Speech on the Refined proposal on the design of private health insurance policies regulated under the Health Protection Scheme and Public funding support for the implementation of the Scheme
The Hong Kong Federation of Insurers (HKFI) sent the submission to the FHB on 4 December. I hope the FHB can make a detailed written reply. Also on 6 December, HKFI sent out a press release to express their concerns and doubts on the effectiveness of the scheme. It pointed out that the individual and group medical insurance are providing protection for more than 3 million people in Hong Kong. Actually, without government intervention, there are 180 000 new policyholders every year, which shows that members of the public do think that health protection is useful. In terms of medical indemnification and in-patient surgery, 90% of the people received the service by private clinics and hospitals, instead of people saying that they have the insurance then they still seek treatment at public hospitals, I think those are the minority. Also, in terms of in-patient services, every $100 paid in the policy, $75 will be paid by the insurance. For day surgery conducted in clinics, $90 will be paid by the insurance, in other words, the coverage provides total protection even though the medical fees increase.
Most importantly, in the private market, there are different products, some are more expensive than others to cater for different needs. The biggest change is that the Government has proposed to regulate the health insurance business. In future, the consumers can only take out medical products that are able to fulfill the “minimum requirement” which will be more expensive. You are not going to bring benefits to the public, you are actually depriving consumers of their rights to choose the products. The HKFI doubts how many people will join the HPS. If the number is small, how is it going to shift patients to the private hospitals from the public sector?
I have joined the Working Group on Health Care Financing of the Health and Medical Development Advisory Committee since 2005, as one of the few people who follow the Healthcare Protection Scheme (HPS) throughout. Although I understand the Secretary and his team has spent a lot of time and put so much effort to devise the proposal, if the HPS is launched in the current version, it will defeat the original objectives of HPS, such as focusing on the fee structure of private hospitals and the operation of medical policies so that citizens are able to get cheaper and better healthcare insurance services. It will create a no-win situation for the citizens, society and insurance industry.
Everyone should notice that a large part of the insurance premium is paid for fees of private hospitals and doctors. Since the Government now decided not to push for DRG and packaged charging, the large proportion of the fee is not reduced. Then, how could medical insurance expenditure reduce? How could the citizens gain benefits? The Government also plans to regulate medical insurance products so that only those with minimum requirements are allowed to be marketed. According to the consultant, the new products will be around 10% more expensive than the current average policies, but the figure has not been confirmed by the insurance industry. There is an estimation that for the budget products now, there has to be a 30% to 40% increase in the premium in order to meet the minimum requirements, which means the consumers will be deprived of the rights to buy cheaper products. They have to bear the burden of the 10% increase in premium. People cannot choose the products according to their own affordability, only expensive products are available, which brings chaos to the market.
In terms of incentives, it seems that tax deduction is now the only incentive. Those effective incentives originally proposed are not mentioned, including 30% discount for first purchase, and then 30% discount at retirement, etc.; So, there will be a lose-lose situation for the public and insurance industry. The Government also proposed to set up a regulatory body to operate an ineffective scheme, it would just create a bureaucratic institution that wastes social resources. Therefore, everybody is going to lose.
l If the policyholder has used the public hospital service, they can make a claim of $100 per day under the miscellaneous item. Statistics from HKFI show that 90% of the claim payments are for private medical service while the Government said that only 50% of those with insurance policy would use private hospital service. I urge the Government to confirm the figures with HKFI to see whether it is 90% or 50%.
Actually, the HPS has some good features, such as broadening the current coverage etc. But these benefits come with a cost, and the premium will naturally increase. I doubt whether there would just be a 10% increase in the premium. Has the Administration asked for the confirmation from the insurers? It is the insurance industry who is going to run the HPS, not the consultant. If the increase is 30% to 40%, will the Government impose a 10% cap, and subsidy 20% to 30%? Could the Administration make a promise here, and affirm that the HKFI has agreed in writing that the increase is really 10%?
As the proposed HPS is going to be expensive, it is estimated that 10% to 20% of the existing policyholders can’t afford it, that means 100 000 to 200 000 people could only go back to public hospitals. Has the Administration thought about this?
Concerning the financial incentives, I am extremely disappointed that there is only tax deduction in the current proposal. Encouraging the young people to join the scheme and long-term subscribing are very important. In overseas countries, the tax rates are high, so tax deduction already brings much attractiveness. But since many people in Hong Kong do not have to pay taxes, so it will not be attractive. The Administration should follow the original plan with 30% discount for the first purchase and another 30% discount for people over 65 years old who subscribe it for a long period. The Administration only needs to subsidize policyholders aged 65 or above.
Does the Administration have any political consideration so that you only subsidize the high risk poo by using $4.3 billion and put back $45 billion into the public hospitals with the aim of reducing the resistance? Why don’t you put all $50 billion to the public hospitals? Now the public will get very little incentives from the HPS, but many legislators still oppose the proposal. Why don’t you just cancel the scheme and don’t waste everybody’s time.
How did the Government come up with $4.3 billion for the high risk pool? As the insurers will be the administrators for the high risk pool, the industry believes that 12.5% is not sufficient to cover the commission and the administration cost. Is the Government prepared to manage the high risk pool by themselves?
