|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
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
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
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
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!