One wouldn’t think Chinese in their 60s worried about the cost of cancer treatment would be a demographic slice that interested high-flying technology companies. Earlier this week, however, Ant Financial Services Group, an affiliate of Alibaba Group Holding Ltd., announced a new product targeted especially to them, part of its Xiang Hu Bao platform. For a small monthly fee, participants will be guaranteed up to $14,700 specifically for cancer care if they ever receive that dreaded diagnosis.
It’s only the latest innovation from Chinese technology companies looking to tap into fears over rising health care costs on the mainland. Even as politicians in the United States champion a version of socialized medicine, Communist China is desperately looking for ways to make private insurance work. And high-tech companies, even more so than traditional insurance providers, could well lead the way.
Xiang Hu Bao, which Ant initially launched last October for individuals between the ages of 30 days and 59 years, is one of several “mutual aid” platforms that have sprung up in recent months. The idea is simple: Users agree to pay membership fees up to $28 per month to cover the health care of other members. In return, they’re guaranteed reimbursement for treatment of 100 “critical illnesses.” (Payouts for non-cancer care top out at approximately $44,000 for those younger than 60 years old.) The only criterion for joining is a decent credit score, as calculated by Ant’s Zhima Credit, which collects data on hundreds of millions of Chinese.
Before announcing its cancer-focused extension on May 8, Xiang Hu Bao had already attracted 57 million users, most of whom earn low incomes and would otherwise struggle to afford traditional private health insurance. And it’s not alone: At least two other mutual health plans claim more than 50 million members each, including Waterdrop, owned Beijing Shuidi Mutual Insurance Technology Co., a company backed by Tencent Holdings Ltd. and food-delivery giant Meituan Dianping.
Waterdrop is gambling that mutual aid is just the gateway to other insurance-like products. It also operates an online insurance distribution platform that, presumably, members can join as their incomes allow.
Like so much else in China, demographics are driving these innovations. At the end of 2018, 18% of China’s population — roughly 250 million people — had reached retirement age. That’s the world’s largest population of elderly, and it’s growing.
Paying for their health care won’t be easy. China’s state-sponsored insurance system provides near-universal coverage and reimburses 60% to 90% of medical expenses. But it generally covers only treatment at government hospitals, and only for basic services and the most common diseases.