Crowdfunding Can’t Cure China’s Health Care

Rural Chinese are turning to mutual aid apps—but the pool only goes so far.

Chinese line up in the pharmacy of Yueyang Hospital in Shanghai on Nov. 7, 2018.
Chinese line up in the pharmacy of Yueyang Hospital in Shanghai on Nov. 7, 2018. Johannes Eisele/AFP/Getty Images

There’s nothing grimmer than taking a number in a Chinese hospital and realizing a few hundred people are ahead of you in line. That’s a common experience in a country where top-tier public hospitals are restricted to its richest cities. As a result, hundreds of thousands of people a day must travel to places like Beijing or Shanghai from smaller cities to receive dependable treatment. One massively popular online insurance service, backed by the Chinese tech giant Alipay, promises to cut through those lines—and the sometimes crippling costs of care.

For those left languishing in waiting rooms, the sight of a sky-blue Ant Financial logo, a QR code that links to its proprietary Alipay app, and the words “No need to get in line: Make appointments, take numbers, and pay fees here” are a sight for sore eyes. Ant Financial is the highest-valued tech start-up in the world, a $150 billion juggernaut spun out of the massive Alibaba conglomerate.

In October 2018, Alipay launched an insurance product aimed at lower-income patients. Its “mutual aid” service allows for crowdfunding and pooled insurance products to offset costs for larger illnesses not covered by traditional insurance programs. China’s public systems are usually grossly inadequate to cover actual needs, leaving patients paying the bulk of bills themselves or without coverage at all if they seek better medical care in the cities.

More than 50 million users have enrolled in Ant Financial’s Xiang Hu Bao (“mutual protection”) program since it was launched. Users, who must be between 30 days and 59 years old, opt into the system by paying a small sum and can file claims to receive payouts of up to 300,000 yuan, or some $45,000—though the numbers scale down if you’re over 40.

For the migrant workers who make up 47 percent of Xiang Hu Bao users (as of April 2019), mutual aid provides the predictability to offset the hidden costs of financing hospital visits and treatment costs. Alongside new insurance products, Ant Financial also integrated features to allow patients to take numbers and make payments via the Alipay app. That makes hospital access easier for those who lack the personal connections needed to skip the lines—or the money to pay somebody to take a number and wait in place of them.

Xiang Hu Bao clearly comes as a blessing for patients needing a stopgap for medical expenses. However, it may lead to the long-term worsening of existing divisions—with a new technological patina.

Underlying broader health finance trends and the behaviors of frustrated patients are deeply unequal tiers of health care within the public health insurance system. China’s government-sponsored health insurance comprises tiers, which range from basic medical insurance programs for urban residents to the New Cooperative Medical System, which enrolls countryside dwellers. In rural areas, this problem can lead to high out-of-pocket costs combined with subpar care, and official data from 2015 indicated that 44 percent of Chinese households below the poverty line were struggling because of health care costs. Many doctors, even in the cities, only have bachelor’s degrees, with the higher quality of care usually available only in mega-cities like Beijing, driving rural and smaller-city patients to crowd the metropolitan hospitals.

Patchy insurance coverage, complex hospital bureaucratic processes, and insufficient provider services have cultivated an environment where technology companies see gaps they can fill in—and profit from. This is only going to get worse in the future. China’s population is aging at a rate that will test an increasingly strained pension system; individuals and families are looking to shop around more for effective resources that can reliably deliver health and social services. Tech companies like Ant Financial, as well as Tencent, which backs the start-up health service WeDoctor, are promoting polished-looking all-in-one health platforms to meet that need.

Xiang Hu Bao bills itself as a hyperefficient intermediary between cumbersome insurance and health service pipelines and consumers. But as with many tech systems, its users are also its product. The data being provided by users is being used to improve the service—but also to divide customers into those worth covering and those who may be too expensive, old, or poor. Prior to its foray into health insurance, Ant Financial launched car insurance software that allowed users to speed up how they addressed vehicular damage. An Ant Financial system would then evaluate damage from the photo and process claims from within the app. Yuan Qi, Ant Financial’s chief data scientist, told Bloomberg that “AI is being used in almost every corner of Ant’s business. … We use it to optimize the business, and to generate new products.” Those same predictive systems are likely being developed in the company’s ever expanding list of health technology products and the larger reams of health data it is now handling.

When health information is digitized and lower-wage patients are desperate for ways to make insurance work, critical ethical questions are involved in allowing technology companies to evaluate health insurance eligibility, claim processing, and navigating health care policy. For all the efficiency that technology can lend to health care, officials still have to act as a final arbiter of how companies are handling user data. Reports have emerged that WeDoctor is already collecting checkup data from free clinics without properly informing patients.

A key indication that Alipay has broader technological ambitions than just dispensing insurance is the tying of its Sesame Credit system into the health policies. At present, users with a score of 600 or above can participate. This score is calculated using a number of factors: financial health statistics such as timely utility bill payments, a good credit history, and personal financial assets (the primary factor, as with Western credit systems), as well as social data and consumption metrics, which are considered secondary factors. The 600 points needed to qualify a patient for Xiang Hu Bao is middling to good, with 950 being the highest possible credit score.

Though Alipay’s mutual aid program doesn’t rely on personal narratives like U.S. crowdfunding platforms such as GoFundMe, it meets many of the same needs. That makes it fundamentally a poor substitute for long-term health care plans. Ant Financial’s entry into this field has also opened up avenues for less trustworthy players to start marketplaces of their own. Some have already flopped, including a crowdfunding platform started by the delivery giant Jingdong that abruptly shuttered one day after launch, leaving only a notice that existing users would still have their payouts processed but that the product needed improvements.

In the short term, Ant Financial and its competitors can introduce and experiment with innovative solutions and provide an enticing alternative to traditional health infrastructure. But without more careful consideration of how resources are allocated and managed by the hospitals and insurance systems at the core of health care, the problems of pension disparities and resource-starved rural areas will continue to persist. As health insurance data flows to corporations so that patients can shorten hospital visits or ease their financial burdens, technology firms will be relied on to handle increasingly sensitive casework.

With social safety net institutions facing long-term issues of slow fee collection, corruption, and inconsistent coverage, increasing dependency on crowdfunded care and health system start-ups means that firms are taking on more and more of the burden of social safety net government bureaus.

Because Ant Financial and other companies have more profit-driven limitations than government programs, those over 59 or who have more complex diseases are still left without an effective health care finance solution. If platforms like Jingdong’s or apps by even smaller start-ups continue to close suddenly, government officials and health care networks could be left juggling payment problems and angry patients.

GoFundMe’s rise as a source for medical bill financing for many patients has earned recognition as a troubling sign of health care service disparities in the United States. Likewise, the speed with which Xiang Hu Bao and tech-aided medical shortcuts have caught on in China illuminates more long-term systematic problems than it does solve them. Government entities haven’t quickly stepped in to fill regulatory gaps and stamp out bad actors in this emerging health ecosystem.

As a result, patients are not only navigating hit-or-miss private sector solutions but also risk either receiving substandard care or going further into debt due to mishandling of funds by untrustworthy firms. Even with the power of technology, there are no quick and easy magic pills to resolve a divided health care policy.

Rui Zhong is the Program Assistant for the Kissinger Institute on China and the United States at the Wilson Center.

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