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The Government today (December 15) launched a three-month public consultation on the Voluntary Health Insurance Scheme (VHIS) to consult the public on implementing a government-regulated, market-operated VHIS.
Speaking at a press conference today, the Secretary for Food and Health, Dr Ko Wing-man, said that the VHIS is a supplementary financing scheme for adjusting the balance of public-private healthcare sectors. It enables those who are willing and able to afford private healthcare services to purchase value-for-money private health insurance in the market.
He said: "The Government intends to encourage more people to use private healthcare services through the VHIS. This will help relieve pressure on the public system, and users of public healthcare services can benefit from shorter waiting time and enhanced service quality, thereby contributing to the sustainable development of Hong Kong's healthcare system."
Under the proposed VHIS, all individual indemnity hospital insurance products must comply with the Minimum Requirements prescribed by the Government. When selling individual hospital insurance, insurers must offer to consumers a Standard Plan that meets all 12 Minimum Requirements as an available option, so as to enhance the accessibility and continuity of hospital insurance, as well as the quality and transparency of hospital insurance.
According to the estimate of the consultant commissioned by the Government, due to the enhanced protection offered by the Standard Plan, the average annual standard premium of the Standard Plan is about $3,600 (in 2012 constant prices) and about nine per cent higher than the average premium of individual hospital insurance products (general ward level) in the market.
The 12 Minimum Requirements of the Standard Plan are:
(1) guaranteed renewal with no re-underwriting;
(2) no "lifetime benefit limit";
(3) coverage of pre-existing conditions subject to standard waiting period;
(4) guaranteed acceptance with premium loading capped at 200% of standard premium for –
(i) all ages within the first year of implementation of the VHIS; and
(ii) those aged 40 or below starting from the second year of implementation of the VHIS;
(5) portable insurance policy with no re-underwriting when changing insurer, provided that no claims were made in a certain period of time (say, three years) immediately before transfer of policy;
(6) benefit coverage must include medical conditions requiring hospital admissions and/or prescribed ambulatory procedures;
(7) benefit coverage must include prescribed advanced diagnostic imaging tests (subject to a fixed 30% co-insurance to combat moral hazard); and non-surgical cancer treatments up to a prescribed limit;
(8) benefit limits must meet prescribed levels;
(9) no cost-sharing (deductible or co-insurance) by policyholder except the fixed 30% co-insurance for prescribed advanced diagnostic imaging tests; and annual cap of $30,000 on cost-sharing by policyholder (excluding excess amount payable by policyholder if actual expenses exceed benefit limits);
(10) budget certainty for policyholder through –
(i) Informed Financial Consent: a policyholder should be informed of estimated charges and estimated claims amount through written quotation before treatment;
(ii) No-gap/known-gap arrangement for at least one procedure/test: a policyholder can enjoy "no-gap" (no out-of-pocket payment is required) or "known-gap" (a pre-determined amount of out-of-pocket payment) if the procedure concerned, the institution (e.g. hospital) and doctor selected by the policyholder are on the lists agreed among his/her insurer and healthcare providers;
(11) standardised policy terms and conditions; and
(12) transparent information on age-banded premiums through easily accessible platform (e.g. websites of insurers and the VHIS regulatory agency to be established).
To ensure that high-risk individuals (i.e. their applications are either rejected by insurers, or accepted with additional clauses imposed in their policies excluding their pre-existing conditions, or charged a premium loading at a rate deemed appropriate by insurers) are able to purchase hospital insurance complying with the Minimum Requirements, the Government proposes to set up a High Risk Pool (HRP). The HRP will be supported by public funding. The HRP will be open to all in the first year upon the implementation of the VHIS and limited to those aged 40 or below thereafter. The policyholder shall pay the premium with a premium loading at 200% of the standard premium prescribed by the insurer. It is estimated that the total cost to the Government for funding the operation of the HRP for a 25-year period (2016 to 2040) would be about $4.3 billion (in 2012 constant prices).
The Government also proposes that, where the expiry of the existing individual hospital insurance policies falls within one year of implementation of the VHIS, insurers are required to, upon such expiry, offer an option to policyholders concerned to migrate to an individual hospital insurance policy that meets or exceeds the Minimum Requirements without being re-underwritten for benefit coverage and benefit limits in existing policies. After the aforementioned one-year window period, policyholders who wish to migrate to compliant policies may be subject to underwriting if deemed necessary by the insurer concerned. For policyholders who do not wish to migrate but to renew their policies, whether within or after the said one-year period, on the same old terms or any other terms which fall short of the Minimum Requirements, such policies will be grandfathered, i.e. exempted from the Minimum Requirements as long as the insurers concerned continue to administer such policies.
Group hospital insurance is not required to comply with the Minimum Requirements prescribed by the Government. To better protect employees' interests, the Government proposes to require insurers to offer as an option to employers an elective component – the Conversion Option – in the group hospital insurance products. If the employer decides to purchase the group policy together with the Conversion Option, an employee covered by such group policy can exercise the Conversion Option upon leaving employment so that he/she can switch to an individual Standard Plan at the same underwriting class without re-underwriting, provided that he/she has been employed for a full year immediately before transferring to the individual Standard Plan.
In addition, insurers may offer, on a group policy basis, Voluntary Supplement(s) to individual members covered by a group hospital insurance policy who wish to procure at their own costs additional protection on top of their group policy. The group policy, enhanced by the Voluntary Supplement, should provide insurance protection at a level comparable to the protection of an individual Standard Plan.
Dr Ko said, "In order to encourage people to purchase VHIS plans, we propose to provide tax deduction for individual hospital insurance policies complying with the Minimum Requirements. We will explore the detailed arrangements after the public consultation."
Dr Ko emphasised that, while taking forward the VHIS, the Government will continue to uphold the dual-track healthcare system by which the public and private sectors complement each other. The Government will strengthen its commitment to the public system and continue to provide a high quality and efficient healthcare safety net for all.
He said, "The Government's recurrent expenditure on medical and health services in the past seven years increased from $32 billion in 2007-08 by over 60% to $52 billion in 2014-15 (public health expenditure now accounts for about 17% of the Government's total recurrent expenditure); the Government is also embarking on a programme of public hospitals development, redevelopment and expansion, including the construction of the Tin Shui Wai Hospital and the Hong Kong Children's Hospital, expansion of United Christian Hospital, redevelopment of Kwong Wah Hospital and Queen Mary Hospital, etc.
"The Food and Health Bureau will also implement various policy initiatives to complement the VHIS, including strengthening the regulation of private healthcare facilities, enhancing the capacity of private healthcare services and reviewing healthcare manpower planning. If the community supports the VHIS proposal, we will proceed with legislative procedures in order to implement the proposal."
Copies of the VHIS consultation document are available for collection at district offices or can be downloaded from the VHIS website (www.vhis.gov.hk). The public can send their views on this consultation document on or before March 16, 2015, by email (vhis@fhb.gov.hk), by post (Healthcare Planning and Development Office, Food and Health Bureau, 19/F, East Wing, Central Government Offices, 2 Tim Mei Avenue, Tamar, Hong Kong), or by facsimile (2102 2525).
Ends/Monday, December 15, 2014
Issued at HKT 16:31
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