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Ant Financial’s Xiang Hu Bao is a platform within the mobile payment app Alipay that provides affordable online health plans.

A clue to how it works is in its name: It means “mutual protection” and is a nod to the concept underlying the platform where members agree to pitch in and help other members with their medical expenses.

Centered on the concept of low-cost health care, Xiang Hu Bao, and other similar platforms, are beginning to take hold—especially among those who have typically not been well served by the country’s medical system.

Members of mutual aid plans share health care costs equally, so there are no premiums. Participants of  Xiang Hu Bao health plan make contribution twice a month, which is often less than a tenth of a yuan, and, in return, they receive coverage for 100 critical illnesses.

In return for managing the process, Ant Financial takes an 8% administrative fee out of every payout.

Late last month, TechNode visited Peking Union Medical College Hospital (also known as Beijing Xiehe Hospital), a state-run general hospital located in Beijing’s Dongcheng district, to understand why online mutual aid plans like Xiang Hu Bao are gaining popularity.

Near the busy entrance of the hospital complex, family members waited in the afternoon sun while loved ones undergo surgery, while nearby, hundreds of patients lined up to have prescriptions filled.

TechNode searched the crowd for Xiang Hu Bao users to learn what impact, if any, the app has had on their lives. In the first hour of relentless searching, however, we had little luck.

Finally, we bumped into Huang Zekai, a 29-year-old Xiang Hu Bao user from the northeastern province of Jilin. Huang said a pop-up in one of the Alipay mini-apps led him to join the Xiang Hu Bao health plan.

“People nowadays care more about healthcare and there is an increasing awareness around it,” Huang told TechNode.

Huang hadn’t given it much thought because the payment amount automatically deducted from his Alipay account each month is trivial.

Huang has a stable job in international trade. Better off Chinese people like him are increasingly turning to private insurance for better coverage and lower co-payments than public insurance.

But Huang is aware that many others in the country don’t have the same privilege.

Huang said one of his close friends working in the floral business received help from another online mutual aid community after his friend’s mother’s accidental fall last month that caused injuries around her thoracic area. The operation cost more than RMB 500,000 (around $74,200), Huang said he donated RMB 7,000 to assist his friend through Tencent-backed insurtech company Waterdrop Inc. (also known as Shuidi).

“I think the most important aspect for me is that someone benefited from such services,” said Huang.

Online mutual aid plans like Xiang Hu Bao takes on a more meaningful aspect—it allows those more fortunate to give back to the society, by donating and pitching in other participant’s medical expenses.

Ant Financial announced last month that its online mutual aid platform had amassed more than 50 million members since its launch in October. Xiang Hu Bao is aiming to have 300 million users—roughly a fifth of the population in China—on its platform in the next two years.

Other Chinese tech titans like, Tencent and Suning have made moves into the mutual aid space over the past year. For example, Waterdrop Inc. closed a RMB 500 million ($74.3 million) funding round led by Tencent in March and is now seeking new funding at a valuation of over $1 billion. The company’s mutual aid platform Waterdrop Mutual has over 78 million members. Meanwhile, Chinese retailer Suning announced last month that it was testing (in Chinese) its mutual aid product “Ning Hu Bao.”

Anyone with a score of 600 or higher in Sesame Credit, the credit scoring system developed by Ant Financial, that meets the health conditions can join the plan. The 600 level is considered a “benchmark” score and is what everyone starts off with when first opt-in to the Sesame Credit system.

The health plans, which cost significantly less than private insurance policies, have gained popularity over the past few years, especially among rural and underserved parts of the country.

Although it is also popular with white collar workers like Huang, Xiang Hu Bao is popular with less well off citizens. For example, some 47% of Xiang Hu Bao’s participants were migrant workers and 31% were from rural regions, Ant Financial said in April.

Significant strides

China has made significant strides in healthcare over the years. In a decade, the rate of basic healthcare coverage went from 22% in 2000 to nearly 95% in 2011.

However, even with improved access to public health care, out-of-pocket payments remain high, and access to medical care for the country’s rural citizens is worse compared to their urban counterparts.

Another couple at the hospital, who declined to be named, had traveled from Inner Mongolia for the wife’s routine check-up after her thyroid surgery. The husband, a gardening worker in his early thirties, said he enrolled in Xiang Hu Bao after a colleague recommended it. He said he pays an annual fee of less than one hundred yuan per person, which is an affordable option for him to get additional healthcare coverage for himself and his three-year-old son.

“It doesn’t cost us a lot of money and it adds an extra layer of protection,” said his wife, who teaches preschool. In her early thirties, lean and fair skinned, she sat on the pavement outside near the hospital entrance playing online mahjong on her smartphone.

Although both her husband and her young son are covered by Xiang Hu Bao, she is not. She’d applied for Xiang Hu Bao and another mutual aid plan Shuidi Huzhu, she said, but was rejected both times because of her thyroid operation, which left a visible scar that runs across the right side of her neck.

“It’s like I’m being blacklisted,” she joked.

One of the kids in the class she teaches received a payout of RMB 170,000 ($25,344) for his treatment for leukemia, the teacher added. Though short of the maximum payout of RMB 300,000 that the family had hoped to receive, it was still a financial burden lifted off of their back.

A worker sweeps the street near China Citic Bank in Beijing April 9, 2019. (Image credit: TechNode/Cassidy McDonald)
Xiang Hu Bao is particularly popular among migrant workers and those who can’t afford more expensive health care options. (Image credit: TechNode/Cassidy McDonald)

For a long time, public knowledge and awareness of health care and insurance remained quite low in China, said You Jia, a life insurance worker from Changchun, capital of the northeastern province of Jilin who now works in Beijing for pan-Asian insurance company AIA Group.

It wasn’t until two years ago that the public became more knowledgeable and aware of health insurance, which had to do with the government’s policy push to improve health care and reduce poverty caused by illnesses.

Online mutual aid plans like Xiang Hu Bao gained traction because they are inexpensive relative to health insurance policies. For those with little understanding of health care products, You said, the cost becomes a much bigger factor.

What Xiang Hu Bao offers seem like a better deal: members only need to put aside a few yuan every month, “a pack of cigarettes or a bottle of liquor” as You puts it, unlike traditional health insurance products that ask for larger sums of money annually. You said, however, such online health plans complement but do not replace traditional insurance.

You believes that with the government further push to improve basic health care and educate the public about health products like insurance, online mutual aid, and other inexpensive health care products will effectively bridge the gap of the urban-rural medical care gap.

Also at Peking Union Medical College Hospital, another middle-aged couple who had traveled from rural Henan province to visit their children said they were unfamiliar with online health plans, or, for that matter, the public health care system.

They said they were illiterate, and received health care the way most residents from their agricultural town did: They paid cash to treat minor ailments at inexpensive community clinics.

In some ways, the couple, who were nervous to speak with reporters and declined to give their names, belong to a demographic group who could be well-served from a mutual aid platform like Ant Financial’s.

But they are also precisely the same kind of people Ant Financial does not want in their fund as it begins to grow: As older adults, they have a higher chance of requiring expensive care. Xiang Hu Bao only allows users between the ages of 30 days and 59 years old and does not admit those with pre-existing conditions.

A man takes a morning walk in Shanghai March 22, 2019. (Image credit: TechNode/Cassidy McDonald)
Xiang Hu Bao only allows users between the ages of 30 days and 59 years old. (Image credit: TechNode/Cassidy McDonald)

Leveling the healthcare system

The purpose of online mutual aid plans like Xiang Hu Bao is to complement public and commercial health insurance plans with wider coverage, rather than provide an alternative to those products, as Ant Financial has emphasized after facing regulatory scrutiny (in Chinese) from Banking and Insurance Regulatory Commission for promoting it as a health insurance product.

Chinese retailer tested its online mutual aid plan “JD Hubao” in November but was forced to take it down after just one day.

While online mutual aid plans are not necessarily patching up all the holes in the healthcare system, there is a clear need for affordable and adequate healthcare plans that such services are addressing.

The existing public health schemes in China cover only a portion of medical expenses, which often still leaves individuals saddled with hefty out-of-pocket payments. On average, Chinese still have to cover around 30% of their medical expenses out of their own pockets according to OECD figures in 2015, which is much higher than that of advanced economies like the US, Japan, and South Korea.

Moreover, the reimbursement of medical fees can vary considerably from urban to rural areas—lower for rural citizens compared to their urban counterparts—which has exacerbated inequality in China’s healthcare system.

Another insurance professional—whose company may soon launch a competing product—agreed to speak to TechNode on background. Health care products that cover critical illnesses could help bridge that gap, however, there is an inherent risk with mutual aid plans: members in the plan share medical costs, so if members exit the program, monthly rates could go up, which would only drive more people to leave.

While online mutual aid is not a new concept in China, the Xiang Hu Bao delivery mechanism is broader via Alibaba’s channels, which gives it an upper-hand in terms of expanding its reaching and growing its user base, the insurance industry worker added.

Additional reporting by Cassidy McDonald.

Nicole Jao is a reporter based in Beijing. She’s passionate about emerging trends, news, and stories of human interest within the world of technology. Connect with her on Twitter or via email:

Cassidy McDonald is a Beijing-based multimedia journalist who covers technology's effect on Chinese society. She tweets at @CMcD123.

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