Press Release

 

 

CS' speech at luncheon meeting of HK Academy of Medicine

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Following is the full text of the speech by the Chief Secretary for Administration, Mrs Anson Chan, at the First Academy Fellows Luncheon Meeting of the Hong Kong Academy of Medicine today (Friday):

"The 21st Century: Challenges and

Opportunities for the Medical Profession"

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Mr President, distinguished guests, ladies and gentlemen.

I am very honoured to have been invited to address the First Academy Fellows Luncheon Meeting. I think, looking around this room this afternoon, I can see that there will be no shortage of expert diagnosis and help on hand should one of us accidentally fall ill!

But before I address such a distinguished gathering, I believe I should declare a strong family interest in medical matters -I see Uncle Harry here, and of course brothers Frank and David, not to mention Brother-in-law, TK, and a number of cousins who are also doctors. I hasten to add that from my point of view, this is an unmitigated blessing since between the whole lot of them I can probably have all my medical needs attended to.

There is a further connection as well. Your esteemed vice president, whom I see most Mondays in his capacity as Chairman of the Legco House Committee, was able to give me his kind and expert professional attention when I recently discovered, contrary to some perceptions that I am not a bionic woman.

In a way, the subject of health is never far from people's minds. When you think about it, there is one question we often ask ourselves, or raise with our friends, even jokingly and that is, given the choice, what would we prefer - wealth or good health?

Of course, the natural inclination is to say both. But as the question doesn't allow this, the answer is invariably - good health. We all want to remain healthy. But to do this in today's economic and social climate, no matter whether it is in Hong Kong, the United States, Australia, the UK or wherever - costs a good deal of money.

To illustrate my point. Five years ago Government's 'public health bill' was $17 billion. This year it is estimated at over $30 billion - a 75% increase. This is almost one-sixth of our total recurrent government expenditure. And the figure does not include capital projects - the new hospitals, new clinics, new equipment, which add several billions more.

And what do the majority of people pay to receive the benefits of this health care system in public hospitals - $68 a day, when the average costs are around $3,000 a day. In other words, the government, or the taxpayer if you like, is subsidising over 97% of these costs. And for one-third of the patients even this fee is waived.

So, little wonder then there is resistance to change! Who would want to give up access to quality government medical services for which there is virtually no charge?

But, like the health warning on cigarettes - We do not believe that this situation can continue.

In the past because of strong sustained economic growth, Government has been able to finance a whole range of social services that the community needs at increasingly higher standards in terms of both quality and quantity. Health spending this decade grow in real terms at an average of 7% per annum, much faster than the growth in total Government expenditure. But with our economy maturing and the reality of much slower growth in the wake of the Asian financial turmoil, Government spending will have to be strictly controlled if we are to meet our obligations under the Basic Law. In other words, alongside with other services, the good old days of 7% growth per annum are gone. It has already been projected that our public health bill will consume over one-fifth of Government's total recurrent expenditure in 17 years' time, just simply to maintain current quality and access to public health services. If nothing is done, health care will increasingly crowd out other essential social services or services will slowly deteriorate. So, the options facing us are very stark indeed.

I trust you will all agree that doing nothing is not an option. The longer we delay change, the more painful will be the consequences, both for the Government and for the community as a whole. That is why we commissioned the Harvard team to take a comprehensive look at both the funding and the delivery of health services in Hong Kong.

I am pleased to see that support for reform has already been voiced by some within your profession. Your own vice president recently wrote: "When a policy on health care - an essential social issue - has not been debated, let alone reformed for a quarter of a century, change must be imminent if not already too late". I say amen to that.

What changes do we want to see? The Harvard report has thrown out the challenge with its recommendations. The debate is only three weeks old but it has already sparked a good deal of comments. We want the debate. But at the end of the day, we want reform of the health care system that will be sustainable as we move into the 21st century.

Since the release of the Harvard Report on 12 April, the Secretary for Health and Welfare, her colleagues, and the Harvard team have taken part in over 20 media interviews, briefings and programmes to explain the content of the Report. They have attended over 11 discussion sessions and seminars to exchange views on this important subject with medical doctors, health care professionals, welfare organizations, patient groups, academics and other community leaders.

So far, the views expressed are very diverse. But one clear message that has emerged is the general consensus on the need for reforms. However, public discussions seem to us have so far been rather lopsided. Views and criticisms have tended to focus on the financing side only. The equally important organisational and structural nature of the reforms seems to have escaped many.

I'd like in this address to focus on some of the key issues which I believe are all need to address in the coming few months.

I have referred to the costs earlier on in my address. These costs will be exacerbated by our ever-growing aging population and their reliance on the system for both hospital and other related services due to a higher incidence of chronic conditions. By 2016 we estimate we will have over 1 million people above the age of 65, almost double the 1997 figures. And our elderly patients spend double the number of days in hospital care than the average patient - in some cases up to 17 days. And this, together with other factors, pushes up the cost per admission to between 3 and 4 times the norm.

The second area that we need to address, is a public health care service that attracts a disproportionately large number of affluent people.

Why does the public sector provide some 92% of the total bed days, including for top income earners, while only 8% of the bed days are in the private sector hospitals. Presently, everyone can have access to good quality public health care by paying only 3% of what it costs the Government to provide a hospital bed. This huge Government subsidy for all, irrespective of means is inequitable, unsustainable and makes it very difficult for the private sector to compete.

Figures show that both the inpatient and outpatient services in the public sector increased by 5% annually between 1991 and 1996. However, during the same period, utilization of private sector inpatient care actually dropped, admittedly by only a fraction, [0.07%], and outpatient care rose by only 2.1%.

How do we go about finding solutions to the escalating costs?

The fallout from the Harvard team's proposals, I think, has hit Hong Kong like a force-10 typhoon. As you know the proposals involve, on the one hand, the risk pooling concept of a compulsory health insurance plan to protect people against unexpectedly large medical expenses; and, on the other, an individual savings account, known as MEDISAGE, to be used to purchase long-term care insurance on retirement or disability.

A risk pooling insurance scheme might be anathema to a society that treasures individualism and freedom of choice. But the government needs to devise a solution that embraces the whole community - from the wealthy to the poor, from the sick to the healthy. If the Harvard team recommendations are not acceptable, then we need to find another solution to share out responsibility.

Those who argue they are not prepared to pay now because they're not sick, or they don't want to 'subsidise' those who are ill, are ignoring the fact that one day - and it may come sooner than they expect - they too will get sick. They will get old. They will need medical attention. No one likes to think about it. But, no one can escape these truths.

You might ask: Is raising taxes a solution to the funding problem?

I note that some are calling for taxes to be raised. We can of course continue to finance public health services through taxes. But I think we should be clear what this means. Under our simple and low taxation system, only 40% of the working population pay tax at all, and less than one per cent of those pay the full 15%.

Meeting escalating health expenditure through general revenue means widening the tax base to introduce new taxes and bringing more people into the tax net. Those who are already paying will have to pay more. This proposal, I think, is every bit as controversial as compulsory savings or pooled insurance. Putting aside the issue of equity, such a move is also likely to undermine the strength of our current simple and low tax system and in turn threaten Hong Kong's economic development.

So, if increasing tax is not the answer, can we increase fees and charges?

We had this debate, as you recollect, in the early 1990's. But it was rejected because it was alleged that it would place too great a burden on the sick and those who fell between the gap of the wealthy and the poor - in other words the so-called middle class.

It was argued that raising user fees will hurt a person at a time when the person is most vulnerable, that is, at a time when the person is ill, and in some cases, has lost his earning power. Just to maintain our present health care quality and accessibility, and if the Government is to keep its future expenditure on health care at about 14% of its total public budget, the $68 a day we now pay for public hospital services would have to rise to $1,400 a day at present day cost in the year 2016.

At such a price level, even our middle class might well have difficulty in paying the hospital bill. When you analyse it, wouldn't it be better for all of us to plan ahead and to pool this risk through employment-tied contributions so as to protect individuals from such a potential burden at a time when the person is least able to shoulder it.

Another area which I believe should be examined is the role of the public and private sectors.

The private sector in Hong Kong has traditionally played a very important role in the growth and development of health care in Hong Kong. We want to see this continue because it offers the public the widest possible choice. The Harvard proposals appears to be an attempt to remove unnecessary barriers between the private and public sector health care, whilst still allowing the private sector a character and identity of its own. For example, specialists should be able to continue their practice and indeed deal with a higher patient load if a risk pooling insurance fund was adopted. In the final analysis we want a healthy and viable private sector to share out the health care responsibility.

Some have questioned the need to embark on health reforms now, particularly with a new mandatory provident fund scheme to be launched next year.

I think I should point out that we are not talking about introducing a new health system tomorrow, next year or the year after that. We have begun the initial consultation phase. As the Harvard report notes it takes more than a decade to effectively implement major structural changes.

But we need the debate now, and we need to explain that in assessing any future option we should bear in mind what will happen in 10 to 15 years' time when the existing methods of financing health care are simply no longer sustainable.

And we shouldn't be side-tracked by discussion of the Mandatory Provident Fund Scheme as this is expected to be fully implemented by the end of next year, well ahead of any changes to health care funding.

In any event the MPF is for an entirely different purpose. It's clear to us that no matter which financing option is adopted in the long run - whether it is a mandatory scheme, increased taxes, higher fees and charges, or some other yet to be discussed proposal - it will inevitably lead to some form of redistribution of income, with the medical costs for those without means being borne by those who have means. The so called middle class is not being targeted. They have always shared the costs and any changes will not alter that situation.

Structural Reforms to the Health Care System

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The debate has so far largely focused on funding. But equally important are the sweeping structural reforms recommended in the report.

I notice that some within the medical profession have been, perhaps, a little too pre-occupied with criticisms levelled personally at them. Whilst this is understandable, I hope it will not divert attention away from the bigger picture. The report has highlighted inadequacies and inefficiencies in our present organisational structure with its over-emphasis on hospital-dominated curative care. It also points to the need to effectively link primary health care with specialists and hospital services so patients can move easily through the entire health care system. Our current service delivery mode is clearly outdated.

The concept of an integrated health care system must be appealing - particularly if (as the report says) a lack of co-ordination and cohesion adversely affects patients' health and health care, unnecessarily increases costs, and does not effectively address the needs of a population increasingly suffering from chronic illnesses.

There will no doubt be considerable debate about whether we want, in the longer term, to reorganise the Hospital Authority into 12 to 18 regional Health Integrated Systems each providing - in contract with the private sector - a defined benefit package for patients that will include preventive, primary, outpatient, hospital and rehabilitative care. Is this part of the solution, or are there better alternatives? Should we be making more use of family and community medicine and traditional Chinese medicine?

We want to move ahead. To reform the system. To improve our delivery. To target funding at the most needy, and into more productive areas, such as preventive medicine and community-based primary care. And we want to keep a lid on costs.

The proposals in the Harvard report have far reaching implications for the Government, for the community and, I suggest, for the medical profession as a whole. We have an open mind about these recommendations. We realise that some are controversial. That is why we are as a first step soliciting comments from all concerned before drawing up proposals on the way forward. We wish to see a wide ranging and constructive debate about the options facing us. We hope on the basis of public comments to issue a Green Paper for further consultation by the end of this year. This paper will set out Government's thinking on the way forward. I urge you all to help steer the public debate on the important issues that the report raises. These are tough issues which raise even tougher questions and we have to get the answers right.

Conclusion

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Let me conclude by reminding you all of the Government's guiding principle in the provision of health care. It is this: "Every resident should have access to reasonable quality and affordable health care. The Government assures this access through a system of shared responsibility between the Government and residents where those who can afford to pay for health care should pay."

The Government has no intention of cutting back on health care expenditure. The reform of our health care is not simply just about dollars and cents. It is a timely opportunity for us to improve on overall delivery of services to achieve ultimately the goal of health for all. We look very much to the medical profession to help us find the right prescription for the community and, indeed, for your own profession. This is perhaps the biggest challenge facing your profession as we move into the new millennium. But in challenges, there are also opportunities and I personally have no doubt that the medical profession as a whole will rise to this challenge admirably.

Thank you.

END/Friday, April 30, 1999

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