Iam glad that Hong Kong’s Secretary for Health Lo Chung-mau had the tenacity to introduce the healthcare charges reform that took effect on Jan 1. Increasing healthcare charges is unpopular, even though the public has been told that the reform is not simply a way to raise funds and that the Hong Kong Special Administrative Region government will continue to shoulder its responsibility to serve the needs of the public for affordable, timely, and reliable healthcare services. I have been advocating this model of excessive burden protection since 1997.
Healthcare financing is a difficult and serious problem for every government. A shortage of funds appears to be a perennial problem everywhere. Given population aging, rising expectations, rapidly evolving medical technology that promises new drugs and new medical procedures, every government needs to find the resources to meet rising demands. This is aggravated by the prevalence of large fiscal deficits in almost every country. The excessive burden protection model, by design, hits three birds with one stone. By raising fees, conceptually the direct cost of delivering a service excluding all fixed costs, the problem of demand-side moral hazard is reduced and additional resources are made available. By capping annual eligible expenses, affordability is ensured. No one will need to pay anything above the annual cap or ceiling on eligible healthcare expenses, which should be all essential healthcare services that are needed.
The logic of excessive burden protection is very simple: Patients are charged for the cost when they can afford it; patients are protected against having to pay beyond their means when they cannot afford it. So the idea is: When people can afford it, charge the full cost; when people have difficulty paying, do not charge them.
Unfortunately, the actual reform on the ground does not entirely follow this logic. While to an extent this cannot be avoided, because some compromises may be needed in actual implementation. However, we must deal with the basic problems of affordability and fiscal sustainability. These two cannot be avoided.
What worries people the most is when they cannot afford to pay; under the present setup, they still need to foot the bill for the various itemized charges that can be very onerous. These itemized charges include both drugs that are not on the Hospital Authority Drug Formulary, medical devices used in interventional procedures, prostheses, and appliances for allied health services and items purchased by patients for home use (such as wheelchairs and home use ventilators), among others. These are essential for the patient’s healthcare needs. Yet they are not included in the capped expenses. This means that even if a patient has paid much more than HK$10,000 ($1,275), which is the current annual cap, not only do they have to pay for the full cost of these expensive items, but they also need to pay other expenses including clinic visits and regular drugs if the total of eligible expenses is under HK$10,000.
It is true that some items are very costly and there may be questions about whether spending a lot of money on a few patients can be justified. To answer this question, let us imagine that any of us can be one of these unlucky ones. In particular, drugs for rare diseases can be extremely expensive. But if we put ourselves “behind a veil of ignorance” and imagine that there is a chance for any of us to be a victim of rare diseases, the protection gives all of us a sense of security. The benefit is not just for a few people, because we would all know that we will be cared for if misfortune hits us or our loved ones. We will then have peace of mind and thus benefit from the insurance value of the arrangement.
Patients’ expenses in the private healthcare sector are currently not included at all and do not count as eligible expenses. My suggestion is that the Health Bureau can set benchmark prices for consultation and for inpatient care. Regardless of how much is paid, these services should be recorded at their benchmark prices as eligible expenses. This way, patients can seek services in the private sector and part of these expenses can still accumulate toward the annual cap. This is not difficult to do and will help relieve the pressure on public hospitals and clinics.
I understand that currently patients in grave or critical conditions admitted to Accident and Emergency departments are exempted from all fees. This is a logical gesture of goodwill and sympathy. However, if patients can afford it, there is no problem charging them. After all, the resources are plowed back to the healthcare system to better serve the interests of patients.
Similarly, the government has allowed people to apply for exemption and the numbers are quite staggering. Speaking at a Commercial Radio program in August, Lo pointed out that the number of people exempted from all fees has climbed from 14,000 to 280,000. Even though these people have low income, they still can afford something. Total exemption is a proven ticket to demand-side moral hazard and inefficiency. Why not charge them for what they can afford, and cap at a level that is appropriate to their income levels?
The author is an adjunct professor at the Academy for Applied Policy Studies and Education Futures, the Education University of Hong Kong; and an honorary research fellow at the Lingnan University and the Chinese University of Hong Kong.
The views do not necessarily reflect those of China Daily.
