The Way to a Healthier Health Care System

Lok-sang Ho

作者對哈佛專家小組就醫護保險的多項建議作出質疑，並提出其基於瑞典模式，認為較可行的改革措施。

While the Harvard Report makes it clear that with an ageing population, slower economic growth, rapidly improving medical technology, and increasing expectations, the community has to face the reality of having to shoulder more burden or sacrifice access and/or quality, its recommendations stopped short of providing a way to contain costs and to enhance efficiency.

The Health Security Plan

The proposed Health Security Plan (HSP) is intended to provide insurance benefits. It shares a key similarity with my earlier proposal, "Excessive Burden Insurance?EBI). Both EBI and HSP protect people against unexpected large medical expenses. There are however two key differences. First, EBI caps a household's annual expenditures on all qualified medical expenditures. HSP, however, caps only the hospitalisation expenditures for each admission. Second, EBI is entirely financed by taxes. The HSP, on the other hand, is financed by a 1.5 to 2% levy on income (albeit with a cap). Obviously, the HSP has a direct adverse effect on Hong Kong's competitiveness.

Under the HSP, $2500 is charged for the first day of hospitalisation and additional, though much lower, charges are paid each day for up to a week. This arrangement is designed to contain the problem of moral hazard. However, moral hazard for hospitalisation services is not an important issue as there is an effective gatekeeping mechanism run by professional physicians. Even though moral hazard may still exist we know that the majority of hospital admissions are involuntary. Because the deductibles are chargeable for each admission there is clearly the potential for multiple payments in a year worth over $5000 each time. We cannot underestimate the possibility of disputes if a discharged patient is readmitted within a short period of time.

Compared to hospitalisation services, accident and emergency, ambulatory care, and outpatient services are much more likely to be subject to the problem or moral hazard. I proposed imposing or raising the charges for all covered health care services to offset the direct cost involved in delivering services to the patient and that the charges should be set at a level that will make it not attractive to provide more services. This is my way of controlling moral hazard. In contrast, the Harvard Report apparently would exempt the poor from all charges, while raising charges paid by the better-to-do significantly. Because of the need to control wasteful moral hazard I do not agree to exempting the poor from all charges. I do agree, however, to lowering charges for them and letting them have the benefit of a lower yearly spending threshold.

Money Follows the Patient

I am particularly critical of this proposal. It is not right for public hospitals to compete for patients?admissions, because this will engender wasteful competition and moral hazard on the part of hospitals. Hospitals should concentrate on providing services professionally, rather than competing for financial resources.

Private/Public Sector Interface

I support having uniformed charges on "standard services" throughout the entire health care sector and believe that this is the only way to utilize the capacities of the private sector and the public sector optimally. I do not agree to separate agencies negotiating charges with health care providers separately, as suggested by the Harvard Report. Indeed, there should be just one basis for pricing determination, which is basic cost recovery without any financial gain. This is the only effective way to control supply-side moral hazard. To elicit participation from private health providers, a yearly grant reflecting the range of services provided and the capacity of these providers can be given.

Under my proposal, private providers are free to provide above-standard services and charge any fees the market can carry. Those private providers that do not want to participate in the EBI scheme can charge any prices they want but they will do without the yearly grants. Private insurers can provide insurance covering above-standard services as well as the user charges. (i.e., within the yearly spending threshold).

Separating the Territory into 12 to 18 Regional Health Care Administrations

I cannot see the logic behind this proposal. A regional health care administration makes sense if its epidemiological parameters are different from those of others and if the population is large enough. As a rather small place, Hong Kong certainly cannot support so many regional health care administrations. The proposal will increase administrative cost. Dividing up the administration into separate entities goes against efficient resource allocation.

Medisage

Medisage is just another form of payroll tax. Already there is the mandatory provident fund for retirement. With Medisage there is the risk that the demand for institutionalized care will rise sharply. When this happens, it is doubtful whether the proposed rates of charges are sufficient.

Conclusions

If user fees are not set at levels that induce cost saving, suppliers will provide more services than is necessary and users will tend to abuse the system. If suppliers are producing too much it may actually do harm to health. If users abuse the system it also leads to low quality service. It is unfortunate that the Harvard team sees user fees as incompatible with risk pooling. My EBI plan, by combining user fees with a cap on expenditures, preserves incentives to economize and protects.

What will prevent users from rapidly spending beyond the threshold and then enjoy additional services free? The answer is simple. Spending beyond the threshold is no fun. Having to be hospitalized or having to visit clinics so many times in a year is not enjoyable. The covered services are basic services, and a new year will set in before long so the patient will have to pay again.

In short, I do not see much need to control moral hazard for major medical needs. Demand side moral hazard is essentially a problem for minor medical needs, and it is generally less of a problem than supply side moral hazard.

Unlike the proposed measures under the Harvard Report, the success of which have yet to be empirically proven, Universal Excess Burden (UEB) scheme has been successfully tried elsewhere. Sweden has used it successfully, with wide public support and with the growth of medical expenditures contained. Sweden has two kinds of yearly spending thresholds. One is the threshold for drugs (it is currently at 1800 krones). The other is the threshold for care (900 krones per year).

UEB also has the added advantage that the community can decide the level of the yearly threshold. By raising it, the tax payer will be less burdened and patients will pay more. The community can also decide what services should be covered in the UEB. Community participation becomes much more active and with that we will begin to have a healthy health care system.

Prof. Lok-sang Ho is the Director of the Centre for Public Policy Studies at Lingnan College.