The Health Protection Scheme - Essay Example

? The Health Protection Scheme THE HEALTH PROTECTION SCHEME Introduction Owing to increasing demand in the public health care system for medical treatment, the Hong Kong Government, has proposed the HPS, or the health protection scheme, in the year 2010 (Jowett et al, 2012). The health protection scheme was meant to ascertain that the government was committed to HK’s health care and its improvement. The health protection scheme came up with proposals for voluntary subscription where the citizen would want more medical coverage through an additional monthly premium. In this optional health protection scheme, everyone is served, and no one turned away because they do not possess private insurance, which includes high-risk groups and older citizens (Hsiao, 2009). In this case, private insurance will cover SOP consultation and chemotherapy costs within private facilities. On paying the monthly premium, the health protection scheme subscriber’s medical expenses in the private sector will be covered, regardless of the type of treatment being given; for example, generic and advanced drugs for chemotherapy. The scheme will aid patients in easing financial burdens in case of severe illness that shortens time spent waiting in public hospitals (Goodstadt, 2013). The main objective for this paper is to discuss the arguments for its implementations, as well as those against its implementation, and compare it to other schemes in other countries. Background Hong Kong has had private health insurance for many decades in various forms (Bennett et al, 2004). In 2009, about four million policies covered two million individuals and over 1.5 million groups. This was representative of 34% of HK’s population being privately insured (Tao, 2009). The number of people buying private insurance has gone up in the past four years. Private health insurance has contributed 12% of HK’s financing in health care between 1998 and 2009, while it has continued to grow at 9% every year with regards to total health expenditure share during the same period (Hong Kong Hospital Authority, 2012). In 2010, hospitals in the private sector spent a quarter of their entire expenditure on caring for inpatients, of which at least half was covered by insurance from the private sector. Despite these statistics, the Food and Health Bureau, through a study on private health insurance, outlined various challenges and inadequacies that insurers, providers, and consumers were confronted with, particularly in the private health insurance sector (Gauld & Gould, 2012). This led to proposals on the health protection scheme, which sought to address several issue. With regards to the insurers, it sought to address rising and non-transparent medical fees, unnecessary admissions and moral hazards because of investigations, non-disclosure and anti-selection when underwriting, and the challenge of public insurance that was dimming attractiveness for private health insurance (Dembe & Boden, 2000). For consumers, it sought to address uncertainty of charges and coverage and lack of quality assurance and medical fees that were non-transparent. Finally, it sought to address coverage of procedures for outpatients and inadequate coverage for private doctors and hospitals (Shek, 2012). Argument for Health Protection Scheme One area that the HPS will help the situation is in financing, particularly with two tiers in the HK health system, i.e. public and private. The private sector mainly gets its funds from private sources like out-of-pocket payments and private insurance. In contrast, the public health insurance sector gets heavy subsidies from the Hong Kong government that come from taxes (Wong et al, 2011). While the HK government spends relatively less compared to countries from the west, the expenditure trend has been increasing. The health protection scheme has proposed to improve controls on expenditure through inclusion of voluntary participation in premiums by individuals. The government is encouraging HK citizens to join the scheme to enjoy more coverage in private facilities and settings. Because of this, the government will introduce additional funding for investment in its citizen’s health care by using the premiums that they pay (Hay, 2012). In addition, the scheme also seeks to balance the services that are provided by the private and public sector. The private sector caters for approximately 65% of out patients in HK, while the public sector caters for approximately 90% of all in patient services (Centre for Health Protection, 2012). The health protection scheme will introduce the option of free choice for its citizens to receive treatment in the private sector. This will allow them to access quality healthcare from the private sector, which would have otherwise been too expensive with rising costs. The main objective of the health protection scheme has to do with provision of wider choices to the public, while also protecting them better using private health insurance and care services that are regulated by the government (Lam et al, 2011). This will be of help since it will encourage HK citizens to take out savings and health insurance to improve their access to health care service in the private sector, while also facilitating increased use of services from the private sector as an alternative. In addition, it will also increase price level and service standard transparency in health markets and private health insurance by giving packaged charge for medical procedures that are common. The scheme is designed to provide selected admission and hospitalization cover, especially associated with consultation for specialist outpatient care, procedures, or investigations whose costs are rising (Cipriano et al, 2011). The scheme will also prevent overuse and abuse through incorporation of management controls for utilization. These will include co-payments and deductibles common with all policies in private health insurance, while it will also incentivize healthcare providers to improve their standards and performance (Leung, 2006). The government has also made the scheme attractive to HK residents in order to retain them in the scheme. This is particularly for those who have coverage from private health insurers. The government has earmarked HK$50 billion to give no-claims discounts to the public at 30% for them to enroll, as well as giving those aged over 65 a premium rebate of, which will be based on their savings and length of stay within the scheme. This is important because older patients have more chronic illnesses and their insurance premiums are usually very high (Chow, 2004). Finally, with rising healthcare costs across the board, the scheme should aid the healthcare sector to focus on being an all-encompassing safety net, relieve long queues, and serve the needy. Arguments against Health Protection Scheme The health protection scheme seems to have some risks, particularly with regards to health care system as a whole in HK. One of the issues with the scheme is risk pooling, which is part of risk management and is used by insurance companies where a people insured under specific policies are pooled together (Cutler et al, 2000). While the company can lose money in paying for the insured, the costs are covered by those insured who did encounter loss. This will be a problem for the health protection scheme because it includes high-risk groups and elderly people. Since the scheme removes the ability to turn away patients, it will be very attractive to vulnerable groups like old people who cannot afford private insurance. In addition, the scheme competes with other companies in the private sector for healthy and young subscribers to expand the pool. Even though the government backs the scheme up, it will still be hard for it to compete against established private insurance companies. Because of this, the subscriber pool is mostly elderly and high risk that cannot cover the healthy group. Cancer risk factors have been observed to increase with age, especially for those above 65 years of age (Fisher & Welch, 2010). Elderly cancer patients will also suffer from chronic diseases simultaneously, which increases the cost of health care for insurance companies. Another problem with the health protection scheme is healthcare professional manpower management (Fan, 2009). When the health protection scheme is implemented, the patient will either seek out the private sector for medical services or receive public health care by paying for items that are self-purchased. Both outcomes will impact public sector manpower management significantly. While the patients will have more choices in getting advanced health care in the public hospitals, there will be a respective increase in medical service demand. Hospital authorities (HA) have difficulties in retaining staff because of the work they have to do, as well as the long hours spent at work. Increased demand on the workers leads to heightened patient demand and workload, which ultimately causes staff to leave the HA. If the patients go to the private sector for medical treatment, on the other hand, because of HPS’s additional coverage, private sector demand will also increase. As demand goes up, the sector will require more staff. With a constant supply of medical staff, clinicians may move to the private sector that has higher salaries (Shixun et al, 2004). Both outcomes will harm management of manpower in the public sector, leading to difficulties in convincing public sector management to implement the HPS until a more effective plan for manpower management is proposed. In addition, it is not entirely clear how the HPS will lead to lower costs of healthcare, improvement of quality, and enhancement of equity. While there is evidence that its voluntary nature will improve the healthcare system, relieve overcrowding, and reduce costs pressure on healthcare, the evidence is yet to be quantified (Leung, 2008). There is likelihood that it will cause adverse selection, stimulate overuse, abuse, and increased demand pressures on the healthcare services, cause increased costs of healthcare, and cause some inequity in access to consumer plan benefits. Comparison with other Similar Health Protection Schemes Similar to Hong Kong, Australia has universal coverage, although it mixes private and public health care systems. While Australians have universal access to public health, approximately 45% of the population elects to attain insurance that is more private (Connelly et al, 2010). The Private health insurance coverage in Australia aimed at avoiding long queues in public facilities, while improving private sector medical care. Unlike in Hong Kong, the main driving force for the scheme in Australia was reduction of waiting time. However, a similar problem arose to that in Hong Kong where they found that those who did not want to wait in long lines were better-off and healthier citizens. The scheme in Australia seems to be only attractive to those who are better off and can afford the monthly premium. This could be also an issue when the HK HPS is implemented. Australian use of private insurance is at 7% of total expenditure in health, which compares negatively with that of Hong Kong. Like in HK, the scheme in Australia sought to balance private and public workload. However, the results were not good since majority of the population under the scheme still preferred to go to public hospitals. High-income earners in Australia also tend to use the scheme to avoid paying high income taxes (Connelly et al, 2010). Low-income groups have to attend public hospitals since private insurance is out of reach. If they attend private hospitals, they will have to pay more. Singapore’s system, just like Hong Kong, is funded by the individuals and the private sector, as well as their employers. However, their spending on healthcare accounts for only 4% of their GDP with 70% of this coming from the private sector (Lim, 2004). Like Hong Kong, the healthcare system will have to deal with an ageing population with life expectancy at 80 and retirement age about to be raised to 65. Like Hong Kong, Singapore will have to deal with a population that is aging and its long-term implications. In order to help citizens save for old age, Singapore’s employees contribute 20% of salary to the Central Providence Fund with employers contributing another 15%. The rates are increased as one grows older and this is one aspect that Hong Kong could copy from Singapore. However, unlike in Hong Kong, Singapore already has achieved a balance between public and private hospitals, particularly because their public hospitals are run as PLCs (Ramesh & Holliday, 2001). Because of this high standard, as well as the equally high standard of private hospitals that have to compete with the public hospitals, the population has no significant preference for either type of facility. Conclusion Under the HPS, the insurers will have to accept all obligations for private citizens, although there are higher premiums for some plans. Where there is group insurance, the amount insured is to be covered by employees and the model of minimum requirement will not cover this. However, majority of employees will purchase individual plans of insurance even when they are in group insurance. The scheme will also help in financing by reducing the amount of tax money used in financing public healthcare in times of escalating healthcare costs. It will also help to balance the workload between the public and private sectors, while also putting in place plans to reduce abuse and overuse that is already rampant in the public health sector. Finally, the scheme will also give wider choices to the population by protecting them when they seek private health facilities. However, there are concerns regarding risk pooling that will make insurance of elderly citizens and high risk groups very expensive. The scheme’s attractiveness to the elderly will make it prone to abuse and overuse, as well as increase costs. In addition, the scheme will hurt manpower management in the public sector as staff leaves for the private sector due to increased workload and better pay in the private sector. Finally, there is still not enough evidence that the scheme will lower costs of healthcare, improvement of quality, and enhancement of equity. While comparing the healthcare sector in Hong Kong with that in Singapore and Australia, it is clear that, although the HK model has worked better than that in Australia, it has some way to go in emulating the Singapore sector. Unlike the model in Australia, the HK model appealed to all classes of the society, while also spending much more on healthcare as percentage of GDP. 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