Analysis of Demand for China’s Commercial Health Insurance from the Perspective of Loss Aversion

Abstract

China's health insurance industry has been developing continuously since its emergence in the 1980s, but at this stage, China's social security system is still at a relatively low level of development, and people's expenses incurred in a variety of medical needs cannot be given by the current social security system, while commercial health insurance has made a good supplement to this, ensuring people's practical interests, and is also its biggest competitive advantage. This paper lays out an overview of its market size, product structure and security degree, followed by effective suggestions of improvement in relation to the behavioral economical concept of loss aversion. The irrational misunderstanding of health insurance and the resulting problems of lack of insurance, insufficient coverage, excess insurance and double insurance have been puzzling the sustainable and healthy development of health insurance, which is also a hot issue of general concern at home and abroad. According to analysis of possible improvement measures about the effect of loss aversion on citizens, optimizing claims and modifying health service models in a desirable way will mitigate the loss aversion effects when purchasing commercial health insurance.