Medical issues top patient complaints to industry watchdog The government-proposed health-care reform may provide huge business opportunities for the city's 62 medical insurers, but industry experts are urging a tougher regulatory model be applied before it becomes compulsory for everyone to buy medical cover. To meet the demands of an ageing population on future medical expenses, the government last month issued a consultation paper listing six options on reforming the health-care sector. Three of the options involve private insurance cover: encouraging people to voluntarily purchase medical insurance; mandatory medical coverage for all, and a combination of personal medical savings accounts and compulsory medical insurance cover. The other three options take in medical savings accounts, an increase in hospital charges and a government-run social health insurance plan which works like a new tax for health benefit. Leading providers such as Manulife, HSBC and Sun Life have all expressed interest to act as providers subject to more details of how the plans will work. However, while insurers are excited about the business opportunities, government officials and legislators said a new regulatory model for the industry was necessary before it could force everyone to buy cover. In fact, figures reveal that medical insurance was the area that led to the most customer complaints last year: the Insurance Claims Complaints Bureau received 120 grievances in the period. This represents 33.89 per cent of all 354 complaints last year, up from 108 in 2006, 90 cases in 2005 and double the 60 cases in 2004. However, the rise in complaints may also be due to more people buying medical cover. According to statistics from the Hong Kong Federation of Insurers, there were 2.95 million medical insurance policyholders in Hong Kong as of the end of last year, including 1.4 million covered by company plans and 1.55 million who bought their own policies. The two groups may overlap. These policyholders paid HK$7.9 billion in premium income last year, up 12.9 per cent on 2006. Gross claims stood at HK$5.4 billion last year, also up 12.5 per cent on the previous year. Taking the 120 complaints against the 2.95 million medical policies in hand, the figure is hardly a ripple. In many cases, the real problem is that dissatisfied policyholders have no way to make a complaint. One medical insurance policyholder said her insurance company cancelled her policy immediately after paying out a HK$100,000 medical bill to cover the cost of treatment and a big operation. She could not go to the Insurance Claims Complaints Bureau because it only handles cases when insurers refuse to pay, not cancellation of policies. Medical insurers traditionally do not cover people over a certain age or those with pre-existing medical conditions. Those companies that are willing to offer the cover will charge higher premiums. At present, the Office of Commissioner of Insurance licenses medical insurers and also keeps an eye on the financial stability of insurers - but it has little to do with the complaints of unhappy patients, which is the job of the Hong Kong Federation of Insurers through the Insurance Claims Complaints Bureau. The Commissioner of Insurance Clement Cheung Wan-ching admitted there will be changes in the way that medical insurers are regulated if the reform proceeds. 'If we were to embark on a mandatory medical insurance scheme, proper regulatory measures to ensure prudential underwriting and safeguard consumer interest have to be put in place. These considerations will have to be tackled at a later stage,' Mr Cheung said. 'Any initiatives to deepen the existing pool will lead to better risk sharing, economies of scale and product innovation, and will be conducive to the resolution of structural problems such as ambiguous policy wording, uncertainty of renewal or lack of transparency in premium adjustment.' 'The general insurance sector in Hong Kong has hitherto been facing keen price competition, and thus has adequate capacity to cope with the demand associated with new products arising from health-care reforms. 'Public awareness and receptiveness to medical insurance coverage is also likely to be enhanced as a result of the ongoing debate on various options.' Michael Tsui Fuk-sun, the chairman of the Insurance Claims Complaints Bureau, agreed that the government must introduce a new model to regulate medical insurers or more complaints would be the result. 'If medical insurance is to become a mandatory requirement, the type of products must be highly regulated or we are set to see a wave of complaints,' Mr Tsui said. Anthony Wu Ting-yuk, the chairman of the Hospital Authority, preferred the option that combines a mandatory savings account plus an insurance scheme. He believed the government can prevent complaints if it acts as an insurer to provide cover for all. 'If the government makes it mandatory for people to buy insurance, it must make sure there is a single premium and unique conditions in the policy. There should be no exemptions or rejections,' Mr Wu said. 'I think the government may well end up insuring everyone and then it can have a reinsurance arrangement with the private sector. This would make sure everyone has basic medical insurance to provide their basic needs. 'Those who want better treatment or better hospital services can buy the additional insurance cover.' Hong Kong Institute of Certified Public Accountants president Albert Au Siu-cheung said he personally thought the government should provide mandatory medical coverage. 'The private insurance companies operate as profit-making organisations and it is inevitable that they may reject claims. This means some patients may not benefit from the reform. The government should run a mandatory insurance scheme to ensure claims are made in a fair manner,' Mr Au said. However, Sun Life Hong Kong chief executive Roger Steel said a government-run scheme was not an ideal solution. 'If the government is the only provider of a mandatory medical insurance scheme, it effectively does not allow any choice for the public. The beauty of Hong Kong is that it is a free-market economy which allows the public to have many providers to choose from as the competition among will enhance services and benefits of the medical products,' Mr Steel said. He suggested the Hong Kong government should set up something along the lines of the Mandatory Provident Fund to allow private insurers to run the medical plans but be subject to the authority of a government-appointed regulator. Mr Steel also said that the health-care reform plan could take the form of a two-tier insurance system in which basic compulsory insurance provide basic medical cover for everyone at an affordable price while insurers could sell top-up medical insurance products to increase the benefits. Sun Life might be interested in being a mandatory insurance scheme provider if the government announced all the details. Bernard Charnwut Chan, an Executive Council member and a legislator for the insurance sector, said if a compulsory medical insurance scheme was launched there could be no exclusions. 'The government should ensure the mandatory medical insurance scheme covered the entire population without exclusion for the aged or those already suffering from a particular disease,' Mr Chan said. 'This policy should also be fixed at a single price for all so the premium will not increase with the age of the policyholders.' Mr Chan said if the idea were implemented, the size of the pool would spread the risks allowing insurance companies to charge a fair premium price. Michael Huddart, Manulife's executive vice-president and general manager for Hong Kong, pointed out that a mandatory scheme would eliminate exclusion. 'This is why we support a mandatory scheme. This would guarantee a level of coverage to all people covered under the plan and we would not need to have exclusions. Benefits levels would be regulated by the government. Only additional optional cover would be subject to underwriting and possible exclusions for pre-existing conditions,' Mr Huddart said. 'We support the concept of a mandatory medical insurance scheme that is managed by the private sector, but subject to government regulation and oversight.' He said Manulife also would be interested in a role as a provider if a mandatory scheme was launched. Jason Sadler, managing director of HSBC Insurance, said: 'The fact it will be mandatory will mean that there will be a large pool of individuals that will be covered and hence risk will be spread, which will give insurance companies more scope to offer competitive levels of coverage. 'The competitive nature of the free-market economy in Hong Kong works to the customer's advantage in terms of choice and product offerings.'