*************

The following is a speech by the Secretary for Health and Welfare, Dr E K Yeoh at the Annual Dinner of the Hong Kong Federation of Insurers

today (April 7):

Mr Hubbard, ladies and gentlemen,

I'm delighted to be here tonight and to be given an opportunity to talk on a subject that is vital to the health of Hong Kong - for both the economy and for the individual. In doing so, I'm reminded of something that was written by a Roman playwright more than two thousand years ago : "when we are well, we all have good advice for those who are ill".

I hope from what I have to say tonight, the opportunities for the industry to provide the right advice for the healthy and not so healthy will become a little clearer, as the process of reforming our health system moves up a gear.

The Harvard Report was a useful starting point in discussing the health care reforms that Hong Kong needs. And we are grateful to the Hong Kong Federation of Insurers for your submission, which contained very thoughtful insights and comments on the direction in which we should be heading.

We have taken note of the points that you made, including your experience in risk assessment, ensuring quality services and cost-effective benefits, and the large database that you have on insurance related statistics. And we hope this rich pool of information can be used in the process of transforming our health care system.

As you are aware, the government is currently preparing a consultation paper on health care reform and this will be released for public consultation soon. I hope that you will also contribute your thoughts and ideas at that time.

The road to reform is never an easy one, and embarking on such a course of action involves a painstaking consideration of the roles, interests and benefits of the stakeholders in both the public and private sector. We are acutely aware of the critical and complementary role that the private sector must play if we are to ensure a system that is financially sustainable, accessible, affordable, equitable, delivers quality service and provides choice.

We cannot have a well-run and efficient public sector without a vibrant and complementary private sector. The private medical insurance industry is an integral part of Hong Kong's health care system, as evidenced by the fact that 2.3 million citizens in Hong Kong are now covered by some form of medical insurance scheme, with annual gross premiums of over $3.8 billion. No doubt the insurance industry has and will continue to play a significant part in shaping the provision of services as well as the financing of care.

The health care reform process needs to be built on a number of building blocks: collaboration, integration, and innovation. Intersectoral collaboration is key to ensuring that all stakeholders are closely involved, with appropriate channels for input and feedback and better interface between public and private sectors, between users and providers and between physicians in ambulatory and hospital practice. The sustainability of the health care system calls for a high degree of close cooperation and information exchange between various industry sectors. For example, the quality and cost of health care services, choice of providers, responsiveness to community needs, as well as the efficient allocation of resources all require complementary and co-ordinated efforts of all sectors, including the insurance sector, in both the planning and implementation stages of reform.

In order to provide health care in the most efficient and effective way possible, service integration is one of the critical means to ensure that patients have reasonable access and choice, without compromising affordability, quality and financial sustainability. The insurance industry will have a major impact on enhancing and furthering this principle.

One important means of doing so will be the development of insurance products with respect to outpatient, inpatient, long-term and dental care. How and at what level these products are priced will significantly influence service utilization rates and patterns, service provision priorities, as well as provider choice and affordability. Through establishing a formal channel of communication with the Federation, we hope to maintain a continued dialogue with the industry to refine and develop products which facilitate health care service integration, support service priorities, and meet community needs and expectations.

If we are to provide long-lasting solutions to the problems that we have identified, such as financial sustainability, variable quality and compartmentalization, we must strive to be innovative because our health care system is being faced with some tough challenges. We have seen from the experience of other countries that "single doctrine"-based solutions rarely work. The U.S., for example, has used the free market concept as a basis for its health care policy. While this has provided significant freedom in allowing market forces to shape the system, it has also paid a high price in terms of affordability, expenditure escalation and accessibility. At the same time, countries which have adopted "social insurance" as a doctrine have also suffered from provider-and user-induced moral hazard and expenditure escalation, which in some cases have led the health care system to the brink of bankruptcy.

A very important part of our search for innovative solutions must lie in a multi-faceted approach which is not limited by overly simplified doctrines, so that we do not repeat the mistakes of other countries, and there should be ample opportunities in the decades ahead as we transform our system.

These are some of the challenges confronting us as we enter the next phase of our plans to bring much-needed reform to our health care services. During the process, I look forward to working closely with you to achieve what I hope is a common vision - sustainable, accessible, affordable, equitable and quality care for all.

Thank you.

END/Friday, April 7, 2000 NNNN