Hong Kong Settles on Public Health Insurance Subsidy

Posted on Sep 08, 2010 by Sergio Ulloa (G+)

In the latest development of the Hong Kong healthcare reform saga, the government of the Special Administrative Region has announced an insurance subsidy scheme, intended to sweeten the voluntary health insurance coverage proposal. The voluntary insurance coverage scheme is soon to commence under Hong Kong's Food and Health Bureau in an attempt to encourage the population to take out private medical insurance. The scheme has been in debate since late 2008, and in light of Hong Kong's rapidly ageing population, is intended to alleviate the strain currently faced by public healthcare providers throughout the city. In April it was announced that an impasse between the government and insurance companies had been resolved with the proposal of a "three year waiting period" for pre-existing conditions. Under the agreement insurance companies would be able to impose a three year waiting period for full coverage of pre-existing conditions under the plan, with policyholders receiving 0% indemnity for pre-existings during the first year of coverage, 25% indemnity in the second year, 50% indemnity in the third, and full coverage of the condition during the fourth year of enrollment. Insurance plans being provided under the "voluntary scheme" would also ensure guaranteed renewability, in addition to ensuring the availability of packaged medical services at the city's private medical facilities. However, the voluntary proposal was deemed to be lacking in substance; as such, the government has announced the introduction of subsidies for "high risk" individuals who purchase health insurance through the initiative. A recent announcement by the city's leaders will see the government set aside HK$ 50 billion (US$ 6.4 billion) over the next 25 years in order to subsidize an estimated 500,000 "high risk" public health insurance policyholders. The subsidies announced by the government would only pertain to those individuals who are deemed to be high risk: defined as individuals whose annual medical costs are more than 20% higher than those of a "normal, healthy individual." As such, the subsidy fund would mainly target persons over the age of 65, individuals with pre-existing conditions, in addition to providing an incentive for young people (aged 30 and under) to establish some form of private medical insurance coverage. At present it is estimated that just over 34% of the Hong Kong population has private health insurance, with only 4% of those over the age of 65 possessing coverage. One of the reasons for this lack of cover has been attributed to concerns about rising premiums amongst the city's elderly population. As such, the insurance subsidy announced by the government is intended to ease these concerns and drive more individuals to purchase medical insurance. In an attempt to avoid abuse of the scheme, the government has announced that co-payments will be applicable to all policies purchased under the reform. The co-payments are structured so that the policyholder is responsible for 20% of the final price for medical treatments costing up to HK$ 10,000, and 10% of the costs for the next HK$ 90,000 in medical treatment. At present no co-payments are applicable on claims of over HK$ 100,000, meaning that the maximum co-payment for any single claim under the plan will be HK$ 11,000 (20% at HK$10,000 plus 10% at HK$ 90,000). With the HK$ 50 billion subsidy earmarked to support the reform for the next 25 years, analysts are expecting the scheme to cost HK$ 2 billion annually.