The Food and Health Bureau (FHB) has put forward new proposals for the voluntary Health Protection Scheme (HPS), and will soon launch another public consultation to seek views from the community on the scheme. The insurance industry recently had a meeting with the bureau to express our concerns about the revised proposal. But the bureau refused to amend their new demands, and only agreed to include part of our industry’s viewpoints in the new consultation document. The insurance sector thinks that the government’s latest proposal has many problems and finds it hard to accept the scheme at this stage.
The FHB and the industry obviously have very different positions on the issue. We think that their latest proposal will be problematic for insurers and the public, and the bureau’s explanations failed to convince the industry. Firstly, the newly proposed Standard Health Insurance Plan (Standard Plans) offers wider coverage than private insurance policies now available in the market. Therefore, the premiums of the Standard Plans will surely be more expensive than the current insurance plans. But, according to estimates by the government consultant, the premium of the Standard Plans will be 10 per cent higher than normal private insurance policies. The industry doubts the accuracy of its estimation and has demanded the government to disclose the calculation method. The consultant made many assumptions when making the calculation. They fail to realize that different insurance companies have different operating costs and there are many factors affecting the market prices. It is therefore impossible to make an accurate projection beforehand. If we look at it from the cost perspective, it is hard to believe that the premium will rise by just 10 per cent with greater protection.
To be honest, our worries are not groundless. Once the Standard Plans with a premium increase of more than 10 per cent is launched, members of the public will blame insurance companies for drastically increasing premiums. They will not care that it was the consultant who made the wrong projection, and the insurance industry will take all the blame. Therefore, we find it difficult to accept the proposed scheme if uncertainties are not cleared.
Secondly, regarding the management of the High Risk Pool, the industry thinks that it is impractical to set the administrative cost covering operating expenditures and commissions at 12.5 percent. Due to fierce competition in the health insurance market, the administrative costs and commissions altogether account for 15 per cent to 30 percent of premiums. The industry believes that the FHB is trying to win public support for the health insurance scheme by deliberately pressing down the expenditure figure of the High Risk Pool. But the government hasn’t considered whether insurers can really manage to keep the administrative costs at 12.5 percent. The industry, therefore, finds the administrative expense limitation unacceptable. We hope that the government can hold further discussions with the industry with consideration of our practical situations.
Thirdly, the success of the health insurance scheme depends on one vital factor: whether the number of hospital beds in private hospitals is enough to meet the demand. Patients have often complained about having difficulties in booking hospital beds in private hospitals, and they have to wait in queue for hospital beds in order to undergo surgeries at private hospitals. The surging demand of hospital beds has pushed up the fees of private hospitals. At present, private hospitals in Hong Kong altogether provide some 4,000 beds. The government plans to increase the number by 40 to 50 percent in the coming five to six years, which means adding 2,000 beds at most. But will a total of 6,000 bed spaces be enough to meet the increasing healthcare demand in the future? It is doubtful that 6,000 beds are really enough to help divert the patients from public hospitals to private hospitals? As a matter of fact, the previous administration reserved four sites for building private hospitals. But only one site has been given to a private hospital operator, and another site has been returned to the government for housing development. It makes people feel that the government has no sincerity to develop private healthcare and will continue to let people seek medical service in public hospitals.
The biggest problem of the government’s latest proposal is the introduction of Standard Plans. In future, members of the public wanting to buy health insurance will have to first purchase the Standard Plans and then pay more for top-up benefits if they need more protection. The public will no longer have a choice to buy cheaper health insurance policies with less protection. The government initiative will kill the diversity of the private health insurance market. What is more, the government has removed some advantageous features from the latest proposed scheme, making it less attractive than the previous proposal. For example, private hospitals will not be required to provide packaged charging for patients. The amended scheme also has made no mention about its earlier proposals: to provide $50 billion to set up a High Risk Pool; to offer discounted premiums to attract people to buy insurance; and to provide financial incentives to encourage savings by subscribers for paying future premium at older age. In the new proposal, the government only suggests tax incentives for new HPS subscribers, and took out all other benefits previously proposed. The current government only agrees to spend less than HK$5 billion on the overall health insurance scheme, down by 90 percent from the original HK$50 billion fiscal reserve earmarked to support the project. It means that the scheme has lost 90 percent of its attractiveness.
In conclusion, the insurance industry will not support the revised voluntary health insurance scheme, and the public will not be interested in it. The government will also fail to convince the legislature to approve it. What is the point of having such a scheme then? I hope the FHB will think twice about their latest proposal.