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Doctor, Doctor

One of the main points to come out of the Harvard Report is that Hong Kong's present health care system is 'financially unhealthy'. If this assertion was not clearly spelt out in the Report's introduction and subsequent paragraphs, the concluding paragraphs should have left readers in little doubt.

The Report's five options all placed a very strong emphasis on the financial viability of the various options. This is perhaps not surprising. The simple logic is that if you ask people whether they would like better health care, they will undoubtedly say yes, asking for 'better, more and fast.'

If you ask these people who should pay for the higher costs of these improvements, fingers will no doubt be pointed in every direction and, in particular, at the Government's coffers. Therefore, the point of consultation must be on finding the most cost-effective balance for Hong Kong's health care system.

Doctors and health car professionals responded to the consultation paper enthusiastically, arguing at length as to the appropriate quality and organisation of the system. But they seem to have missed the point when it comes to the Report's detailed financial analysis. Accountants, however, who have the most legitimate expertise to contribute towards this discussion, have kept rather quiet.

Commenting on public finance issues, such as health care, can be quite simple and yet fundamental to the development of the course. In this case, health care is Hong Kong's second most expensive recurrent social service. It has already soaked up 14 per cent of the Government's annual budget and the figure projected by the Harvard team will rise rapidly to over 20 per cent in less than 20 years if their assumptions are correct. This may cause a 'crowding out' of resources for other public programmes such as education, social welfare and infrastructure.

There is one certainty - the costs of health care will become a bottomless pit if we do not set financial restraints

Furthermore, the experiences of other advanced nations provide little comfort. There is however one certainty - the costs of health care will become a bottomless pit if we do not set financial restraints. This must make sense, but it is probably too simple to say that we must first identify the most cost-effective health care system.

The next problem is to find a system that can help reduce costs. So far, the majority of respondents and the general opinion on the Report is that the Government should raise general tax revenue to cover additional costs. However, accountants would prefer to keep our tax rates low and our business environment competitive. A 6 per cent rise in recurrent expenditure could see our standard tax rate increasing by more than 10 per cent which is clearly unacceptable.

Some accountants have suggested to me that a separate low rate sales tax may be a possible solution. I don't disagree with this, but would rather the tax be directed at the people who use the service. The cost burden of this would be better borne by raising user fees. The only exception would be when the costs become higher than the general public can afford. Even then, it would be necessary to take into account the fact that different social groups may be able to pay drastically different amounts.

Also, once we move towards different user pay scales, complicated administrative procedures such as means testing mechanisms may become unavoidable - with such a system, the sick would pay more, but would have little influence on the quality of health care provided.

Most advanced countries have opted for some kind of medical savings/insurance plan where risks and costs are pooled, and where the payment rates and monitoring are left to professionals working within a 'collective bargaining' situation. These systems make much more financial sense and probably deserve a more serious and methodological examination.

I personally think that a combination of the said options is also feasible. However, adoption these options would mean that the Government would be going back on its commitment to health care - hence the Government may still choose to commit 2.5 per cent of GDP (or about 14 per cent of the Government's annual budget) to the general health care pool. This amount would buy about 97 per cent of Hong Kong's total health care needs if costs are properly controlled and, even when this percentage falls in the future, will continue to represent a significant contribution, giving the Government the right to establish a public health care policy, as well as the right to scrutinise closely the overall cost-effectiveness of the health care system.

The remaining costs could be borne by long-term medical savings plans based on a fixed low compulsory standard package for everyone, plus one or two possible top-up levels for those who can afford more and desire better medical care and services. However, the costs of the compulsory standard package must be capped at a very low rate, 2 per cent for example, and employers and employees should jointly pay the premium.

The Government should pay the full costs for the unemployed and the needy by providing targeted subsidies. We must also ensure that private sector medical services remain effective by not over-subsidising the public sector, as well as ensuring that the private and public sectors retain some level of meaningful competition.

When the medical system requires financial health medicine, it is the accountants (not just the doctors) who are in a good position to prescribe a cure. There is little reason for us to hesitate playing 'doctor' on this special occasion. After all, a sound health care system affects everyone, including accountants. Let the community therefore hear our voice!

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