Expanding Health Insurance Access for Substandard Populations in China: Product Design, Morbidity, and Pricing

August 2025

Author(s)

Pingyi Lou
Associate Professor
Department of Insurance, Fudan University

Hong Song
Professor
Department of Public economics, Fudan University

Hui Ding
Assistant Professor
Department of Insurance, Fudan University

Executive Summary

This report examines China’s health insurance market for substandard populations, primarily composed of individuals with pre-existing illnesses (PEIs). Despite the rapid growth of the broader health insurance sector, this segment faces significant coverage gaps. The primary obstacle to developing PEI-inclusive insurance products is the scarcity of reliable pricing data, which stems from limited morbidity rate estimates for substandard populations. The report conducts a multifaceted analysis: (1) a review of the Urban-Customized Commercial Medical Insurance (UCCMI) scheme, the largest category of health insurance for PEIs, focusing on its design features and underwriting rules for PEIs across products; (2) an empirical analysis of chronic illness prevalence among PEIs using the China Health and Retirement Longitudinal Study (CHARLS) database, exploring demographic, socioeconomic, and regional factors influencing morbidity rates; and (3) a theoretical application of the Markov model to estimate critical illness incidence rates among individuals with PEIs, leveraging single-period prevalence data to overcome limitations in historical cohort studies. The report concludes by proposing recommendations for insurers and policymakers, including adopting advanced modeling techniques to improve pricing accuracy, developing tailored insurance products for substandard populations, and strengthening data infrastructure to support sustainable innovation in China’s health insurance market. This study provides actionable insights to accelerate the equitable expansion of health insurance coverage for substandard populations by bridging knowledge gaps in PEI morbidity and pricing.

Material

Expanding Health Insurance Access – Report to be published soon

Expanding Health Insurance Access – China - tool

Acknowledgements

The researchers’ deepest gratitude goes to those without whose efforts this project could not have come to fruition: the Project Oversight Group and others for their diligent work overseeing questionnaire development, analyzing and discussing respondent answers, and reviewing and editing this report for accuracy and relevance.

Project Oversight Group members (list alphabetically by last name; list SOA credentials first, followed by other credentials in alphabetical order):

Hai Bi, FSA

Hao Mei, PhD

Davout Yean, FSA

At the Society of Actuaries Research Institute (list alphabetically by last name; list SOA credentials first, followed by other credentials in alphabetical order):

R. Dale Hall, FSA, CERA, CFA, MAAA

Lisa Li

Xiao Xu, FSA, CERA, FIAA, CFA, FRM, CA, CPA, PhD

The authors would also like to thank the following members for their research assistance work on this project.

Haoyu Li, Fudan University

Ke Tao, Shanghai Jiaotong University

Lina Wang, Fudan University

Litian Zhang, Fudan University

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