According to Hong Kong’s secretary for health, Professor Lo Chung-mau, the nature of healthcare charge reforms is totally unlike the fare increases on public transportation. Instead, it is aimed at improving the financing and delivery of healthcare to the public. He estimates that after implementation, the number of people who benefit from lower itemized charges on such things as expensive drugs and medical supplies used in surgical operations will increase sharply from about 300,000 to 1.4 million.    

The proposed reforms, which involve raising charges and capping the annual eligible expenses of patients at HK$10,000 ($1,286), resemble the proposals made in my book, Healthcare Delivery and Financing: A Model for Reform, published in 1997. The spirit of the reforms is to charge patients when they can afford the expenses, and to relieve them when they face an excessive burden. I called this model “excessive burden protection”. However, many residents might worry that while they will be charged more, they might not actually qualify for lower charges for very costly items.   

They have reasons to worry. I have learned that, under the proposal, whether one qualifies for an exemption or lower charges on specified costly items will be assessed by medical social workers on a case-by-case basis. This was not what I had in mind. I meant that all residents would only bear what is within the cap, and never what is beyond it, every year. If assessment by a medical social worker is required, every middle-income family or individual will worry. Such a system is not only administratively costly, but also emotionally costly on the middle class. 

The proposed vetting mechanism to assess if a particular patient qualifies for subsidies or an exemption on itemized charges clearly arises from the worry that the Hong Kong Special Administrative Region government may not be able to afford to take on all the expenses beyond the cap for every patient.

This concern is well justified. My proposals to deal with the problem are multi-pronged. They include: First, raising the annual cap for each year as one gets older beyond the age of 50, reaching the peak at three times the regular cap. As we know, the average cost of healthcare for the elderly is five to eight times that of a prime age adult. This rising cost profile is reflected in the well-known fact that health insurance premiums rise with age rapidly after the age of 50.

Second, re-examining the list of itemized charges, and comparing the social costs and social benefits of including each under the “eligible charges for excessive burden protection”. The list of included items will be announced. 

Third, follow through with the principle of charging when people can afford to pay. Exempting a large number of people for low-cost items would add up to a sizable cost. Abolishing these exemptions, such as charges on X-rays, will save a great deal of expense and enable the government to extend excessive burden protection to all basic healthcare needs, including basic dental care.

Fourth, replace exclusive civil servant clinics with group insurance for primary care needs. This will save a lot of resources and will be seen to bring benefits to the Hong Kong public. Publicly funded regular and dental clinics exclusively reserved for civil servants and their families look very odd and should become history.  

If there is still concern that all this is not enough, the government can consider raising the cap for the well-to-do. But people need the assurance that the excessive burden protection will work for them. No one would cherish the thought that the protection may not apply when the burden hurts.

I propose the lifetime healthcare supplement, a standby reserve that could be drawn on if desired. There are two provisions to ensure that the public funds will be put to good use. First is that any withdrawal must be matched dollar-for-dollar by the person who wants to take advantage of it. Second is that after the limited funds are fully depleted, it will be gone

In order to motivate the well-to-do to seek private care, I would recommend releasing a list of indicative comparable healthcare service charges that will be generally lower than what private healthcare providers charge and that will count toward the cap. This means that even though a patient seeks healthcare in the private sector, a portion of their payments will still count toward the cap. In the event that they need to be sent back to a public hospital, they will enjoy the benefits of having eligible expenses beyond the cap paid by public funds. Hopefully, these benchmark prices will help reduce private providers’ charges and contain health insurance costs.

There are some items that are truly expensive and the social benefits may not justify the huge cost of covering them in a basic healthcare plan for the public. To give residents the option of getting access to them, I propose the lifetime healthcare supplement, a standby reserve that could be drawn on if desired. There are two provisions to ensure that the public funds will be put to good use. First is that any withdrawal must be matched dollar-for-dollar by the person who wants to take advantage of it. Second is that after the limited funds are fully depleted, it will be gone. These funds can be treated as contingent life-saving funds of the last resort. Since withdrawals need to be matched dollar-for-dollar, no one will withdraw the funds unless they truly believe that the expenses are worth it. It is likely that most people will never use it, but the availability increases people’s sense of protection and wellbeing.

The author is a former director of the Pan Sutong Shanghai-Hong Kong Economic Policy Research Institute, Lingnan University, and an adjunct professor at the Education University of Hong Kong.

The views do not necessarily reflect those of China Daily.