HK Health Protection Scheme to give benefit to those who are least likely to take out insurance:Mercer

The healthy and able bodied, who will be needed to subsidize the HPS, have no clear incentive to voluntarily sign up.

According to Mercer, this is the single biggest weakness of the HPS.

For individuals, this means a greater need to be aware of your options, no matter what stage of life you are at.

Potential winners for individuals are:

• Individuals at risk - individuals with conditions where insurance companies either deny them cover or charge excessively high premiums
• Individuals at low risk - Healthier individuals who can access private health care at a subsidized premium rate

Potential losers for individuals are:

• Individuals aged 65+ with rapidly deteriorating health - Due to the lack of premium caps, those aged 65+ will be charged excessive premiums by insurers
• Middle income families - Families that support two or more aged 65+ family members could find the cost of HPS to be excessive and must rely on the public health care system

Employers: Key issues for consideration

Hong Kong employers have an opportunity to consider their broader employee value proposition around benefits versus salary.

Clearly, with an aging workforce and given the demographic factors that we have discussed above, more employees are potentially going to value employee health care benefits in the future, and they may value this over salary. Why would this be?

Simply put, the employer that offers group medical benefits takes advantage of pooling together risk and reducing benefit costs to the individual. More and more, individual employees are going to value health benefits over salary since any private coverage is going to be more costly to them.

The HPS is a wake up call to the insurance industry

As one of the largest brokers of group employee benefits in Hong Kong, Mercer believes that the insurance industry has a responsibility to maintain and sustain the affordability of insurance coverage.

Conclusion

The cost of health care will continue to increase year after year, combined with an aging employee population; employers will need to manage the cost of such programs to ensure they are sustainable for the long term. This might call for paradigm shift from curative care to preventive care which can integrate into the existing program.

In Mercer’s opinion, the most recent health care reform proposed by the Hong Kong government is an act of shifting cost to employers and individuals. It will not be the last that we see. There will be more to come.