Until now, health insurance has been a tiny segment of the Chinese insurance market and this is expected to change as a result of the new tax benefit. However, there are some doubts as to the profitability of this line due mainly to entrenched practices and the lack of control over claims costs.

It’s only a pilot plan, but the Chinese government has introduced a new tax deduction for holders of private health insurance policies. The deduction is limited to the equivalent of around $380 a year but this equates to about half a month’s wage for many workers.

Chinese Government Announces tax relief for private health plans

This is timed to coincide with the abolition of government price controls for medical supplies, which could increase the cost of many treatments. However, the stated goal is to promote private health insurance which would supplement the basic health benefits that the government provides. It is hoped that the move will be a boost to health services which will improves general welfare and also provide additional jobs.