Introduction

A recent study on catastrophic medical insurance (CMI) in China notes that an innovative policy design by the Chinese government aimed at relieving the financial burden on people who suffer a critical illness is receiving international attention.¹ The burden brought on by critical illness is higher than generally appreciated, and will only increase as the population ages. Critical illnesses caused 36.19 million deaths and 662.71 million years of life lost worldwide in 2016, both figures experiencing a growth of 18.6% to 51.4% from 2006 to 2016, respectively.² Highly regressive payments cause financial hardship at all income levels, especially in lowand middle-income countries, i.e. financial catastrophe for about 150 million people worldwide pushed 100 million people into poverty in 2015.³ Expenditure for diagnosis and treatment seemed catastrophic for patients with cancer in China.⁴ Reducing out-of-pocket (OOP) health expenses is an important public health issue, in which social as well as medical determinants should be prioritized. Enhanced provision of publicly funded insurance helps to protect people against catastrophic health expenditure (CHE) and health-care inequity.⁵

Protection against financial risk is an explicit health guarantee within China's health reform. In 2012, China's central government launched a CMI program. CMI was the design that reimburse patients whose out of pocket medical expenses exceeding a certain level after reimbursed by the basic medical insurance (BMI) system, with the aim of preventing people from being reduced to poverty by necessary health-care costs.⁶ The CMI revenue comes from BMI revenue, usually occupying its 5%, or a certain annual premium amount from US$ 3.25 to US$ 8.14 in different provinces. BMI only covers necessary treatment and medicine, not including organ transplant and following up antirejection treatment, tumor immunotherapy and most targeted therapy and other expensive therapies (see Table I in Appendix online). CMI reimbursement scope follows that of BMI. Although around 1.3 billion people have been covered by the BMI system in 2016,⁷ medical expenditure burdens incurred by patients with severe medical conditions remain heavy. BMI system mainly comprises urban employees' BMI, urban resident BMI, and the new rural cooperative medical system. High OOP costs resulting from catastrophic illnesses are often financially devastating and can plunge families into poverty. The new arrangement will increase the level of protection provided by China's BMI system.

China's CMI program aims to ensure that each patient's total medical expenditure is no more than the "catastrophic household expenditure for healthcare".⁸ The World Health Organization proposes that health expenditure should be called catastrophic whenever it is greater than or equal to 40% of the disposable income.^9-10 However, individual countries could well adopt a higher or lower percentage in their respective national health policies.¹¹ The Chinese State Public Health and Family Planning Commission suggested setting the households CHE level at the regional annual per capita disposable or net income.⁸ Patients receive reimbursements from the newly launched CMI scheme when their medical bills for necessary treatments under the existing basic healthcare insurance system exceed a certain level. It is not a percentage; it is a certain amount, such as US$ 813.96 in Qinghai province, or US$ 1302.34 in Hubei province. It should be noted that there is a distinct difference between the definition of a critical illness in China's CMI scheme and the traditional definition of diagnosed diseases.^12-13 In the CMI scheme, a critical illness is determined by the patient's OOP expenses after receiving reimbursement from China's BMI system, irrespective the kind of disease diagnosed. Eighty percent of covered medical expenses exceeding US$ 813.96 paid by patients after reimbursed by BMI system will be reimbursed by the CMI to reduce the burden on such patients.

Epidemics of chronic diseases, are becoming the main cause of CHE, and will rise in the future.^14-15 China's new approach targets the widely acknowledged problem of "people falling into poverty due to illnesses", and aims to ensure that most people are not reduced to poverty because of health-related issues. All local governments have been asked to develop local regulations regarding fund raising, reimbursement levels and other details regarding the new insurance scheme in line with local conditions.⁶

Qinghai Province, district selected by our study, is an agricultural hinterland in China's northwest, located in the northeast of the Qinghai-Tibet Plateau, which is known as the "Roof of the World", and was once a part of the ancient Silk Road. People living in this region have a poor level of health, and despite a decade of health promotion and disease prevention program, there are significant health disparities among the western, central and eastern regions of China. The average life expectancy in Qinghai is 68.1, far below that in Shanghai (81.1 years in 2016).¹⁶ Qinghai is one of the poorest zones in China, and the government is attempting to alleviate poverty in the region. Medical costs resulting from critical illnesses are an important cause of poverty. The per capita disposable income, personal income after taxes, in Qinghai was US$ 2816.63 in 2016, which includes US$ 581.98 paid by central government.¹⁷ The level of social economic development was not necessarily associated with total medical expenses but determined the level of financial protection.¹⁸ Preventing people with catastrophic illness from falling into poverty is a matter of prime significance in this zone compared with other provinces.

Although a few studies have examined the program policy design^1,6,8,19, there has been no appraisal since the program was launched in 2013. Whether the China CMI reaches the original target, how much the program reduces the incidence of the urban and rural residents CHE, how should the program be optimized, are all questions that have not been well answered. This study addresses these issues.

Methods

Results

Discussion

We analyzed the incidence and intensity of CHE before and after CMI imbursement in five level medical expenses and in two lines. CMI shows a desired effect on covered medical expenses and a lower-than-expected effect on total medical expenses. The finding shows that a combination of CMI and BMI could provide perfect financial protection against covered medical expenses. CMI can significantly improve the level of financial protection for residents, while the financial protection provided by BMI is limited. The CMI scheme demonstrates strong equity with progressive compensation. The incidence of CHE is almost eliminated in all the expense groups, while at the same time, the intensity of CHE at all health expense levels falls to zero unless the MPG in the more than US$ 12,000 group.

The findings also show that a combination of CMI and BMI can only provide partial financial protection against the total medical expenses. CMI can at a certain extent improve financial protection. The CMI reimbursement also presents progressive compensation. Findings from previous studies indicated that the incidence of CHE decreased from 13.62% to 7.74% after New Cooperative Medical Scheme reimbursement in Jiangsu Province in 2010.²² The sharp declines of the incidence of CHE in all the expense levels in our study demonstrate a strong financial protection of CMI.

We find that uncovered medical expenses is the main reason for the significant difference in the financial protection effect of CMI between the two situations. Uncovered medical expenses rise from 12.8% to 27.5% as total medical costs increase. According to Pavón-León et al.²⁴ study on OOP health expenses incurred by elderly people enrolled in the Seguro Popular program²³ in Mexico, the percent of the drugs that are not covered by the program to the monthly OOP expenditure on health is 12.35%. This part of the medical expenses was ignored and not reimbursed by either BMI or CMI because the CMI scheme follows the reimbursement list of the BMI scheme. Another fact may furnish the evidence that the BMI reimbursement rate assumes progressive in the covered medical cost but presents regressive in the total medical cost. The significant gap is the result of the limitations of the CMI list. Innovative drugs are often unavailable through the National or local Essential Drugs List in China, so patients must cover the full cost of these expensive drugs. They suggest treatment access for patients needs to be improved through better drug availability.²⁵ We also propose broadening the CMI list based on treatment needs in relation to catastrophic illness and pharmacoeconomics evaluation.

Honestly, we chose Qinghai Province because it may produce most demonstrable effect. Though all the provinces have the same policy design, Qinghai executed lowest deductible and co-insurance for covered health care services. Other provinces may not demonstrate so obvious protective effect. On the other hand, it proves that the policy can meet its policy objectives if it has enough low deductible and co-insurance.

In terms of objective and program design, China CMI program and Mexico Seguro Popular can be compared. While 10% of BMI fund was appropriated as the CMI fund in Qinghai province, the system of Mexico Social Protection in Health allocated 8% of all resources to Seguro Popular annually to cover costly, specialized interventions for protection against CHE. Correspondingly, the incidence of CHE drops 49.03% in Qinghai province, while it drops 10.0% when people with social security and 20.6% when people without social security in Mexico.²⁶ In this respect, CMI in Qinghai shows more effective than Seguro Popular. We also think it has some advantage that the definition of critical illness defined by the expense and not by the diseases diagnosed in China CMI. Insured people suffering from rare diseases have no any obstacle to benefiting from the program. The policy implication may enlighten other countries reform and development against CHE.

Though our study has some interesting findings, it also has some limitation. We collect medical expense of every patient reimbursed by CMI in the year as his/her direct medical cost, not including non-medical cost such as the transport and accommodation costs for patients and companions, and nutrition supplements costs. According to a study on the component of OOP of patients with tuberculosis as one of the critical illness, the direct health expenditure for tuberculosis care is the most important component of the OOP, accounting for over 72% of the total OOP payments, following by transport and accommodation costs for patients and companions (13.3%), and nutrition supplements cost (13.1%).²⁰ That consistent with another study which shows chronic diseases, needing not only hospitalization service but also ambulatory care and drugs, are responsible for 68.8% of the total disease burden in China.²⁷ That would also probably lead to an underestimation of incidence and intensity of CHE. Due to imperfect income registration system in China, we cannot get the completely household income of the patients and their families, so we cannot calculate out every patients' household CHE incidence criteria. We adopt the China health and family planning commission's recommendation on incidence of CHE about catastrophic illness financial protection. That is a stationary line not varying with everyone. Despite these limitations, the findings of this study would offer an insight into the effect of BMI and CMI on protection from CHE, considering we adopt the same criteria to evaluate the effect.

This study finds that CMI has had a significant effect in terms of protecting households from CHE if we focus only on the covered medical expenses, and a combination of CMI and BMI can provide financial protecting to people who experience a catastrophic illness. But if we consider total medical expenses, CMI can only provide limited protection from CHE. The considerable gap that remains is the result of the limitations of the CMI list, which currently corresponds with the BMI list. We propose broadening the CMI list based on treatment needs in relation to catastrophic illness and pharmacoeconomics evaluation.