Hong Kong’s plan to steer 1.5 million people towards private health sector through Voluntary Health Insurance Scheme will be ‘challenging’
Excluding high-risk individuals and potentially high premiums work against goal of scheme to get more Hongkongers to use private hospitals, according to a Legco research paper
The Hong Kong government’s plan to shift 1.5 million people towards private hospitals through a voluntary insurance scheme will be “challenging” because the plan carries potentially high premiums and excludes high-risk individuals, according to a Legislative Council paper released on Tuesday.
Under the Voluntary Health Insurance Scheme, subscribers will receive a HK$8,000 (US$1,020) tax break as an incentive to join the scheme, which seeks to ease the burden on the city’s highly congested public health care system.
“There are concerns in the community whether the Voluntary Health Insurance Scheme can achieve the stated objectives,” the paper states. “Two important product features namely ‘guaranteed acceptance’ under the high risk pool and ‘portable insurance policy’ are not included as minimum requirements of the scheme after the public consultation concluded.”
The paper criticises high administrative costs in the private sector, and states that people who already have private health insurance are hesitant to seek treatment at private hospitals because of restrictions in existing insurance plans and disputes over claims.
The plan would allow policyholders to use private medical services until they are 100 years old. The goal is to enrol 1.5 million people over the next three years.
Hong Kong Medical Association president Dr Gabriel Choi Kin said a single tax exemption would not be “very attractive” and that it would be up to the financial secretary to “reconsider and decide” whether to increase it.
The annual average premium for the standard plans under the voluntary scheme would be about HK$4,800 initially but that “some health insurers expect that such premium could exceed HK$5,000 in 2019”, the Legco paper stated.
This is higher than the average annual premium of HK$4,365 for existing individual health insurance products in 2016, it noted.
Choi said the association had discussed the issues listed in the Legco paper with Secretary for Food and Health Sophia Chan Siu-chee earlier this year as the association believed “the scheme will not be as sustainable as it sounds”.
He said the association planned to send a letter to Financial Secretary Paul Chan Mo-po, calling on him to raise the tax allowance for people who want more comprehensive and more expensive insurance plans.
Choi, who is nearly 70 and has diabetes, hypertension and “a lot of problems” said his medical insurance premiums had increased from about HK$50,000 a year more than a decade ago to HK$70,000 a year now.
He decided to use a private hospital because he could not wait for a bed to become available at a public hospital.
“The last time I had my surgery within four hours. I paid about HK$10,000 more but the whole surgery cost HK$250,000.”
Tim Pang Hung-cheong, a patient advocate with the Society for Community Organisation (SoCO), said the government scheme would not affect low-income earners who did not pay tax and could not afford medical coverage.
Although SoCO had “no objection” to the scheme, Pang said: “We doubt whether it will be effective enough to divert the patient load from Hospital Authority to the private sector because of the income gap between the wealthy and poor.”
Some people would be deterred from switching to the scheme from their own medical plan even if the premiums were cheaper but the coverage was not comprehensive enough, he said.
A spokesman for the Food and Health Bureau said the “certified plans” under the scheme would be more attractive than existing private plans because of several factors, including “a no lifetime benefit limit” and coverage that includes “unknown pre-existing conditions and ambulatory procedures”.
He added that an independent consultant estimated that about 1 million people would buy such plans in the first two years, increasing to about 1.5 million people in the third year of implementation.
About 70 per cent would be existing policy holders of individual health plans and the rest would be new customers.
According to the Census and Statistics Department, as many as 3.26 million people – or 47 per cent of the local population – were covered by health insurance in 2016, comprising 1.48 million people with individual policies, 860,000 with group-based policies only and 920,000 with both types of policies.
Market premiums have almost tripled to about HK$10.3 billion in 2016. However, less than 57 per cent of people with insurance that covers private hospitals were treated in those facilities, indicating “a general hesitation”, the Legco paper states.
Chan Kin-por, legislator for the insurance sector, said on Tuesday he had made an appointment with the Legco Secretariat’s research office to understand why its figures on administrative costs of medical plans were different from that of the industry.
The Legco paper said the ratio of administrative cost was 37 per cent in individual insurance schemes, compared with just 1 per cent borne by the government in running the public health care system.