the growth of private health insurance is being stymied by the entrenched power of state-owned hospitals. Insurers are unable to offer a viable insurance product when they have no control over hospital costs or procedures - in other words, insurer-dictated managed care is essential for health insurance to make a profit. In addition, insurers need access to data and social security system figures if they are to manage their risks adequately - and they have been denied access to this information by local governments who fear losing control over their social security arrangements. Some Chinese health insurers have tried to partner with foreign insurers to build on their experience and technical know-how, but a joint venture between China Pacific Insurance Group C. (CPIC) and Germany's Allianz SE in Shanghai collapsed after less than a year when the European partners found that the insurer had no sway over hospitals.
We have already heard how doctors are unwilling to work in the private sector - despite official encouragement - because they fear being 'excommunicated' by their main employers, the all-powerful state hospital system. The entrenched power of the big hospitals also appears to be another major barrier to any evolution towards private provision of healthcare in China.