Some members including Dr KWOK Ka-ki and Mr CHEUNG Kwok-che expressed reservations on using the $50 billion fiscal reserve earmarked to support healthcare reform to subsidize the uptake of private health insurance (“PHI”). They considered it not cost effective to use public money to subsidize people from taking out Health Protection Scheme (“HPS”) plans as the insured might still choose public healthcare services, and as a result, failed to reduce the burden of the public system. Dr KWOK Ka-ki also surmised that given the high administrative fees charged by the private insurers, any such subsidies might benefit more the insurers than the insured. These members suggested that the $50 billion should be used to improve public healthcare services, or provide direct subsidy to elderly persons aged 65 or above in using private healthcare services, as they might not be able to afford continuous health insurance protection after retirement when they needed it most.
Mr CHAN Kin-por held a contrary view. He pointed out that the use of the $50 billion to support HPS would span across 20 to 25 years (i.e. about $2 billion per annum), which, in his view, was so insignificant as compared to the some $40 billion annual subvention from the Government to HA to support and finance the delivery of public healthcare services. It was worthy to note that HPS was designed with a view to safeguarding consumer interests in PHI and private healthcare services, so as to bring about material impact on the overall healthcare system to enhance its long-term sustainability. However, in regard to the stringent core requirements and specifications proposed under HPS, it might not be commercially viable for private health insurers to offer health insurance plans in compliance with those requirements if there was no injection from the Government into the high-risk pool (“HRP”) to buffer the excess risk arising from the participation of high-risk individuals.
The Administration advised that Hong Kong was unique in that both the public and private hospital systems were well developed to provide a comprehensive range of quality services. However, there was a significant public-private imbalance that the highly subsidized public system provided over 90% of all in-patient services (in terms of bed-days), resulting in longer waiting lists and waiting time for services. To provide better choice of individualized healthcare for the public, an objective of HPS was to enable more people who could afford and were willing to purchase PHI to use the readily available private services on a sustained basis. In so doing, the public system could focus on serving its target areas and population groups. The proposal of accepting all subscribers into HPS Plans subject to a reasonable premium loading and an HRP reinsurance mechanism might also eliminate the existing market practice of excluding or pricing out high-risk individuals. The Administration stressed that apart from serving as the safety net for the low-income families and under-privileged groups, the public system would continue to be an alternative available to all for treatment of catastrophic and complex illnesses that required advanced technology and multi-disciplinary professional team work which might not be readily available or might entail very high cost in the private sector.
Some members including Dr KWOK Ka-ki and Dr Joseph LEE maintained reservations on the appropriateness to use public money to assist insurers participated in HPS to absorb the excessive risk of high-risk subscribers. However, Mr CHAN Kin-por remarked that given the already very low underwriting profit margin for PHI plans which currently stood within a range of 3% to 5% as well as the stringent core requirements and specifications for HPS plans, there was concern from the industry, particularly the small and medium-sized insurers, that it might not be viable for them to participate in HPS. He called on the Administration to ensure that the design for HPS plans would be actuarially sound.
Dr KWOK Ka-ki considered that there should be direct Government control over the setting and adjustment of the premium of HPS plans to ensure that the premium would be remained at an affordable level, say, subjecting premium adjustments of HPS plans to the approval of the Chief Executive in Council or the Legislative Council. Mr CHAN Kin-por cautioned against excessive regulation, and considered it more important to ensure pricing transparency under HPS. The Administration responded that given the intense competition in the PHI market and in line with the free market principle, it would be more appropriate for the Administration to further consider the pros and cons involved before putting in place a mechanism for premium setting and adjustment. In addition, the improved transparency and non-discriminatory pricing should be able to keep premium levels in check.
Mrs Regina IP suggested that the Government as an employer should consider making use of HPS to offer medical benefit schemes for civil service eligible persons (“CSEPs”), in particular to those civil servants appointed on or after 1 June 2000 (and their eligible dependants), as they would cease to enjoy civil service medical and dental benefits once they left the service. The proposed arrangement would provide CSEPs with a wider choice of healthcare services, reducing the pressure on public hospitals, and providing a large membership base for the initial implementation of HPS. That said, those CSEPs who had joined HPS should not be deprived of the right to continue to receive treatment and services provided by HA free of charge should they chose to do so. Mr CHAN Kin-por was of the view that CSEPs should be given the choices of migrating to HPS or continuing to receive treatment and services provided by HA free of charge.
The Administration advised that the Food and Health Bureau would explore and discuss with the Civil Service Bureau on the issue at an appropriate time upon finalization of the detailed design and arrangements for HPS.