There are concerns in the community whether the Voluntary Health Insurance Scheme (VHIS) its objectives to enhance "accessibility, quality and transparency" of health insurance products, and strengthen consumer confidence in exercising their insurance coverage to patronise private healthcare services, according to the Legislative Council (Legco) Secretariat which this week released a research brief on "Health insurance for individuals in Hong Kong".
Outlining the reasons for the concerns, the paper says:
- The regulatory regime is entirely voluntary and is confined to certified plans under VHIS. For the existing stock of non-compliant policies in the market, they are still "lightly regulated". Health insurers can continue to sell such products, without addressing the product caveats discussed above.
- Two important product features, namely "guaranteed acceptance" under the high risk pool (HRP) and "portable insurance policy", are not included as minimum requirements of VHIS. These exclusions undermine the overall attractiveness of VHIS.
- The minimum requirements laid down in certified plans are not entirely new, as some of them are already seen in existing individual-based health insurance (IHI) products. Coupled with expectation of higher premium of certified plans, there are doubts whether VHIS are attractive to members of the public.
- As health insurers have limited incentives to accept high-risk individuals who may then have to continue to stay in the public healthcare system, it undermines the policy objective to improve the structural imbalance in the healthcare system.
- It appears that there is no specific provision under VHIS to address the issue of high administration cost in running the IHI system in Hong Kong, precipitating concerns whether it could effectively improve the structural imbalance in the overall healthcare system
The Hong Kong government aims to enrol 1.5 million people in the scheme over the next three years so as to ease the burden on the public healthcare sector. The Food and Health Bureau will launch the VHIS in early 2019, offering a HK$8,000 ($1,020) tax break per subscriber as an incentive to join the scheme. The plan will allow policyholders to use private medical services until they are 100 years old.
The annual average premium for the standard plans under the voluntary scheme would be about HK$4,800 initially but “some health insurers expect that such premium could exceed HK$5,000 in 2019”, the Legco paper states. This is higher than the average annual premium of HK$4,365 for existing IHI products in 2016, it notes.
The paper notes that the number of local people covered by IHI schemes has surged by 78% within a decade to 2.4 million in 2016, along with a leap in the penetration ratio from 20% to 34%. Market premium has almost tripled to about HK$10.3 billion in 2016.
However, less than three fifths of the insured people covered by IHI policies were treated in private hospitals, indicating a general hesitation amongst IHI policy holders to patronise private hospitals.
This could be partly attributable to caveats of existing IHI products in the market, including a lack of premium transparency and budget certainty, declined coverage of pre-existing conditions, no guaranteed renewal of policies, frequent reports of disputes and complaints over insurance claims.
The paper states, “Cupled with the omission of high-risk pool and expectation of higher insurance premium, the policy target to cover 1.5 million people under the VHIS within three years seems to be quite challenging.”