The young, the old and those in the high-risk category are expected to receive incentives and subsidies under the new voluntary medical insurance scheme, to be supported by HK$50 billion over 25 years. The government wants the subsidies and incentives to cover at least 500,000 people, a person familiar with the plan said. The HK$50 billion set aside for the health-care financing reform would be enough to cover the plan for 25 years, the person said. The fund would be used in three areas: to subsidise the premiums of policyholders when they reach the age of 65; to subsidise the premiums of those in the high-risk category, including people with pre-existing conditions; and to provide incentives for young people who buy into the plan early. High-risk customers are defined as those whose medical costs are expected to be 200 per cent more than those of healthy people. The Food and Health Bureau will soon roll out its long-awaited health-care reform, aiming to relieve pressure on the overstretched public system by encouraging more people to use private services. Under the voluntary scheme, insurers will have to provide guaranteed policy renewal and cannot exclude those with pre-existing conditions. The standard plan will provide coverage for packaged medical services at private hospitals. The four new private hospitals being planned will be required to provide general ward services for at least 30 per cent of beds. An ageing population is creating a challenge for the government in the form of rising medical costs. While 34 per cent of the population is insured, the ratio is only 4 per cent among people aged over 65. And just 5 per cent of the uninsured elderly population use private hospital services, compared with 60 per cent of those who are insured. Focus group studies by the bureau found elderly people were worried about a sharp rise in premiums and whether they could afford them when they retired. The person said the rationale behind the voluntary scheme was to encourage Hong Kong people to sign up for health insurance at a young age and to stick with it into old age, when they were likely to need it most. 'The challenge is to keep the people on the plan ... if, in the future, our elderly people are insured, this will help reduce stress on the public system,' the person said. 'Consumer protection elements such as guaranteed renewal, government supervision of the scheme and the ability to transfer the plan from one company to another all work together to avoid abuse and strengthen the scheme's continuity.' The government will consult the public about whether a savings element should be included. One option is to require policyholders to save, with the funds to be used only to pay the premium after they turn 65. Another option is voluntary saving, with no stipulation as to its use. But if policyholders do not want to contribute to a savings account, they can still receive a subsidy if they continue to pay the premium after they turn 65. The subsidy would be proportional to the subscription period, so those who have been with the plan for longer would receive more subsidies. The HK$50 billion earmarked for the health-care financing reform is expected to support the voluntary scheme for about 25 years, with an annual subsidy of about HK$2 billion, the person said. The government has yet to make a final decision on the details of the scheme. 'The public will ask: is the government dumping the HK$50 billion into the sea? The answer is, if we can encourage more people into the private market, with better consumer protection, the public sector will have resources spare for more needy patients. Public health-care spending will increase. In the private market, those who can afford insurance will have more choices and enjoy shorter waiting times,' the person said. Under the voluntary scheme, policyholders will be able to transfer their plans from one company to another. And all participating insurers will have to make their charges and income transparent. 'Every year, insurers will have to publicise their premium revenue, expenses on claims, administrative fees and commission so that customers can make their own choices,' the person said. Other features of the scheme include a three-year 'waiting period' before pre-existing conditions can be fully covered - from zero in the first year to 25 per cent repayment of bills in the second, 50 per cent in the third and full coverage in the fourth year. To avoid abuse, policyholders would have to pay a 20 per cent co-payment on the first HK$10,000 in benefits and 10 per cent for the next HK$90,000. No co-payment would be required for sums over HK$100,000, meaning the maximum would be HK$11,000 per claim. The scheme would provide guaranteed renewal and a 'no-claim bonus' to encourage people to stay healthy. An annual premium of HK$1,085 is proposed for people aged 20 to 24, up to HK$10,514 for those over 85.