Big international and local insurance players – including AXA, AIA and Cigna – are jumping aboard Hong Kong’s big new push to create affordable private medical coverage and take pressure off the city’s overburden public medical system. Eleven insurance companies contacted by the South China Morning Post confirmed that they have been approved to join the city’s HK$10 billion (US$1.3 billion) new health insurance programme, which kicks off on April 1. The others are Manulife, Prudential, Zurich, FWD, Bupa, BOC Life, FTLife and Bowtie. Under the new Voluntary Health Insurance Scheme (VHIS) – seen as a milestone in health care in the city – participants will get an annual HK$8,000 tax break per family member put on the plan. Hong Kong residents – totalling about 7.3 million people – have access to public medical coverage, which includes doctor visits at clinics, hospitalisations and surgeries. Taxpayer dollars cover 90 per cent of costs, meaning some operations might cost one-tenth as much as at private hospitals. The city public hospitals are swamped by people needing medical attention, meaning non-urgent surgeries may be delayed up to years. Meanwhile, clinic visits may take many hours of waiting. The government-backed VHIS hopes to alleviate some of that stress by offering those of higher means tax incentives to buy into the private system. Public hospitals’ staff shortage can be solved with ‘Hong Kong model’ rather than imported ideas, executive councillor Lam Ching-choi says The programme also ensures older Hongkongers have the option of private health insurance past 60, the age when some private plans cut off coverage and have a lifetime cap for compensation. Under the VHIS, policyholders will be covered up to 100 years old, with an annual compensation of up to HK$420,000. The new programme isn’t expected to save taxpayers money because of the tax incentives. The motive behind the push is more to take pressure off the public health care system, with a price tag of HK$78 billion in 2015 that is expected to grow to HK$127 billion in 2025. In a survey last month, AXA found that 82 per cent of respondents said they would consider buying a VHIS plan. Also, 49 per cent of people said they would prefer private plans because they believe they offer better services. But a similar number of respondents said they prefer public hospitals because of savings. Mydy Lai, a 55-year old hairdresser who has no private medical insurance, said he would consider buying a VHIS insurance plan. “The tax incentive is one of the factors but not the major one. It is more important to review the details of the medical plan to see if it can really give me a good medical insurance coverage,” Lai said. But Au Son-yiu, a 74-year retired stockbroker, said he would not be interested. Hong Kong’s health care system is teetering on the brink. What’s wrong with it, what can be done to fix it and will the budget provide some answers? “I have some medical plans which offered me very good coverage. I do not think the VHIS has a very comprehensive coverage,” Au said. “I have retired. The tax incentive is not important to me. It is more important to have comprehensive medical coverage.” David Alexander, the chairman of the Task Force on Healthcare Reform of Hong Kong Federation of Insurers, said he expects about 30 Hong Kong insurance companies will offer VHIS plans. “The tax incentives and the government’s approval of the products will bring up awareness of the medical insurance,” Alexander said. The government expects about 1.5 million people will buy VHIS plans over the next three years. Of those, about 1.1 million will move from their current private plans -- about half of the total private policy holders -- and another 400,000 will be buying private plans for the first time, Secretary for Food and Health Sophia Chan said on a radio programme last week. Industry players expect the basic plan will have annual premium of HK$4,800, while so-called “flexible” plans with more features will have higher premiums. The total annual premiums expected from the programme would be HK$10 billion. Hong Kong’s ailing health care system needs an injection of people-centred policymaking Other private plans will continue to be offered by insurers, but they won’t have the tax benefits. Alexander Chiu, medical director of health and employee benefits at AXA Hong Kong, the second largest medical insurance provider in Hong Kong, says its 6,000 agents and online platforms will be deployed to meet the expected demand beginning next month. In addition to the basic plan, it will have additional VHIS products that offer additional protection at a higher price. “The competition will be keen in April as all of the insurance companies will be selling the standardised basic VHIS products at the same time,” Chiu told the Post. “It is like every company is selling Coca-Cola. The product is the same but we can only compete with our services and agency force.” Bowtie Life Insurance, a digital insurer in Hong Kong, will use its online platform to sell VHIS. “We believe a growing number of them will prefer online-only channels, especially those who are young and tech-savvy.” said Bowtie co-founder and co-chief executive Fred Ngan Yiu-fai. Hang Seng Bank will sell VHIS products from Bupa. Ip Man-kit, who is leading the VHIS effort at AIA, said the programme catches Hong Kong up to other parts of the world that use tax incentives to help people buy private medical insurance. “Insurance premiums may be used to apply for tax deductions or tax allowances in Germany and Ireland,” he said. Even before the VHIS, health and accident insurance have become an important revenue driver for insurers. The net premium of health and accident insurance rose 11.5 per cent in the first nine months of 2018 to HK$10.7 billion over the same period the year before, according to data from the Insurance Authority.