance is certainly not like that, but is rather a lasting policy, without the insurance company screening clients. Of course, the insurance company can set different charges for different clients depending on their state of health.

Limited medical insurance

Many regions in the world have this kind of insurance. So why is there none in Shanghai? It isn't as if the government forbids or limits its development.

Is it because the current social medical insurance system, which the city is now vigorously implementing, already suffices to cover all health risks?

Known to all business insiders, the city's social medical insurance is actually a basic and low-level one.

It only covers a very limited number of medicines and diseases - a common feature shared by basic forms of medical insurances.

Currently, some medicines, especially new and expensive ones, are not covered by the insurance.

One serious problem to emerge already is that patients, in order to save costs, refuse to use new medicine and advanced technology, impeding the city's medical development.

"Shanghai doesn't lack first-rate doctors or advanced medical equipment, but because of the lack of high-standard medical insurance, it is as if five-star hotels were being asked to accommodate two-star customers," said Chen Bochang, a professor from the Shanghai Children's Medical Centre. His viewpoint aroused a heated discussion among Congress deputies when it was raised during the ongoing 12th People's Congress.

Basic insurance doesn't cover all kinds of diseases. As an orthopedist, Chen has many times received people who were born with six fingers. Yet basic medical insurance, which is trying to extend insurance to the whole society, has to exclude this kind of problem from its scope in the near term, Chen predicts. The same problem might also be found with obesity.

In some countries, such as the United States, social medical insurance works only as a government subsidy to the poor, while a majority of people buy business medical insurances, Chen added.

The low level of basic social insurance gives great scope for the development of the business version.

Yet, despite the fact that so many years have passed, no insurance company has dared to dip its toe in the water. Is it because the local people are still too poor to buy such business insurance?

In contrast to social insurance, which is tax free, insurance companies would have to shift some of their tax burden to their clients, naturally increasing the costs.

According to business insiders, the charge for business medical insurance is at least 2,000 yuan (US$241) a year.

That is not a big figure for todays' urbanites in Shanghai, whose average disposable income already exceeded 13,250 yuan (US$1,596) per capita last year, and is still rising.

Although interest rates have fallen substantially in recent years, those who place their savings in banks still constitute a majority.

People put aside money in case of tragedies, and the most frequent tragedies are simply diseases.

China has always been the largest market for tonics.

"All these facts just show that Chinese people have a high concern for health, thus a high level of acceptance for a better standard of medical insurance," he said.

That just makes the problem all the more puzzling - why do insurance companies ignore such a vast potential market as Shanghai, or even China as a whole?

Obstacles

Zhou Haiyang, director of the Shanghai Medical Insurance Bureau, who is also a Congress deputy, suggested where the ultimate reason was to be found.

He cited a simple example. In the 1950s and 1960s, snail fever was so endemic in China that it even became the national disease.

The country made up a decision to get rid of the disease, and issued an order - all hospitals should treat patients with snail fever free of charge.

For a time, the medical records of almost all patients were oriented towards snail fever. Doctors could easily collude with patients to help them escape the costs of medical treatment by categorizing all diseases as snail fever. After all, it was the nation, the government, who would pay, not the hospitals.

Similar problems exist even today. If you have a doctor as friend, you can easily ask him to prescribe unnecessary but expensive medicine. Then, if you have an insurance policy, the cost is passed on to the insurance company.

This "imaginative" behaviour of Chinese is one main obstacle that forces many insurance companies to ignore the seemingly tempting market.

Of course, you may argue that insurance companies could just visit hospitals to make regular checks of their medical records and see whether the hospitals are cheating.

In foreign countries, a central task of insurance companies is to check hospitals' medical records. To some degree, it is the insurance companies who manage the hospitals.

Yet in Shanghai, there is the Health Bureau. It is always the officials who check the hospitals' behaviour. The result is an overlap of rights between the insurance companies and government. How to cope with such relationships involving the Chinese government is always something enterprises worry about.

"However, the development of business medical insurance has already become urgent in Shanghai, either to meet the ever-increasing demand of locals, or to alleviate the already serious financial difficulties arising within the social medical insurance system," Chen said in his bill submitted to the Congress.

"And to develop the insurance system requires the support of the government. It is not something one or two companies can achieve."

(Shanghai Star February 20, 2003)