The paper, unveiled by Secretary for Health and Welfare Yeoh Eng-kiong, proposed individual 'health protection accounts' to cover medical bills after retirement. Each account would be for a worker and spouse, with mandatory contributions from the individual of one to two per cent of earnings from age 40 to 64.

The savings could not be used until the age of 65 and could then cover medical and dental care based on public sector rates, or to buy medical and dental insurance. Unused savings would be passed to relatives.

However, unionist lawmaker Chan Yuen-han warned that the extra contribution would hit people too hard. 'The working classes have been leading a difficult life since they had to start making [five per cent] contributions to the Mandatory Provident Fund this month. Many have had a pay freeze for the past few years. I hope the Government is not eyeing the money in people's pockets. They are already quite panicky,' she said.

Associate professor Kwong Kai-sun, of the Chinese University's department of economics, said the scheme would not necessarily do what it was intended - reduce the Government's bill for health-care costs. 'The costs for advanced medical treatments and drugs are so expensive that I really wonder how much the two per cent [contribution] can cover.'

However, Dr Yeoh said the proposals would not be implemented overnight. A study of the savings plan would begin next year and would take about 18 months. A report is expected by 2003 for consultation.

Dr Yeoh said he believed it was the most feasible scheme requiring a low savings rate. The scheme differs from Singapore in that the contribution there is six to eight per cent and it can be used before retirement.

'If we lower the contribution rate further, then I think the money that we get can be quite meaningless. After all, we are not talking about an insurance scheme. We're just requiring each person to save a little bit of money for their health-care needs when they retire,' Dr Yeoh said.

He reaffirmed the Government's commitment to spending on public health, meaning there was no need for drastic hospital fee increases. 'We feel that there should be no changes. The present system in the next decade should be sustainable.'

He said that after the fee review, which had started and would take about 18 months, adjustments would be implemented in phases. 'There is still room to manoeuvre and we can, step-by-step, incorporate new ideas, such as private insurance.'

At present, 40 per cent of public hospital patients, mainly chronically ill or mental patients, cannot afford even the heavily subsidised rate of $68 per day.

The former legislator representing the medical sector, Dr Leong Che-hung, and Medical Council chairman Dr Lee Kin-fung criticised the paper for being 'skeleton proposals rather than having much substance'.

But Dr Yeoh said the document did not go too much into detail 'because we believe the details can follow'. 'It's just to make sure there's a framework so that people understand that we're looking at the system in a comprehensive manner and these are the components that need to be addressed.'

The consultation paper was released 20 months after the controversial $7 million Harvard Report, which called for two compulsory 'risk-sharing' medical insurance schemes, including one for long-term medical care.

Dr Yeoh said the Harvard Report had provided a broad framework for the consultation document. 'It was a very good report in doing the research and identifying the issues of the present health-care system. It brought on a lot of discussion in the community and a recognition of the problems of long-term sustainability.'