Hong Kong plans to steer 1.5 million towards private health sector

Hong Kong wants more of its citizens to benefit from private hospitals and is launching a voluntary insurance scheme to shift 1.5 million people towards the private health sector.

Under the Voluntary Health Insurance Scheme, subscribers will receive a HK$8,000 (US$1,020) tax break as an incentive to join. The plan seeks to ease the burden on the city’s highly congested public health care system.

However, the move might prove “challenging” due to potentially high premiums and exclusion of high-risk individuals. “There are concerns in the community whether the Voluntary Health Insurance Scheme can achieve the stated objectives,” a Legislative Council paper said.

“Two important product features namely ‘guaranteed acceptance’ under the high risk pool and ‘portable insurance policy’ are not included as minimum requirements of the scheme after the public consultation concluded.”

An independent consultant estimated that about 1 million people would buy such plans in the first two years, increasing to about 1.5 million people in the third year of implementation.

The plan would allow policyholders to use private medical services until they are 100 years old.

Critics say the government scheme is flawed as it will not reach low-income earners who do not pay tax and cannot afford medical coverage.

As many as 3.26 million people – 47% of the local population – were covered by health insurance in 2016, comprising 1.48 million people with individual policies, 860,000 with group-based policies only and 920,000 with both types of policies, according to the Census and Statistics Department.

Pedro Gonçalves
Pedro Gonçalves is Financial Correspondent at International Investment.

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