Research On The Optimization Of Critical Illness Insurance Rate In China

Since 1998,China has gradually formed three Basic Medical Insurance Systems,including medical insurance for urban workers,new rural cooperative medical insurance and medical insurance for urban residents,to provide social medical insurance for urban and rural residents.However,China’s social basic medical insurance has the characteristics of wide coverage and low security.The catastrophic health expenses(CHE)of Chinese residents are high,and the high medical expenses caused by serious diseases will cause many families to fall into poverty.In order to further solve the problem of "poverty due to illness and returning to poverty due to illness" of urban and rural residents,China issued "Guiding Opinions on Carrying out the Critical Illness Insurance(CII)for Urban and Rural Residents" in 2012,and CII came into being.Critical Illness Insurance,as a prepayment system arrangement to deal with catastrophic health expenditure in China,is the backup guarantee to realize the Chinese dream of the great rejuvenation of the Chinese nation.However,in recent years,it has faced the problems of insufficient fund-raising level and successive losses of commercial insurance institutions,so it is urgent to optimize the compensation mechanism and pricing mechanism of CII.In this paper,the two-layer model of CII is constructed.Based on the distribution of hospitalization medical expenses in China Family Panel Studies(CFPS,2016),lognormal distribution,Generalized Pareto Model and Nonparametric Kernel Density Estimation fitting analysis are used to measure the per capita premium of CHE for urban and rural residents.Furthermore,using the medical expenses of CFPS(2018)to test whether the current financing level and compensation ratio can effectively reduce the incidence and severity of CHE,and whether it can ensure the balance of payments of the CII fund.The main conclusions are as follows: First,the two-layer model of CII can effectively reduce the incidence and severity of CHE.Comparing the incidence and severity indicators of CHE with and without CII reimbursement in 2018,it is found that after CII reimbursement,the incidence and severity of personal CHE decreased.Secondly,compared with lognormal distribution,Generalized Pareto Distribution and Nonparametric Kernel Density Estimation both perform well in curve fitting and goodness-of-fit test.Third,by measuring the balance of the CII fund,it can be found that the lognormal distribution method has a gap in the payment of the second-layer premium,which is caused by the fact that lognormal distribution can’t well fit the tail data of individual hospitalization expenses,while the Generalized Pareto distribution and Kernel Density Estimation can achieve the balance of fund revenue and expenditure by fitting the premium of the tail well.Therefore,the designed two-layer model of CII can achieve financial sustainability.Based on the above conclusions,for the good operation of the CII mechanism,the following suggestions are given.First,optimizing the major illness insurance financing mechanism and establishing a scientific fund-raising standard.Second,Exploring diversified financing mechanisms.Third,establishing a risk early warning mechanism to dynamically monitor and analyze the balance of CII fund.