Can Government-Backed Huimin Insurance Sustain Its Growth After CBIRC Steps In?

It is no exaggeration to say that Huiminbao is the hottest health insurance product this year.

Not to mentionLocal Governments Rally in Support as “Hui Min Bao” Sweeps Across More Than 50 Cities in Just One Year, with more than 20 insurance companies participating and dozens of third-party platforms involved. In addition to some traditional insurance brokerage firms, the sector has also attracted insurtech companies and internet giants. According to Beijing Business Today, as of now,The total number of participants in various local "Huiminbao" programs has exceeded 25 million, with cumulative premium income surpassing RMB 1 billion.

Behind the prairie-fire momentum, however, lies a polarized enthusiasm for insurance enrollment among residents across different regions.For example, Shenzhen’s “Supplementary Medical Insurance for Critical and Catastrophic Illnesses” had 7.5 million enrollees in 2019. With a permanent resident population of 13.4388 million in Shenzhen that year, the enrollment rate reached 55.8%. In contrast, Lianyungang City’s “Lian Hui Bao” plan saw cumulative purchases by over 200,000 individuals in 2020. Given Lianyungang’s permanent resident population of 4.4069 million, the enrollment rate was approximately 4.6%.

Not only that, Huiminbao has also been questioned as not being a good business.Given the inclusive nature of Huimin Bao (city-specific supplementary medical insurance), policies in cities such as Shenzhen and Jinhua explicitly stipulate that these plans must be operated on a break-even basis with minimal profits. Coupled with high promotional and operational costs and low premium rates, it is indeed challenging for Huimin Bao plans to maintain their break-even point.

Amidst both acclaim and skepticism, Huiminbao continues to flourish across the country.Since November, city-specific supplemental health insurance plans such as Chongqing’s Yuhuibao, Hebei’s Jihuibao, and Ningxia’s Ninghuibao have been launched one after another, sustaining strong public interest.As city-specific supplementary medical insurance (known as “Huimin Bao”) gained rapid momentum, the China Banking and Insurance Regulatory Commission (CBIRC) released the Notice on Regulating Urban Customized Commercial Medical Insurance Business of Insurance Companies (Draft for Comments), which put forward requirements such as strengthening sustainable operations and enhancing professional services, while issuing strict prohibitions against multiple types of non-compliant practices.

How Significantly Will New Regulations Impact Huiminbao? How Far Can Huiminbao Go in the Future? To address these questions, VCBeat has analyzed Huiminbao by leveraging public data and interviewing industry stakeholders, aiming to provide preliminary insights.

Why Has “Huimin Bao” Surged Ahead So Aggressively? This Is Primarily Due to the Product’s"Characteristics of 'Inclusive'"and the government's “Platform Support”, and“Hand in Hand” Between Insurers and Third-Party Enterprises。

First, let us examine inclusiveness.The most distinctive feature of Huiminbao isLow Underwriting Threshold, with no restrictions on the policyholder's age or occupation, and even no health status requirements.Additionally, the Huiminbao'sThe premium rates are also highly competitive.Currently, the vast majority of products on the market are priced below RMB 100, with coverage amounts typically exceeding one million yuan. Some Huimin Bao plans also offer access to more than ten types of health services.In short, as long as you have social security insurance, residents can purchase this policy for just 100 yuan regardless of their health status, with coverage limits reaching up to one million yuan.

Let’s now turn to government support.At present, the government has been involved in the city-by-city rollout of Huiminbao insurance. As a strong endorsement of trust,Government endorsement has increased public trust in Huiminbao., and are more inclined to believe in the authenticity of its “inclusive nature.” Taking Shenzhen’s “Supplementary Medical Insurance for Critical and Catastrophic Diseases,” the earliest Huiminbao product, as an example, market response was lukewarm when it was first launched in 2015. However, with strong promotion by the Shenzhen Municipal Government, the number of enrollees rose from 4.86 million to 7.5 million by 2019, representing a 54.32% increase.

Finally, let’s examine the participating insurance companies and third parties.“Over the next three to five years, the number of enrollees in Huiminbao (city-specific supplemental medical insurance) is projected to reach 100 million. This represents a substantial user base for both insurers and third-party insurance brokers and insurtech companies,” Qi Ming (pseudonym), head of an insurtech firm involved in the development of multiple Huiminbao products, told VCBeat. He noted that it is precisely this significant market potential that provides insurers and third parties with strong incentives to promote Huiminbao.

With attractive insurance conditions for users and strong promotional incentives from participating parties, Huiminbao is gradually “expanding its territory.”However, the key questions are whether Huiminbao insurance truly enables policyholders to “leverage small premiums (tens of yuan) for substantial coverage (millions of yuan in sum insured),” whether insurers and third-party operators are profitable or operating at a loss, and what role the government plays in this arrangement. These issues are critical to the healthy, sustainable development and operation of Huiminbao insurance.

Premiums for various local "Huiminbao" supplementary medical insurance plans typically range from tens of yuan, yet coverage limits can reach millions of yuan.For example, Jinghui Bao requires an annual premium of only RMB 79 per person, with coverage up to RMB 2 million. Such an affordable price led to nearly 900,000 enrollments within less than a month of its launch.

HoweverAfter carefully reviewing the detailed provisions of various local Huiminbao plans, it becomes evident that these insurance products still present numerous drawbacks for residents.To be eligible for enrollment, one must first have either Urban Employee Basic Medical Insurance or Urban and Rural Resident Basic Medical Insurance. Other limitations include exclusions for pre-existing conditions, high deductibles, low actual reimbursable coverage amounts, and narrow scope of coverage.

AboutPre-existing conditions are excluded from coverage, which corresponds to the feature of Huiminbao that allows enrollment with pre-existing illnesses.“It is important to recognize that Huiminbao is also a business. Despite its inclusive nature, it would not be sustainable if individuals with pre-existing conditions were all able to enroll and receive claims payouts,” said Qi Ming.

RevisitThe deductible for Huiminbao typically ranges from RMB 10,000 to over RMB 30,000., with most deductibles exceeding RMB 20,000.Not only that, the Huiminbao'sReimbursement is also subject to certain restrictions., for instance, coverage is only applicable to the out-of-pocket portion (within the scope of social insurance) remaining after basic medical insurance reimbursement, and reimbursement ratios vary, with many products covering only 70% to 80% of eligible expenses. Taking Rong Hui Bao as an example, during the policy period, insurance benefits are payable only for the patient’s share of medically necessary inpatient expenses incurred at public hospitals that fall within the scope of basic medical insurance, after compensation from both basic medical insurance and critical illness insurance.

“Before purchasing Ronghuibao, I noticed a clause with a 20,000-yuan deductible. This means that within a policy year, for medical expenses covered under Ronghuibao after reimbursement by basic medical insurance, the insured must first pay 20,000 yuan out-of-pocket, and then 75% of the remaining amount will be reimbursed. Amounts paid by other commercial insurance policies that meet the claim conditions of this product can also be counted toward the deductible,” a Chengdu resident told VCBeat.Ronghui Bao only provides reimbursement when an individual’s total out-of-pocket medical expenses approach or exceed RMB 40,000. Given the relatively low actual reimbursable amount, it is not applicable for hospitalizations due to minor illnesses.

In terms of coverage, many city-specific Huiminbao plans only cover items within the national medical insurance catalog., only a few cities’ Huiminbao plans, such as those in Shenzhen and Chengdu, provide reimbursement for specialty drugs used in the treatment of malignant tumors. Therefore, overall, the coverage scope of Huiminbao remains relatively limited.

Certainly,As with other types of insurance, no single product can provide comprehensive coverage.. As an inclusive insurance product, Huiminbao’s core function is to provide coverage for individuals facing critical illnesses. “The design of Huiminbao-type productsThe primary objective is to prevent the widespread occurrence of poverty caused or exacerbated by illness, rather than to cover all medical expenses for individuals.“Qi Ming told VCBeat.

So, is Huimin Bao worth insuring for users? "For users without commercial medical insurance, Huimin Bao can effectively fill the gaps in social security. Among them,Elderly individuals without commercial medical insurance, those who have been denied coverage or offered deferred underwriting by commercial insurers, and white-collar employees whose employers provide group medical insurance but who lack personal commercial coverage are all suitable candidates for purchasing this insurance."Yang Zhenyu, a senior insurance broker at MetLife Insurance, told VCBeat."

On one hand, Huiminbao has sparked a boom across various regions; on the other, there is intense debate within the industry over its profitability.

According to Bao Guancha, Shenzhen's "Supplementary Medical Insurance for Critical and Major Diseases"Having operated for five years, it has remained in a state of loss.In September this year, Huijiabao, which had been online for just over a month, announced that it would not be able to relaunch due to relevant policy restrictions. This means that Huijiabao has become the first “Huiminbao” (inclusive health insurance) project in China to fail prematurely.

Given the profit-driven nature of business, why are insurance companies and third-party enterprises vying to participate in ventures that may not be profitable?

“The primary objective of insurance companies is customer acquisition; rather than focusing on immediate profits, they place greater emphasis on secondary conversion sales.“Huiminbao, backed by the government, can rapidly reach a broader population, making it a high-quality customer acquisition channel,” Zhang Xinyao (a pseudonym), head of an insurance company involved in developing Huiminbao projects, told VCBeat.

andFor third-party insurance intermediaries and insurtech companies, promoting Huiminbao primarily serves to acquire customers at low cost, expand business coverage, educate the market, and gather operational data.

In other words, for insurance companies and third parties, as long as they can “break even” or experience slight profits or losses, it is considered an acceptable range.The core objective remains a strategic consideration for enterprises, namely to leverage Huimin Bao (city-specific supplemental medical insurance) for marketing and customer acquisition, thereby expanding the market for other profitable commercial insurance products.

Therefore, how should product design be approached to avoid significant losses and even achieve a slight profit?

“Calculating the break-even point requires actuarial techniques and substantial data support,” said Zhang Xinyao. “In addition to these complex calculation methods,”The most intuitive indicators of whether Huiminbao can achieve profitability are its covered population and pricing.

First,The number of insured individuals is a critical factor in determining whether Huiminbao can establish an effective risk-pooling mechanism.Given the affordable pricing of Huiminbao (city-specific supplemental medical insurance) and its open eligibility criteria, a participation rate of 70% to 80% is generally required to effectively spread risk. However, the challenge lies in the fact that older adults are more prone to severe illnesses than younger individuals, leading to a higher proportion of elderly enrollees. Meanwhile, younger people tend to have lower insurance awareness. This demographic imbalance causes the overall claim payout amount to gradually increase. Therefore, product design must incentivize greater participation from younger individuals.

Second, regarding pricing.As mentioned above, whether young people can be attracted to purchase insurance is a special consideration for Huiminbao. If the willingness of young people to participate in insurance is not strong,If the proportion of insured individuals aged over 40 is excessively high, it leads to an elevated overall disease risk within the insured population, necessitating an upward adjustment in premium pricing. However, higher premiums would dilute the inclusive nature of Huimin Bao (city-specific supplementary medical insurance).“Many companies have rushed into the Huiminbao sector without sufficiently detailed product design, posing challenges to its subsequent operations,” said Zhang Xinyao.

It is evident that, although both insurance companies and third-party enterprises strategically use Huiminbao as an entry point to extend their reach to broader populations and scenarios, thereby facilitating the expansion of other business lines,"During the operational process, numerous pain points and challenges remain."

Huiminbao has achieved such rapid breakthroughs, largely due to government endorsement and backing. Why are local governments across the country vigorously promoting this inclusive medical insurance product?

From a policy perspective.In March this year, the State Council issued the "Opinions on Deepening the Reform of the Medical Security System," requiring that by the end of 2030, China will establish a medical security system with basic medical insurance as the main body, medical assistance as the safety net, and supplementary medical insurance, commercial health insurance, charitable donations, and mutual medical aid developing together."Hui Min Bao," as a crucial component of supplementary medical insurance, has garnered significant attention from local governments across China.

From the perspective of the health insurance market.In 2018, the total revenue of the national medical insurance fund reached RMB 2.109 trillion, with total expenditures amounting to RMB 1.7607 trillion. The growth rate of medical insurance revenue was 17.61%, while the growth rate of expenditures stood at 22.08%. As the expenditure growth outpaced revenue growth, pressure on the medical insurance fund intensified. In response, regulators have frequently introduced policies in the past two years to encourage the development of commercial health insurance. For instance, this January, the National Healthcare Security Administration and 12 other departments jointly issued the “Opinions on Promoting the Development of Commercial Insurance in the Field of Social Services,” proposingBy 2025, China's health insurance market aims to reach a scale of RMB 2 trillion.

It is precisely for these reasons that local governments’ enthusiasm for Huiminbao (city-specific supplementary medical insurance) has only continued to grow. However, in most Huiminbao projects, government departments merely provide public endorsement without deep involvement, which has directly affected enrollment rates.

“Beyond endorsement, the industry widely expects the government to de-identify and release medical insurance data, establish industry standards, and more.“Zhang Xinyao stated that insurance companies urgently need access to local medical insurance data provided by the government for actuarial analysis and risk control development, thereby providing crucial support for the sustainable operation of Huiminbao (inclusive supplementary medical insurance).”

Since its inception, “Huiminbao” has been constantly compared by the public with “Million Medical Insurance” and “Xianghubao.”

“Huiminbao and million-yuan medical insurance are not mutually exclusive.” Qi Ming stated that, from the perspective of top-level design, Huiminbao and “million-yuan medical insurance” address issues at different levels.The positioning of Huiminbao is "inclusive" and "supplementary."It addresses the out-of-pocket expenses within the scope of medical insurance coverage, building upon basic medical insurance and critical illness insurance. And“Million Medical Insurance” relatively focuses on breaking through the social security catalog., covering reimbursable items such as targeted therapies, high-cost imported drugs, and imported medical devices. Additionally, “Million Medical” insurance offers higher coverage limits, serving as a further tier of supplemental protection.

andThe emergence of “Hui Min Bao” (inclusive commercial health insurance) will have a significant impact on “Xiang Hu Bao.”As an online mutual aid product, “Xianghubao” is a type of mutual aid agreement where funds are collected to cover the medical expenses of members who fall ill, without strong regulatory oversight or long-term third-party supervision. However,"Huiminbao" is a formal insurance product that offers superior performance in terms of risk management, stability, and government endorsement.. Furthermore, insurance companies are subject to strict profit margins when bidding for government-sponsored supplemental health insurance programs, thereby offering a price advantage.

“Based on this, insurance companies can achieve more sustainable operations through actuarial science and product design, whereas many internet platforms may ultimately cease operations due to an inability to identify a viable profit model. ‘From the perspective of overall operational mechanisms, the cost structure of Huimin Bao (city-specific supplemental medical insurance) has become very similar to that of online mutual aid products,’ said Qi Ming.”

However,Most online mutual aid products are indemnity-based, whereas Huiminbao (inclusive supplementary medical insurance) is reimbursement-based, indicating that there is still room for their coexistence.Currently, some online mutual aid products are transitioning to reimbursement-based models, leading to greater homogenization with Huiminbao (city-specific supplemental medical insurance) and potentially facing the risk of being “absorbed.” As a result, major internet insurance platforms are increasingly ramping up their investments in Huiminbao.

As for whether Huiminbao will have a significant impact on Xianghubao, it ultimately depends on their subsequent operational performance.

During the frenzied expansion of Huiminbao,In addition to the aforementioned profitability challenges, Huiminbao also faces issues such as severe product homogenization and intense competition.Moreover, as inclusive medical insurance products, many local Huimin Bao plans still lack endorsement from local government authorities. This has posed obstacles to the sustainable operation of Huimin Bao.

From the consumer's perspective, a prevalent issue with various local "Huiminbao" supplementary medical insurance schemes is the lack of risk disclosure.“Supplementary medical insurance is a reimbursement-type insurance product, which in principle does not allow for duplicate claims; therefore, purchasing multiple similar products may preclude simultaneous reimbursement. However, during the sales process of Huiminbao (inclusive commercial health insurance), such disclosures were generally not provided,” stated Zhang Xiaoyao.The lack of risk disclosures can easily lead to discrepancies between the actual scope of reimbursement provided by insurance companies and consumers’ understanding, thereby triggering claims disputes and consumer complaints.

Additionally, the deductibles associated with the Huimin Bao plans mentioned earlier are often overlooked by many consumers. Yet, most promotional pages for these plans lack prominent disclosures regarding this aspect.

From the perspective of insurance companies, there is serious homogenization among Huiminbao products.“Currently, the coverage of Huimin Bao (inclusive commercial health insurance) products across various regions is extremely similar, differing only by one or two additional or fewer covered liabilities. Insurance companies have flocked to the market en masse, resulting in scenarios where multiple insurers launch several Huimin Bao products in the same city, and where multiple subsidiaries under a single insurance group compete for the same business.” In Zhang Xinyao’s view,The biggest problem caused by product homogenization is that Huiminbao fails to meet the differentiated healthcare needs of residents in various regions.

“From the government’s perspective, the local government departments currently leading Huiminbao initiatives are not uniform. ‘This point also needs to be clarified in regulatory documents. Endorsement by provincial and municipal governments carries greater weight and is more conducive to boosting public enrollment enthusiasm; meanwhile, local healthcare security administrations possess detailed basic medical insurance claims data, which facilitates more refined product pricing. Therefore, it is necessary to clarify whether a single entity should take the lead or whether multi-party joint endorsement is preferable, so that the public clearly knows whom to approach when issues arise,’ said Zhang Xinyao.”

As hidden concerns come to light, how to regulate “Huiminbao” (city-specific supplementary medical insurance) has become a key issue for the industry. Consequently, relevant policy documents are being accelerated.

In the "Draft Opinion" recently released by the China Banking and Insurance Regulatory Commission, regarding HuiminbaoEmphasized the requirements for strengthening sustainable operations and delivering professional services.Guided by this core principle, the Draft Opinion sets forth regulatory requirements for the operation of Huiminbao from multiple perspectives.

First, in terms of standardizing business practicesThe Draft Opinion proposes to include multiple common regulatory violations on a supervisory blacklist, such as engaging in malicious price-undercutting competition, making false commitments, misleading consumers, delaying or reluctant claims settlement, conducting false advertising by impersonating government entities, and leaking or unauthorized use of insured persons’ information. “Standardized operations are of great significance to the healthy development of Huiminbao,” said Qi Ming.In addition to fostering trust among residents, the standardization of Huiminbao (city-specific supplementary medical insurance) can also encourage industry participants to design products from a long-term operational perspective.

Furthermore, regarding the consolidation of primary responsibilities.“The Draft Opinion” requires that the head offices of insurance companies assume management responsibility for customized medical insurance business; coverage plans and underwritten products of branch offices must be submitted to the head office for review and approval, and obtain an authorization letter, an actuarial opinion, and a legal opinion from the head office.The implementation of responsibilities will facilitate the subsequent operation, maintenance, and claims processing of Huiminbao (inclusive commercial health insurance), while also aiding corporate management and preventing cutthroat competition."Qi Ming stated."

ThenTo leverage market mechanisms in serving public welfare and social security, the Draft Opinion also proposes corresponding regulations.In this context, insurance companies offering customized medical insurance services must not only strictly adhere to regulatory requirements but also follow the principles of commercial insurance operations and market-oriented practices. They should tailor their approaches to local conditions, ensuring that coverage plans reflect regional characteristics and align with the actual healthcare needs of the insured population.

Finally, strengthen the provision of professional services in sustainable operations.Insurance companies should conduct reasonable risk assessments and clear analytical judgments for customized medical insurance business. They should also possess stable, professional, and standardized service capabilities, as well as information systems commensurate with their operations, to meet the ongoing demand of insured individuals for healthcare coverage services. Insurers must strictly fulfill their obligation to provide product disclosures and ensure adequate risk warnings.

With Regulatory Guidelines on the Horizon, Where Is the Future of Huiminbao Headed?

As population aging continues to deepen, a gap persists between the existing basic medical security system and commercial health insurance, making it difficult for low-income and elderly populations to mitigate health risks through individual means."Huiminbao," as a form of supplemental medical insurance, will serve as a bridge connecting basic medical insurance and commercial health insurance.

“Supporting the development of inclusive medical insurance products is, in itself, a way to alleviate the burden on basic medical insurance and pave the way for future reforms,” said Zhang Xinyao. As more and more cities begin to develop customized insurance plans,Customized insurance itself will continue to evolve and, under the guidance of new regulatory rules, embark on a path of standardized development.

In this process, in what direction will Huiminbao evolve? In response to this question,"Huiminbao" should be viewed within the context of health insurance.Based on the trends in health insurance in recent years,Most products exhibit a trend of progressively decreasing premiums.This is primarily because insurers aim to rapidly acquire customers and boost sales volumes by offering lower premiums.

Certainly,Lower premiums also imply reduced coverage scope and level of protection.Due to the difficulty insured individuals in China currently face in noting and distinguishing the differences among similar insurance products, coupled with certain embellishments in insurers’ marketing communications, policyholders often realize only when filing claims that there is a significant discrepancy between their expectations and the actual outcomes. This undermines customer experience and leads to non-renewal of policies.

Therefore, under the subsequent regulatory framework, how to optimize Huiminbao products has become a critical issue for all stakeholders. Because,Only business activities that do not incur losses are sustainable.To uphold the inclusive nature of Huiminbao,Local governments must also continuously monitor and evaluate the impacts and lessons learned from integrating inclusive medical insurance products with local basic medical insurance schemes, submitting regular consolidated reports to inform national policy decisions by the National Healthcare Security Administration regarding whether and how to intervene in the inclusive medical insurance framework, thereby guiding the healthy development of Huiminbao.

Looking back on the rapid expansion of “Huiminbao” (city-specific supplementary medical insurance) over the past year or more, it clearly reflects new breakthroughs and possibilities in the health insurance market. Along this journey, health insurance will continue to face numerous difficulties and challenges. Therefore, careful cultivation and guidance by all participating parties are particularly crucial. As the industry gradually moves toward a virtuous cycle, Huiminbao and other tiers of health insurance will inevitably establish a new ecosystem for medical security.