Research | Medicine and healthcare | 2007-08-24

Development and Financing of Hong Kong’s Future Health Care

To ensure the sustainability and responsiveness of Hong Kong’s health care system in the long run, efforts should be made to promote behavioral changes in individuals, Government and service providers.

In releasing the highlights of its final report “Development and Financing of Hong Kong’s Future Health Care” today, Convenor of the Bauhinia Foundation Research Centre’s Health Care Study Group, Dr Donald Li, said: “In reforming Hong Kong’s health care system, behavioral changes are essential. No matter how much funding is available, our health care resources will be exhausted if there is insatiable demand and indiscriminate use.

“For the individuals, they should exercise greater self-responsibility for their own health and put more emphasis on disease prevention and detection. As far as the Government is concerned, it should increase public emphasis on primary health care and encourage users to seek more choice and better services through shared responsibility. Service providers should seek to enhance their service standard and fee transparency.”

Before finalizing its proposal, the Study Group has compared the pros and cons of various health care financing options, including heath insurance, health care tax as well as an individual Medical Savings Account (MSA) scheme that has been proposed in the preliminary report. The different views and concerns raised by the stakeholders after the release of the preliminary report in June 2007 have also been taken into account.

The following are the key features and components of the new health care model the Study Group proposes in its final report:

A three-pillar framework

Pillar 1 will remain as a safety net; its scope and services will not be less than what people are getting today. Evidence-based or beneficial essential items will always remain as heavily subsided Pillar 1 services.

Pillar 2 is to be an added option for those who do not want to rely on the Pillar 1 system and offers incentives for those adopting proper health prevention and health seeking behaviors.

Pillar 2 is to strengthen preventive health services (e.g. initiation of family doctor services, additional evidence-based, age specific health screening, etc) and to ensure access to quality care in old age (e.g. dependency care, hospice and palliative care, visiting medical and nursing care, etc).

To instill a sense of joint responsibility among individuals for behavior modification, the Study Group proposes that the Government subsidize an average 50 percent of the costs of care. Services in this Pillar can be offered by both the public and private sectors.

Pillar 3 services are private sector services not subsidized by Government. Examples of such services could include lifestyle enhancement or maintenance, cosmetic procedures, non-standard formulary drugs, assisted reproduction, some dental care, and eye glasses.

“The difference between Pillars 1 and 2 can be construed as a difference in government subsidy to support individuals to assume a greater role in looking after one’s health and well being,” said Dr Li.

MSA Scheme

Based on careful comparisons, the Study Group proposes a mandatory MSA scheme to supplement Hong Kong’s successful tax-based financing system.

The MSA is meant to foster desirable health seeking behavior and emphasize prevention and more judicious use of health care resources.

“Under the scheme, account holders will receive substantial Government subsidy when purchasing Pillar 2 services and can choose their preferred providers from a list of Government approved providers, including those in the private sector,”said Dr Li.

In response to misconceptions about its usage, Dr Li said funds in the MSA account could be used anytime before the age of 65 to pay for fees and charges under Pillar 1 and subsidized services under Pillar 2.

Users may also choose to purchase government approved health insurance plans where available, such as hospitalization plans after age 65, long term care plans and possibly major illness plans before age 65.

The Study Group, after considering social concerns and public opinions, proposes that the minimum level of monthly income for mandatory contributions be adjusted upward to $8,000, and the minimum account balance requirement of MSA has also been eliminated in the final proposal.

As integral components of the reform initiatives, the Study Group also proposes enhancement of Hong Kong’s primary health care. These include promoting the establishment of community-wide networks delivering holistic primary health care through integrated multidisciplinary teams; establishing a primary care doctor’s register; implementing quality assurance mechanisms; emphasizing a life-course-oriented health screening approach; and building portable electronic medical records to facilitate seamless primary, preventative and secondary care system of delivery.

Institutional Arrangements

To accomplish the reform objectives and to ensure sustained effective system performance, an integrated system of institutional arrangements is needed. Under the system, several essential functions have to be carried out, including stewardship, purchasing, disbursement and delivery of care.

The Study Group recommends a clear delineation of the purchaser and provider functions, which empowers the purchaser to commission or negotiate contracts with providers, in both the public and private sectors, to deliver services. This will serve to optimize value for money spent and enhance proper use and access to both Pillar 1 and Pillar 2 services for users.

On the way forward, Dr Li said whereas he hoped proposals put forth by the Study Group should be implemented in total, it would not be necessary that they be implemented at the same time.

“We propose that a progressive approach in stages be adopted as policy makers take into consideration other factors such as funding gaps and risk pooling,” he added.


Full Report
Executive Summary
Key Stakeholder Comments, Questions and Submissions on Preliminary Report
Proposal Highlight