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Keynote speech by SFH at 4th APEC High-Level Meeting on Health and the Economy (English only)(with photos)
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Following is the speech by the Secretary for Food and Health, Dr Ko Wing-man, at the 4th Asia-Pacific Economic Cooperation High-Level Meeting on Health and the Economy in Beijing today (August 15):

Minister Li Bin, honorable ministers, distinguished guests, colleagues, ladies and gentlemen,

It is my great pleasure and honour to speak at APEC's 4th High-Level Meeting on Health and the Economy. The theme of this year's high-level meeting is "A New Vision for a Healthy Asia-Pacific in 2020". I am privileged to take this opportunity to share with you Hong Kong's journey on healthcare reform in the past few decades, and how we prepare ourselves for the challenges and opportunities ahead.

Hong Kong has long enjoyed the benefits of an effective dual-track healthcare system, by which the public and private healthcare sectors complement each other. Healthcare expenditure accounts for 5.1 per cent of our GDP. The public sector, which is heavily subsidised by the Government, is the predominant provider of secondary and tertiary healthcare services. With 27,000 public hospital beds, the Hospital Authority accounts for 88 per cent of the in-patient services in Hong Kong in terms of bed-days. The private sector complements the public healthcare system in providing primary care services and hospital services for those who can afford and are willing to pay for healthcare services with personalised choices and better amenities. Thanks to the professionalism and dedication of our healthcare professionals, life expectancy in Hong Kong has been ranking among the top in the world, which was 86.6 years for females and 80.9 years for males in 2013. The infant mortality rate remained at a low level of 1.6 per thousand registered live births.

That said, similar to other advanced economies, we are now facing a number of major challenges, most notably an ageing population and rising medical costs. In 2013, the proportion of elderly in our population is about one in seven. This will become one in three by 2041, with huge read-across implications for our healthcare system.

Confronted by these challenges, the Government of the HKSAR has substantially increased its investment in public healthcare over the years. The annual government recurrent expenditure on healthcare reached $52 billion (or around US$6.67 billion) in 2014-15, accounting for 17 per cent of the total recurrent expenditure of the Government. We treasure public healthcare as the cornerstone of our healthcare system and safety net for all. We have and will continue to strengthen and develop our public healthcare system. For instance, we are taking forward a number of major capital works projects to enhance the public healthcare infrastructure, including the expansion and redevelopment of existing hospitals, as well as the development of new hospitals including the first children's hospital in Hong Kong which is currently under construction. As far as ongoing projects are concerned, we shall spend around US$7.6 billion to provide 1,500 additional hospital beds. We have also formulated a blueprint for public hospital development and re-development to further enhance our service capacity to cater for the future demand for healthcare services. Nevertheless, the rising health expenditure, which grows at a rate faster than that of the economy, leads to the important question of how we can ensure the sustainability of our healthcare system in the long run.

Healthcare reform is no news to Hong Kong. Discussions on healthcare reform and healthcare financing began as early as in 1993, when the document "Towards Better Health", more commonly known as the "Rainbow Document" was published, exploring increasing user fees for public healthcare services. This was followed by the so-called "Harvard Report" in 1999 recommending the introduction of social health insurance. The "Lifelong Investment in Health" consultation document published in 2000 explored the feasibility of mandatory medical savings accounts. What these rounds of public consultation revealed was that the community had significant reservations towards any mandatory financing solutions, or any proposal that would change the dual-track healthcare system in Hong Kong.

As a result, we proceeded to develop possible solutions along the direction of voluntary participation, which culminated in a voluntary health insurance proposal that we put forth for public consultation in 2010.

The Voluntary Health Insurance Scheme is meant to be a supplementary financing arrangement that complements the public healthcare system. It is not intended as a total solution to the problems of our healthcare system but one of the turning knobs in readjusting the public-private balance.

Currently, about 2.8 million people, or about 40 per cent of our population, are covered by some form of private health insurance, and among them about 2 million are covered by indemnity hospital insurance. However, for people with private health insurance coverage, half of them still pertained to the public sector in terms of hospital admissions. A question then arises – what is keeping private health insurance from playing a stronger financing role?

We may be able to get an answer from previous public consultations. Many consumers are concerned about a few perceived shortcomings of existing private health insurance, including decline of coverage or exclusion of pre-existing conditions, no guaranteed renewal of policies, inadequate benefit coverage and limits.

With the aim of improving the accessibility and quality of health insurance, our latest proposal is to implement the Voluntary Health Insurance Scheme through a Minimum Requirement approach.

Under the Minimum Requirement approach, all individual indemnity hospital insurance products will be subject to the Minimum Requirements to be prescribed by the Government. The Minimum Requirements comprise key features designed to address the shortcomings of the existing health insurance market and enhance the quality of insurance protection to consumers. Some of the key requirements include –

(a) guaranteed renewal of policies without re-underwriting the policyholder;

(b) coverage of pre-existing conditions, meaning that insurers are not allowed to exclude pre-existing conditions of the policyholder from insurance coverage;

(c) guaranteed acceptance of policyholders; and

(d) minimum benefit coverage and limits, meaning that the benefit coverage must include hospitalisation, prescribed ambulatory procedures, prescribed advanced diagnostic imaging tests, and non-surgical cancer treatments up to a prescribed limit. The benefit limits must also meet the levels prescribed by the Government.

The Minimum Requirements that I outline here are not novel. In overseas countries with a significant private health insurance market, such as Australia, Ireland, the Netherlands, Switzerland and the United States, the governments have all prescribed a set of basic requirements for private health insurance products that are similar to those proposed for the Voluntary Health Insurance Scheme.

With enhanced accessibility, continuity and quality, private health insurance can play a greater role in financing the increasing health expenditure, thereby helping to alleviate the pressure on public healthcare, and strengthen the long-term sustainability of our healthcare system. Upon finalisation of the detailed proposals for the Voluntary Health Insurance Scheme, we will launch a public consultation later this year to seek the community's views.

As I mentioned earlier, the Voluntary Health Insurance Scheme is only one of the tools for readjusting the public-private balance of our healthcare system. In conjunction with implementing the Scheme, we are taking forward a number of complementary policy initiatives in parallel.

First, we are reviewing the regulation of private healthcare facilities, including private hospitals, with the aim of strengthening clinical governance and enhancing transparency of service fees and charges. In particular, on enhancing transparency of private healthcare services, under the strengthened regulatory regime, private hospitals will be required to publish historical statistics on common procedures, and provide a written quotation to patients before they receive treatments. We would also encourage packaged charges for common procedures or tests, and prescribe what a package should contain. To facilitate private hospital development, the Government in March 2013 disposed of a government site through open tender for the development of a new private hospital. The new hospital is expected to commission in 2017. Apart from the successful disposal of the site, we are also considering various proposals from different organisations to develop or expand private hospitals.

We are also in the process of developing an eHealth Record sharing system, which aims to provide timely and accurate information for patients moving between public and private service providers, improving disease surveillance, and bringing about efficiency gains by optimising the use of healthcare resources in the public and private sectors.

Public-private partnership is another tool to help redress the imbalance between public and private healthcare services, with the objective of shortening the queues in the public sector and enabling it to focus on its target areas, such as servicing the underprivileged or handling more complicated cases requiring multi-disciplinary support. Public-private partnership can take a variety of forms, such as the purchase of general out-patient service from the private sector, or transferring ambulatory surgeries to the private sector. We have had quite some success in, for example, significantly reducing the queue for cataract surgery in recent years since implementing the partnership programme.

Other measures or initiatives that we are taking forward include reviewing healthcare manpower planning to ensure a sufficient supply of healthcare professionals in the future; enhancing primary care to ensure the public can receive appropriate medical care in a timely manner; promoting the development of Chinese medicine and practices (including the development of the first Chinese medicine hospital in Hong Kong); and strengthening our surveillance and control of communicable and non-communicable diseases.

Ladies and gentlemen, the challenges presented by an ageing population are common to many economies; yet there is no one-size-fits-all solution to these challenges. Each jurisdiction must develop its own home-grown solution – sometimes through trial and error – having regard to the characteristics of its social, economic and healthcare system. With this in mind, I hope my brief sharing on Hong Kong’s experience on healthcare reform can be of value to you in taking on this challenging task. Last but not least, I thank you for the opportunity to speak here today, and I look forward to some interesting and enlightening exchanges with you.

Ends/Friday, August 15, 2014
Issued at HKT 15:58

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