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China's Alipay, WeChat pilot access to national health insurance schemes

2020-01-22 13:56 Wednesday

WeChat Pay and Alipay, the two biggest players in China's omnipresent mobile payments industry, have introduced pilot schemes in seven provinces and cities around the country that allow citizens to access national healthcare services including insurance and test fees.

According to the latest reports, the collaboration has been introduced in association with the National Healthcare Security Administration. The agency is currently issuing electronic social security certificates which will grant citizens access via their mobile devices.


These electronic social security cards can effectively replace physical versions in the areas where the pilot program is being implemented. Commentators say that this is just the latest example of China's push towards the digitization of everyday transactions.

The expansion builds upon existing updates to other public services which have been taken online including social security expenses, registration fees for insurance, training fees, and other health insurance-related payments. Analysts estimate that the total value of China's health insurance market could reach U.S.$ 193bn by 2020, with affiliate sectors such as insurance asset management also growing at a fast rate.

China has already offered over-the-counter medicine delivery via local service platforms such as Meituan Dianping and Alibaba's Ele.me. The digitization of such payments and processes comes at a time when China's demographics are rapidly aging. Estimates by some predict that within eight years, the country's senior citizen population will double, with 324m individuals over the age of 60.

At the same time, China's younger generations now have more spare income to cover the costs of specialized medicines, biomedical devices, and services for their aging relatives, due to steadily rising earnings and the legacy impact of China's "one child policy". 

Furthermore, the healthcare's digitization of will add to the amount of data available, that can be leveraged to create more targeted algorithms that can efficiently manage the country's huge population.

While healthcare in the United States is the 2nd biggest sector by market cap, it ranks 8th in China, suggesting that it is still in its early development phase. Compared to North America, many local companies in this sector are part of complex, larger organizations that operate in diversified business segments, creating large-scale vertical integration and overlap.

At an industry level, pharmaceuticals makes up the biggest part of the healthcare sector in China at around 55 percent, followed by providers and services at 14 percent, and life sciences tools and services at 13 percent.

Chinese healthcare is supervised at a national level and guided by the idea that citizens are entitled to receive basic healthcare. It is local governments, however, that are responsible for implementing and funding such healthcare services. Many citizens therefore rely on health insurance for their everyday needs.

The nation's healthcare sector only properly began privatizing in the 90s. Today, it's a vast ecosystem hosting the world's second-biggest pharmaceutical market by size. China's healthcare industry is projected to be worth U.S.$ 2.4tr by the end of the next decade. Its development in the next few years will be tied to expanding domestic demand and growing its global reach.

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