Medical Reform

Chapter 129: Medical Reform Published Date: 2008/6 /2 Chapter 129: Medical Reform Written: Sandy Lau Introduction The government published the ‘Consultation Document on Health Care Reform’ in March earlier this year, pinpointing how the healthcare system is facing a great challenge due to aging population and increasing medical expenses. In order to have a sustainable medical system, society needs to make changes to the existing system. The quality of a social healthcare system is a matter of life and death and, as such, this reform is under the close attention of people from all walks of life (各界人士). Before going into the content of the reform, we have to understand first the very structure of our medical system and then other medical systems around the world on which we can base our reform. The medical structure covers social and personal factors. Socially, environmental conditions and food safety both affect public health; personally, individual eating and hygiene habits also affect their health statuses. A perfect medical system should be like the graph on the right. It should start with preventive measures hygiene like and food so safety, forth. environmental Medical Structure Pyramid According to severity, different diseases are ranked on the treatment levels. At the top of the pyramid should be social commitment to people like the elderly and the physically challenged who need long-term care. Equity The financially capable should share a larger part of the burden to subsidise the lower income groups. Quality Medical services should be of high quality, including advanced medical equipment and treatment. Efficiency Medical services have to be competitive and transparent in the market. Choice Risk-Sharing Citizens should collectively Citizens should be able to choose Objectives of a Medical medical treatment that suits their Chapter 129: Medical Reform share the financial risks of being ill under which those who are ill get subsidised and those who are not subsidise others. Published Date: 2008/6 /2 System needs. (e.g. Choosing doctors/service provider, medical equipment, methods of treatment, etc.) Sustainability The medical system should be able provide quality services consistently to citizens and future generations. Cost-control It has to prevent medical fees from being too high because of excessive uses and rising costs. Accessibility Whether or not medical services are conveniently available in terms of queuing time and channelling (分流) is important. Given limited resources, medical systems more often than not cannot meet all objectives but chose between balancing costs and service quality. As a result, different countries have developed different modes of medical systems and financing arrangements, depending on their respective social conditions. According to their sources of finance, they can be roughly classified into the following categories: Major Medical Systems and Financing Modes Solidarity Self Reliance Taxes Capital mainly comes from taxes, including income tax, profit tax and sales tax. Social insurance Medical Savings Private insurance Capital mainly comes Capital mainly comes Capital mainly comes from mandatory funds from private sources from insurance fees paid to which employees, including medical to insurance companies employers and the savings accounts government contribute *Data of 2004 Source: Legislative Council Secretariat Research Papers RP06/05-06, RP-2/06-07. Trivia: Medical Systems Overseas Taxes - Canada Public Finance: 70% Private Finance: 30% Medical Spending as a Percentage of Government Expenses: 17.1% Medical Spending as a Percentage of GDP： 9.8% Objectives Financial Sources General Taxes - Income Tax 46.4%, Sales Tax 7-17% User Sharing - Patients have to pay for his own medicines (except for prescription drugs in hospitals), but certain provinces offer medicine subsidies. Chapter 129: Medical Reform Scope Services of   Published Date: 2008/6 /2 Nationals are entitled to necessary medical services in non-profit hospitals. Fundamental healthcare services are provided by private practitioners and are subsidised by public funds. Private medical insurance can accept insurance in services not covered by the government, e.g. dental treatment, eye treatment and prescription medicines. It ensures that everyone can receive medical treatment, regardless of his financial status. Designated healthcare services are neatly shifted to public or private organisations to improve administrative efficiency and achieve economies of scale.  Policy Evaluation   Social Insurance - Taiwan Public Finance: 64% Private Finance: 36% Medical Spending as a Percentage of Government Expenses: 18% Medical Spending as a Percentage of GDP: 6.3% Objectives To ensure that all citizens are protected by social medical insurance and that they have the right to equal medical services. Fees for a Compulsory National Health Insurance Scheme - The insurance rate is about 4.55% of the insurer’s monthly income. It is to be paid by the insurer and his employer. The insurance fees of unpaid individuals or low-income families are covered by the government. User Sharing - Out-patient treatment fees are between HK$12 and - In-patient service fees (住院費) recover 5%-30% of the total cost, depending on the type of ward and the length of stay. General Taxes - Income Tax 40%, Sales Tax 5% Scope Services of The Bureau of National Health Insurance make contracts with medical organisations with public funds to provide insurers with extensive medical services, including in-patient and out-patient services, dental treatment and prescription drugs.  99% of citizens enjoy medical insurance.  Cost-sharing leads to more reasonable, instead of excessive, uses of medical resources.  Faced with unbalanced budgets of the scheme, the government raised the insurance fee from 4.25% to 4.55%. Financial Sources Policy Evaluation Chapter 129: Medical Reform Published Date: 2008/6 /2 Medical Savings Account - Singapore Public Finance: 31% Private Finance: 69% Medical Spending as a Percentage of Government Expenses: 6.2% Medical Spending as a Percentage of GDP: 3.7% Objectives The government should be responsible for providing citizens with quality and affordable basic medical services… Individuals have the responsibility to save and pay for their medical services. Compulsory Medical Savings Account (Medisave) - 6.5% - 9% of a person’s income, shared between the employee himself and his employer, is kept in his compulsory medical savings account for his medical expenses. Voluntary Medical Insurance Fee - The government has established a national insurance scheme that pays for medical treatment for chronic or severe diseases. Depending on the insurer’s age, the annual fee ranges from HK$155 to HK$3640. General Taxes - Income Tax 21%, Sale Tax 5%  The medical savings and the national insurance scheme cover in-patient treatment, daytime operations, dialysis (洗腎), chemotherapy (化療) and specific chronic diseases.  Patients cannot choose their own doctors while receiving public healthcare services and the government covers 80% of the cost of staying in the cheapest wards (病房) in public hospitals.  80% of basic healthcare services are provided by private practitioners.  It has successfully shifted the financial burden of healthcare to individuals and private organisations.  The efficiency of public medical services improved and patients are treated promptly, e.g. the maximum waiting time for a non-urgent operation is 8 days.  It is certain hat citizens are able to pay for medical expenses and insurance while most of them are protected from acute diseases by medical insurance. Financial Sources Scope Services of Policy Evaluation Private Insurance – The U.S. Public Finance: 44% Private Finance: 56% Objectives Patients should have the right to choose Chapter 129: Medical Reform Medical Spending as a Percentage of Government Expenses: 18.9% Medical Spending as a Percentage of GDP: 15.4% Financial Sources Private Insurance Fee Published Date: 2008/6 /2 General Taxes - Income Tax 41.3%, Sale Tax 2.9 - .25% Scope Services of  Private medical insurance can be purchased by employers or employees. The insurer can use certain private medical services. The government established a federal insurance for people aged 65 or above and the physically challenged. They are entitled to free in-patient treatment, elderly care and home care but outpatient services (門診) and daytime operations are charged separately. Low-income groups or people with poor pre-insurance health records cannot afford high insurance costs. There are about 46 million (16%) people in America with no medical insurance. The costs of medical care are rising rapidly because insurers, upon paying, want the best possible services and hospitals tend to develop high-tech medical treatment so as to charge more. In order to prevent excessive us of medical services, auditors and medical consultants make up as high as 30% of insurance companies’ operating expenses. The government does not provide any medical protection for children, leading to an infant mortality rate of 7% (1.8% in Hong Kong).  Policy Evaluation     Related Movie： SICKO Directed by the famous documentary director Michael Moore, this film depicts many ridiculous cases of medical suffering and criticises the whole medical system as nothing but a private profit-oriented insurance company which does not care about human life. The Existing Medical System in Hong Kong and Its Worries Current Situation Public Finance: 54% Private Finance: 46% Medical Spending as a Percentage of Government Expenses: 12.4 % Medical Spending as a Percentage of GDP: 5.3 % Chapter 129: Medical Reform Published Date: 2008/6 /2 Objective Financial Sources Scope of Services No one should be declined appropriate medical treatment because of financial problems General Taxes - Income Tax 16%, No Sales Tax  Comprehensive services covering all citizens (Except for drugs not included in ‘HA Drug Formulary’ and certain medical equipment) Low price, The hospital maintenance fee is HK$100/Day whereas the cost is HK$3290/Day) Policy Evaluation Public medical treatment is inexpensive, covering all citizens, and general medical expenses are lower than other countries. Compared with other economies, Hong Kong has a very low death rate and life expectancies that are comparable to Japan, Sweden and Norway. Aggregate Performances of Hong Kong and Other Countries Me Infa Life dica nt l Exp Mor ecta Exp talit ncy ense y (Fe s asRat mal a e e) perc （ E enta very ge Tho of usa GD nd P Pers ons ） Bed Ratio （E very Tho usa Chapter 129: Medical Reform nd Pers ons ） Doctor Ratio （ Every Published Date: 2008/6 /2 Thousand Persons） Hong Kong Japan Singapore Mainland China America Canada 15.4 9.8 7 5 80 83 3.3 3.6 2.6 2.1 5.3 8 3.7 4.7 1.8 3 3 23 85.5 86 82 74 4.9 12.9 2.8 2.2 2.7 1.8 1.4 1.1 # WHO’s newest data Future Concerns Increasing Demand for Medical Services - Aging Population: The ratio of the elderly (65 or above) is going to double, from 1 out of every 8 persons in 2007 to 1 out of every 4 persons in 2033. - Rising Morbidity (患病率): Certain lifestyle-related diseases are constantly on the rise, e.g. people with high blood pressure rise from 18% in 1995 to 27% in 2003. Increasing Medical Expenses - Improving Medical Technology: Advancement in medical technology can bring about better treatment results, which also means treatments get more expensive. Effective state-of-the-art (最先進) treatments can lengthen the lives of patients or lead them to receive longer treatments. Longer Life Expectancies: As technology improves and medical information spreads, people are going to have a higher expectation of medical services, inevitably driving up medical costs. # The trend of rising medical costs stemming from improving medical technology and citizen expectation can be named as ‘medical inflation’. Worsening Service Quality Chapter 129: Medical Reform Published Date: 2008/6 /2 - Long Waiting Time: Of the 670 thousand new specialist cases in 2006, about 80 thousand (11.8%) patients had to wait for more than a year, whereas around 12 thousand have to wait for more than 2 years. Heavy Burden to the Grassroots HA Drug Formulary: The Hospital Authority launched the ‘HA Drug Formulary’ in 2007 and from then on about 70 expensive drugs have to purchased by patients themselves. Over 20 are for treating cancer, making a whole cancer treatment cost hundreds of thousand dollars. This policy has already left many patients and their families bankrupt. Some are even forced to cease their medical treatments. Numerous Private Insurance Traps - - According to the Census and Statistics Department, only 29.4% of the Hong Kong population is protected by medical insurance, of which 18.3% enjoys so as part of their fringe benefits provided by employers. Once they quit or retire, these people will become unprotected. Many insurance companies set a maximum age for potential insurers and refuse to insure the old or stop renewing insurance contracts when the insurer is in bad health or old. Medical Reform, Where to Go? Secretary for Health, Welfare and Food York Chow Yak Ngok published the consultation document on healthcare reform ‘Your Health, Your Life’ in March and started the first stage of public consultation. At this stage, we are invited to discuss the main principles of the reform and how different subsidiary financing proposals. Five Keys in the Medical Reform a） Strengthening Grassroots Services Strengthening preventive care to improve public health Subsidising preventive treatment like clinical examinations Promoting family doctor services Buying medical services from the private sector, e.g. non-urgent operations b） Promoting cooperation between public and private medical services c ） Developing Electronic Case History Database Strengthening Public - Hiring private practitioners to work in public hospitals Whether a patient is seeking treatment in a public or private institution, medical staff can, with the patient’s consent, retrieve (檢索) his medical history. Shortening queuing time for public hospital services Investigating the possibility of ‘medical spending d） Chapter 129: Medical Reform Published Date: 2008/6 /2 Medical Safety Net ceiling’ to free patients from worrying about exhausting their savings. In the 2011-12financial year, medical spending will make up 17% of government expenses. Under the existing tax system, public medical expenses are likely to put a heavy burden on public finance, such that the government has come up with 6 subsidiary financing proposals.  e ） Reforming Medical Financing Arrangements  Six Medical Funding Options 1）Social Health Insurance All working persons have to pay a certain percentage of their income to form a social health insurance fund to support public medical services. Income 3-5% All Labour $ Social Health Insurance Medical Fee Payment Services Anyone’s Illness 2） Out-of-Pockets Payments Raising the fees of public medical services, most users, except for individuals with low-income, have to bear to a larger share of the costs. Individual $ Medical Services Fee Payment Individual Illness 3） Medical Savings Accounts Specific groups of individuals have to transfer part of their salaries to their own medical savings accounts to cover their future medical expenses. Medical Services Pre-retireme 自費支付 nt Individual Illness Individual Income 3-5% $ Individual Medical Savings Account Medical Services Retirement Fee Payment Individual Illness 4） Voluntary Private Health Insurance $ Insurance Plan Various fees $Insuranc Fee Payment $ Medical Services Individual Chapter 129: Medical Reform Citizens have to buy their own private medical insurance on the market. Published Date: 2008/6 /2 5） Mandatory Private Health Insurance Specific groups of individuals have to buy government-regulated individual medical insurance schemes. Individual Income 3-5% $ Uniform Insurance Fee Paying Medical Services Individual Illness 6） Personal Healthcare Reserve Specific groups of individuals have to transfer part of their incomes to individual medical savings accounts, of which some is used to buy government-regulated insurance so that everyone can still continue with his insurance policy and cover his potential medical expenses after retiring. $ Uniform Insurance Fee Paying Pre-Retirem Individual ent Income 3-5% Continuing Post-retirement Insurance Payments $Individual Savings Medical Services Individual Illness Conclusion The first stage of the medical reform consultation is going to end in mid-June. Even though the public has not come to a consensus at this stage, underlying our medical reforms is our desire to build for our society a more stable and sustainable medical structure. We want to better protect public health – the sick are treated and the old healthy. Questions to Think about 1. The Hong Kong government has always cared about children’s health. Babies Chapter 129: Medical Reform Published Date: 2008/6 /2 2. 3. 4. that are born in Hong Kong can receive different free child healthcare services between their infancy and primary school stages. From your personal experience, try to list what are covered by the child healthcare services. Of the six medical financing proposals, what are the respective advantages and disadvantages? Which one do you agree with more? (Hint: you may access http://www.fhb.gov.hk/beStrong/ for relevant information.) Given values and beliefs, different individuals are likely to have different ideal medical systems. Try to describe your own ideal medical system. Objective Financial Sources Scope of Services