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Health care systems all over the world are faced with juggling equity, accessibility, affordability and quality with long term financial sustainability, the Secretary for Health and Welfare, Dr E K Yeoh, said.

And while the problems are similar, he said the solutions covered a wide spectrum, depending on cultural, social, political and economic factors.

Addressing the Zonta Club of Hong Kong East luncheon today (March 16), Dr Yeoh said it was not feasible to have a "one-size-fits-all" model for health care reform because the differences in cultural, social and political contexts made it neither practical nor acceptable for policy makers to replicate another country's health care system.

"The most pragmatic approach is to look at specific features of other models and determine whether and how these can be shaped and refined to suit our own needs," he stressed.

Comparing four main types of health care financing mechanisms, he said the Hong Kong system was primarily based on tax revenue; Singapore relied on a compulsory individual medical savings scheme; the United States was market oriented; and Taiwan was social insurance based.

In Hong Kong, 98 per cent of the public health care services is based on tax revenue which has the advantage of being fairly straight-forward and efficient. At the same time, 91 per cent of the private health care expenditure is financed by out-of-pocket payments, which is mainly for primary outpatient care and payment for private insurance premiums. Secondary care is mainly provided by the public sector, at very heavily subsidized prices.

Although Hong Kong has been able to achieve an accessible, affordable and equitable health care system through subsidies provided by the Government, Dr Yeoh believed that continued total reliance on Government funding was not viable for two reasons.

"One is that Hong Kong's tax base is narrow and therefore cannot cope with continued rises in health care expenditure," he explained, citing statistics to show that expenditure on health for the year 2000-01 will account for 14.7 per cent of Hong Kong's total recurrent budget.

"The second is that aging of the population with the associated rising prevalence of chronic diseases and technological advances will increase the need and supply for health care. Even though productivity and efficiency in the delivery of health care services have continued to improve and efforts to contain costs have been made, these cannot entirely make up for the increases in expenditure."

Singapore's total health care expenditure now accounts for a relatively stable 3.6 per cent of its GDP. The split between public and private funding sources is 33 per cent for government and 67 per cent for private, which includes the monthly contribution of six to eight per cent of income by both employers and employees to Medisave Accounts.

"The ability of Singaporeans to use their Medisave Accounts to pay for both public and private sector services have taken some of the pressure off of the public system to be the main provider of health care, particularly with respect to more expensive secondary care. At the same time, users are able to exercise greater choice of providers in the public and private sectors," Dr Yeoh said.

"As with many health care financing systems when changes are implemented, a cascade of other changes ensue. In the regulation and operation of health care services, Government has also examined the cost effectiveness of health care interventions and has stated explicitly that it will not subsidize heart, lung and liver transplants or extravagant efforts to keep gravely ill patients alive.

"Singapore has promoted individual responsibility and has reinforced efforts to contain costs to keep basic health care services affordable," he noted.

Turning to the US, Dr Yeoh said that the country spent US$1.1 trillion on health care in 1997, of which 46 per cent of the funding came from the public sector and 54 per cent from private sources.

While the private side is dominated by managed care and other health plans operated by private insurance, the public side has two major publicly funded programs - Medicare and Medicaid, which are mandatory insurance programs limited to the elderly, the disabled, and some low income earners. They provide coverage to 80 million Americans for inpatient and outpatient care and are responsible for one-third of all health care spending.

However, the majority of the population must rely on a combination of managed care plans purchased by employers, private insurance, and out-of-pocket payments and 40 million individuals are not covered by some form of medical insurance. While strategies in both the public and private sectors have helped slow the rate of growth of health care spending since 1995 and is currently approximately 14 per cent of GDP, they have also had a profound impact on both users and providers.

For users, Dr Yeoh noted, the choice of providers and services are limited by efforts to contain costs. For providers, most has had to join a large group of practice and to bear the financial risk for treatment decisions. Physicians also contend that their autonomy has been curtailed.

"The US reforms have produced a leveling out of rises in health care expenditure, but whether costs will stay down is debatable," he said.

As regards Taiwan, it operates a mandatory National Health Insurance (NHI) scheme, with prices set by the Bureau of National Health Insurance. Equal access to health care is a major objective of the scheme. Seventy to 90 per cent of inpatient care costs are paid by NHI, while average out-of-pocket co-payments are no more than six per cent of average per capital income.

Between 1995-98, health care expenditure grew by 57 per cent due to two major factors. "The first was low co-payments, particularly for outpatient care, which resulted in utilization rates to 15.1 visits per year and accounted for 70 per cent of total expenditure in 1998.

"The second was a fee-for-service payment system which gave incentives to providers to induce greater service utilization in order to boost income."

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Dr Yeoh noted that the NHI Bureau began to contemplate strategies to increase revenue and reduce costs, including improvement of the premium collection rate, better capital management, changing the payment system from fee-for-services to case-based payment, auditing of contracted providers and monitoring of drug prices.

"The Taiwan experience serves as a reminder that the pursuit of values such as equity, accessibility has to be considered in the context of affordability. It also needs to take place with simultaneous consideration for adequate checks and balances," he said.

Summarizing the pros and cons of the various systems, Dr Yeoh reiterated that the greatest challenge for Hong Kong in the long term was to make use of the experience from other countries while refining proven reform strategies to suit our own unique characteristics and values.

"It is also important that our reform process be evolutionary, building on our current strengths. But most of all, we must have shared commitment and long term vision. After all, we are pursuing the same goal - better health for the community that is affordable and equitable.

"A system can only be viable if there is a system of shared responsibility between the Government and the individual, where those who can afford to contribute to maintaining their own good health; while those who are less fortunate can still rely on a system that provides a quality health service at a cost the community can afford," he added.

End/Thursday, March 16, 2000

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