Hong Kong Insurers Support Government’s Proposed Voluntary Health Insurance Scheme

Hong Kong insurers are supporting a voluntary health insurance plan under the Health Protection Scheme proposed by the government with an action plan for the coming two years that will target affordability and an appropriate supervisory framework.

During the second stage of public consultation on health care reform, the government said that among 564 submissions, it received general support for the reinforcement of the public system as a core, and for reforming the private health care market including private health insurance and private health care services.

"There is wide community support for the key HPS features, including an underwriting arrangement, portability among insurers, plan migration, standardized terms and conditions, and the high-risk pool proposal," said York Chow, secretary of the Food and Health Bureau, at a panel meeting on health services of the Hong Kong Legislative Council.

The public also supports regulating private health insurance and health care services through the voluntary HPS to "enhance market transparency and promote healthy competition, and strengthen protection to the public," noted Chow.

The health insurance market in Hong Kong , in terms of premiums, has grown by more than 70% to HK$10.7 billion (US$1.4 billion) in 2010, from HK$6.1 billion in 2005. The majority public support for voluntary health insurance encourages the government to produce a "practical and intelligent" design of the proposed scheme and make it work, according to the Hong Kong Federation of Insurers.

The insurers said the public needs to be convinced that the ultimate design of the scheme is "good for them and is affordable." The program also must contain sufficient incentives to encourage a "sizeable" number of people of different risk profiles to participate.

The scheme must be sustainable financially in the long term and the proposed supervisory framework needs to cover all stakeholders including insurers, doctors, hospitals and scheme members, said the federation.

"We support the proposed scheme in principle," the federation's chairman, Alex Chu, said in a statement, claiming the insurers understand the importance of getting details of the scheme design right.

The federation will also work with the government to come up with a scheme that is "practical, efficient, actuarially sound and commercially viable, while providing a positive health insurance solution to the people in Hong Kong," Chu said.

The government will facilitate the development of health care services and infrastructure, as well as developing the supporting infrastructure for private health insurance and health care services. Chow said the government will also facilitate development of the health care services market prior to HPS implementation, so that insurers and health care providers are better prepared to provide services that are in line with those principles and requirements.

Because the insured population and private health care expenditures are "increasing rapidly," Chow said there are calls for strengthening supervision and regulation over private health insurance and health care services to "address their current shortcomings and enhance the long-term sustainability of the private sector."

"We plan to complete the preparatory works by the first half of 2013," said Chow. "We will then proceed to actual implementation of the proposals on health care manpower planning and professional development and those concerning the HPS, including introduction of the necessary legislative proposals."

The government would maintain and strengthen the public health care system, according to Chow, including its role as a safety net for the whole population.

Health care recurring expenditures, totaling HK$39.9 billion for 2011 and 2012, now account for 16.5% of the government's recurring expenditures, and is set to further increase as the government has pledged to increase the ratio to 17% by 2012, noted Chow.

The bureau has commissioned a market research consultant to conduct consumer market research on potential customers' reactions to the proposed design of private health insurance under HPS. It has also commissioned an academic institution to conduct opinion surveys and focus group discussions to collect the views of the medical profession and specific issues.

The Hong Kong government earlier announced a proposal to establish the Independent Insurance Authority as the main regulator for insurers and insurance intermediaries and the sole authority to outline conduct standards and regulatory requirements, including bancassurance operations, to ensure consistent regulation. Currently, the Hong Kong insurance industry is regulated by the Office of the Commissioner of Insurance, a government body led by the commissioner of insurance, Annie Choi (BestWire, June 27, 2011).

In the first quarter of 2011, the Hong Kong insurance industry reported total gross premiums of HK$56.3 billion, up 13.3% from the same period in 2010, noted the OCI.

(By Rebecca Ng, Hong Kong news editor: [email protected])