• Sun
  • Dec 28, 2014
  • Updated: 6:54am
NewsHong Kong

Government plans to offer tax break in bid to cut public health bill

Extra incentive will be offered to families who take out private medical cover to counter rising cost of hospital care amid ageing population

PUBLISHED : Monday, 13 January, 2014, 4:59am
UPDATED : Monday, 13 January, 2014, 2:16pm


  • Yes: 29%
  • No: 71%
13 Jan 2014
  • Yes
  • No
Total number of votes recorded: 174

Tax breaks will form the core of a government plan to cut spending from the swelling public hospitals budget and shift the burden to the private sector.

Government spending on the Hospital Authority has leapt 63 per cent to HK$44.4 billion in the 2013/14 financial year from HK$27.2 billion in 2006/07.

It is currently rising at about twice the pace of inflation.

Future expenditure could be even higher given the rapidly ageing population and an imbalance in the number of doctors in the private and public systems. About 40 per cent of doctors are in the public system and care for 90 per cent of hospital patients, while the other 60 per cent of doctors treat the remaining 10 per cent privately.

The government plan seeks to redress some of that balance.

Individuals who buy a health insurance package covering all dependents - including their spouse, children and parents - will get an extra tax deduction, a Food and Health Bureau spokesman told the Post.

"The measure [tax deduction] is effective and well-targeted in the sense that most of the taxpayers fall within the working population," he said.

The proposal is part of the government's Health Protection Scheme (HPS) under which all medical insurance products will have to meet minimum requirements laid down by the government. The aim is to ease the burden on public hospitals by encouraging people to take out private insurance schemes and use private health care.

The Post revealed last year that health bosses were also planning a HK$4.3 billion scheme to revolutionise the care of patients with long-term illnesses to further ease the burden on the public health system.

They would receive an annual government subsidy of HK$7,200 to buy medical insurance and use private care services.

The Food and Health Bureau estimates 69,800 people with chronic illnesses would qualify by 2016, according to a source.

But a lawmaker and a professor both believe the HPS will remain unpopular with the public and is unlikely to be approved by the Legislative Council.

The lawmaker for the insurance sector, Chan Kin-por, said the effect of tax breaks would be limited as only 37 per cent of the population pays tax and the average salary tax they pay is about 8 per cent. He said a tax allowance of up to HK$20,000 a year would be needed to persuade people to take out the insurance policies.

A professor at Polytechnic University, Peter Yuen Pok-man, said the HPS proposal was unlikely to be approved "under the current political environment".

"The scheme is unpopular and the government is in a weak position and has no mandate vote in Legco," said Yuen, director of the Public Policy Research Institute. He said Hongkongers were unlikely to support medical reform that required them to dig deep into their pockets.

"Mandatory medical savings are the most desirable financing mechanism for an ageing population. However, the political climate in Hong Kong is such that it is almost impossible to implement that at this stage."


More on this story

For unlimited access to:

SCMP.com SCMP Tablet Edition SCMP Mobile Edition 10-year news archive



This article is now closed to comments

Govt is wasting its time. The benefits provided by most HK health insurance policies no longer match the high charges incurred in the private medical sector. Private hospital charges and surgeons' fees are loaded up disproportionately for any patient who wishes to pay for a private or semi private room in a hospital. Fair enough to pay extra for that private room but to charge more for the operating theatre, surgeons, anesthetists, nursing and other misc, charges is unfair and ridiculous because the levels of service and care provided are identical for a patient using a bed in a shared ward. 'captam' has paid for a private health insurance policy for over 30 years but as fast as the premiums have been increased year by year the level of surgical benefits claimable for an operation has fallen in percentage terms of the costs incurred in private hospitals. 10 years ago my insurers met about 85% of the cost of a major operation ( using a private bed ), last year I once again needed surgery classed as "intermediate" for benefits purposes but the insurer was offering only 25% of the estimated surgeon's, hospital & other costs. 'captam, has therefore been compelled to go back into the Government system and is considering dumping his insurance policy at the time of next renewal.
There has to be a shake up of both the medical insurance industry and the doctors and hospital charging mechanisms. Right now it is way out of match and insurers are not meeting costs. One side has to give!
44 billion Hong Kong dollars a year spent on medical care is less than 2% of GDP, which is a shame by any standard. Even the Mainland spends more than 5% of GDP on medical care, and it has to spend a lot on defense which Hong Kong doesn't.
Agree100%. The bill for a recent visit at a private hospital meant the consultant doctor who visited 3 times on the same evening charged for 3 separate visits. This is gouging but appears to be common practice for private hospitals. If the Government wants to encourage the middle class to take out insurance policies then there must be a review of the avaricious charges the hospitals and doctors can charge for their services.
Urban kid
Public health is one of the benefits of living in Hong Kong. The Government has billions in reserve and must continue to support it. I don’t think that many Hong Kong residents will be willing to pay for private medical insurance even if there are tax breaks.
How can they be discussing tax breakes? It's a matter of raising the tax for the working population to afford a reasonable level of health care, don't feed the private clinics and insurance companies who charge insane amounts with even more money.
The best way for a small population like HK is to insure the whole population for medical care through taxes. It's much more cost efficient for everyone.
Other than tax breaks on health insurance what will be most beneficial for the middle class will be tax breaks for rental. The government churns out tax deductions for housing purchases eg. interest payment deduction which also benefits banks and financial institutions. This creates imbalance between those who own and rent flats. Since the government always seem to say that they treasure the middle class they must think of a way to introduce tax breaks on rental. It is unfair to only provide tax breaks to flat owners and ignore the plight of those who rent and are at the mercy of landlords once their rent renewal comes up.
I understand that TSANG had said that he could not introduce tax breaks for those who rent due some complex problems but this is precisely why we require him and his team. Tax breaks for both health insurance and rentals would be very beneficial to the middle class.
Increasing spending on public healthcare solves only part of the problem. Today our system pays too much for the bloated management of the Hospital Authority, and mistreating the frontline staff who do all the hands-on job.
Time to slash the paychecks for the hospital management.
"The aim is to ease the burden on public hospitals by encouraging people to take out private insurance schemes and use private health care." The aim is to move public money into private hands. There is no other reason why that is preferred over putting more public money into an upgraded, improved public health system.
so why are there no tax breaks for child or self education payments ?
Urban kid
Please see this article for ideas for improvement. comparisons.****www.huffingtonpost.com/2013/08/29/most-efficient-healthcare_n_3825477.html
According to Bloomberg, Hong Kong spends just 3.8 percent of GDP on health care per capita, and it tied for the third-lowest among nations surveyed as being the most efficient health care system in the world.
Perhaps Hong Kong could follow Japan’s example and provide a more egalitarian health system for the public and health care providers.



SCMP.com Account