Replies to LegCo questions
LCQ7: Health Protection Scheme
Following is a question by the Dr Hon Leung Ka-lau and a written reply by the
Secretary for Food and Health, Dr York Chow, in the Legislative Council today
(December 8):
Question:
In the Healthcare Reform Second Stage Consultation Document (the consultation
document), the Food and Health Bureau proposes a voluntary Health Protection
Scheme for the supplementary financing of Hong Kong's healthcare system.
According to the relevant actuarial data, the parties concerned have
preliminarily calculated the indicative premiums for all age groups under the
Standard Health Insurance Plans (Standard Plans) based on the charges for
median-priced private hospital services, as well as the administrative expenses
and profit margins comparable to market figures. Regarding the "pricing
methodology" on page 71 of the consultation document, will the Government inform
this Council:
(a) of the data used by the Government in calculating the premiums in the
Indicative Premium Schedule of Standard Plans on page 70 of the consultation
document, and set out the information according to the attached Annex and
(b) how the calculation of the indicative premiums under the "premium for higher
deductible" on page 70 is reflected in the formula for calculating the premium
rate as set out on page 71 of the consultation document?
Reply:
President,
The Food and Health Bureau has commissioned an actuarial consultant to devise an
illustrative standard health insurance plan (Standard Plan) based on the
features and content of the proposed Health Protection Scheme (HPS) and the
operation of the current health insurance and healthcare markets, and to work
out an indicative premium schedule of the Standard Plan for illustrative purpose
using professional actuarial method. The actuarial consultant's report can be
accessed at the Healthcare Reform Second Stage Consultation website (www.myhealthmychoice.gov.hk/en/studyReport.html).
(a) As the actuarial method adopted for estimating the premium levels shown in
the indicative premium schedule of the Standard Plan under HPS entails a host of
variables and sophisticated calculation formulae, we cannot set out in a
simplistic way the actual data used and the formulae involved in the process.
Generally speaking, in the premium estimation process, the actuarial consultant
would make use of their professional judgement and actuarial models to analyse
the relevant variables and categorise them into some major parameters for the
purposes of making reasonable assumptions and calculations. These major
parameters include: existing expected medical claim costs; additional medical
claim costs due to coverage of pre-existing conditions of the currently insured
people; administrative expenses; High-Risk Pool reinsurance rate; and profit
margin of the insurance companies. A detailed description of these parameters
and the calculation methods is set out in the report of the actuarial
consultant, which is not repeated here in view of length limitation.
(b) From the perspective of actuarial estimation, the inclusion of deductible is
tantamount to adding another variable in the actuarial model. This would mainly
affect the medical claim costs and administrative expenses among the aforesaid
parameters. As far as the actuarial estimation of the premium levels of the
Standard Plan is concerned, the inclusion of deductible would lead to a
reduction in the number of claims with small amounts (with claims amount being
less than or on par with the level of deductible) and a lower average amount of
claim payout per case (as the deductible will be deducted from the compensation
amount) as well as a reduction in administrative expenses required for handling
claims (due to a decrease in the number of claims). These would have the effect
of lowering the insurance premium.
Ends/Wednesday, December 8, 2010
Issued at HKT 16:15
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