Posted on Feb 10, 2010 by Sergio Ulloa
Amidst the global debate on healthcare reform, Hong Kong has waded into the fray with a proposed "voluntary medical insurance" scheme aimed at alleviating the massive financial burdens faced by the city's public healthcare network. The issue was first raised in late 2008, following in the wake of the Global Financial Crisis, and has now reached the penultimate stage of industry level discussion before a territory-wide consultation process can debate the measure later this year.
In talks with various Insurance industry and Healthcare experts, the government hopes that a voluntary insurance scheme would see at least 500,000 individuals take up the coverage, and massively reduce the strain currently faced by an over-burdened public healthcare system. Government representatives have stated that the aim of the scheme would be to provide a wider range of quality healthcare options to patients with the wherewithal to afford private insurance, and will help to level the playing field in the health insurance market by setting solid standards for private medical services and medical insurance.
The Hong Kong insurance industry, lead by the Hong Kong Federation of Insurers, has agreed, in principle, to applying a "basic" level of cover to the scheme. This basic coverage would remove existing exclusions on the coverage of mental illnesses and congenital defects, while making all plan premiums age specific, rather than experience rated.
The basic package proposed by the insurance industry would see policyholders covered for in-patient only healthcare in Hong Kong. Coverage can be then extended on an as-needed basis to include coverage options with more benefits - such as global portability, and emergency medical evacuation. Extended benefits under the current proposals would see premiums increased on a pro-rated basis.
However, recent developments over the issue of Pre-existing condition coverage may have stalled talks and delayed the upcoming consultation process.
One area where the insurance industry has balked at government demands is with regards to the coverage of pre-existing conditions. Insurance representatives have stated that if pre-existing conditions are to be covered under the scheme, those suffering from existing illnesses should pay higher premiums than those without, citing the fact that the scheme is "voluntary" in nature.
In response, some healthcare officials have raised the proposal that it may be possible for the government to subsidize the health insurance premiums of those individuals who do have pre-existing conditions, as a way to offset the higher than normal costs. Observers have suggested that this is no different from a publically funded healthcare system, and have emphasized the issue that the proposal is for "voluntary" private medical insurance, and is not an extension of the universal healthcare already in place for Hong Kong residents.
Executive Director of the Hong Kong Federation of Insurers, Peter Tam Chung-Ho, stated that he believed people with pre-existing conditions should have higher premiums under a community rated, or shared risk, scheme. "½ Otherwise there will be a downward spiral effect with healthy people having to share the high premiums, and the plan will become unpopular and, at the end of the day, unsustainable," he said.
Of the 7 million people living in Hong Kong, 3.2 million are covered by some form of medical insurance. Approximately 1 million people own an individual health insurance policy, while the remaining 2.2 million are covered by a corporate health insurance scheme; the remainder of the populace, an estimated 3.8 million people, has access to the public healthcare system which is government funded and low in cost of services.
With HK$ 50 Billion (US$ 6.41 Billion) in proposed start-up funds, the Voluntary Medical Insurance scheme aims to move people away from the public system towards highly competitive private medical services. Government representatives have stated that the start-up funds should be used to include as many people as possible in the scheme in order to capitalize on the spread of risk throughout the populace.
The proposed Scheme would only impact health insurance policies administered in Hong Kong; international health insurance plans administered offshore will remain unaffected by any potential legislative reform. Companies providing international health insurance policies will typically deal with pre-existing conditions in one of three ways; exclusion, moratorium, or coverage with a premium loading.