Let private insurers help ease health burden

Stuart Harrison says public sector alone can't cope with ageing population

PUBLISHED : Wednesday, 30 January, 2013, 12:00am
UPDATED : Wednesday, 30 January, 2013, 2:13am

With much debate lately about relative income levels and quality of life in Hong Kong, the issue of health care for an ageing population is going to remain a priority for the public and policymakers alike.

In his policy address, Chief Executive Leung Chun-ying called for the sustainable development of our health-care system, noting that our ageing population is raising demand for services, while our medical costs have risen alongside public expectations.

The Hong Kong government is allocating more funds to health care. Last year, it gave an extra HK$2.54 billion to the Hospital Authority, raising its annual recurrent subvention to HK$40.4 billion.

The Census and Statistics Department projects that the number of Hong Kong people aged 65 or over will reach 2.12 million by 2031, accounting for about 26 per cent of the total projected population. This trend will put pressure on our personal savings, pensions and health insurance intended to support wage-earners into their increasingly long retirement.

And, as officials and financial providers everywhere are concluding, purely public provision is increasingly going to fall short, putting an onus on the government to find new ways of working with the private sector, and on individuals to take ever greater responsibility for their own support in later life.

Relying on the traditional Asian extended families to support the elderly is no longer an option, in Hong Kong or elsewhere. The East-West Center, for one, has warned that the low childbearing rate in Hong Kong and mainland China could lead to a smaller working population that can support dependents in future.

Leung acknowledged in his address that "public-private partnership in health-care services can foster healthy competition and co-operation", and said the Hospital Authority would study the feasibility of further service outsourcing to the private sector.

On the mainland, the government has collaborated with commercial insurers to extend its health coverage to the rural regions. While mainland China still faces further hurdles in reforming its health-care system, vice-minister for health Liu Qian noted, "Based on global experience, it is not possible to fully rely on basic medical insurance from the government. Opening it up to commercial insurance products can be more effective."

China's concerns about public health care and provision for the elderly are not unique. The problem is that officials everywhere tend to take a top-down approach in developing public welfare systems. Yet, the bottom-up influence of the private sector, aggregated out of millions of individual choices, may ultimately allow for more effective, tailored and targeted provision.

The question is not whether the private sector will be involved, but where and how. Private-sector involvement can reduce an increasingly onerous, even destabilising, burden on the public purse.

Across-the-board tax increases and rising levies to support better and longer-lasting care for the elderly seem politically impossible in Europe and Asia alike, as well as anathema to policymakers in jurisdictions like Hong Kong and Singapore that have long been bastions of free-market laissez-faire principles.

Strengthening public-private partnerships seems the only way forward. But this requires both policymakers and private providers to educate and guide the public.

It is encouraging to see that, after rounds of discussions, the Hong Kong government has announced that it will put forward a proposal on the Health Protection Scheme, studying the possibility of providing financial incentives or subsidies to encourage people to buy health insurance.

The private sector stands ready to contribute experience and expertise. If the public sector has accepted in principle the involvement of private partners, it should accept the logical corollary and involve them at policy level too. Both sides can only gain.

Stuart Harrison is CEO at AXA Hong Kong