One of the better moves CY Leung has made since becoming Hong Kong’s Chief Executive is to abandon his predecessor Donald Tsang’s harebrained scheme to turn the city into some sort of health-care hub. Inevitably, Sir Bow-Tie’s dream involved real estate: sell land cheaply-but-not-too-cheaply to private hospital operators who would then attract high-paying foreigners and treat some lower-paying local people on the side. It would boost the Big Lychee’s services exports, and some of our middle class would migrate away from overburdened public medical facilities. But balancing the interests of all the ‘stakeholders’ proved impossible (the cost of building a hospital: at least US$1 million per bed).
Meanwhile, demand for public hospital services outstrips supply. A bigger budget – easily affordable given the government’s fiscal position – is one obvious solution. But bureaucrats and others who worry about the aging (owing to being healthier) population resist that idea, and insist that the middle class pay more. Even middle-class people feel embarrassed and even a bit guilty at getting public hospital treatment virtually for free. Hence the announcement a few weeks ago that two of Donald’s sites would be dedicated to affordable private hospitals for the genteel non-millionaire segment. To lure the bourgeois patients away from the all-but-free public service, these new hospitals will (say) offer shorter waiting times, with warmer congee in the morning and a free newspaper.
A snag. A few people might pay, say, HK$750 a day rather than HK$100 for quicker treatment. But the Hong Kong population’s refugee mentality lives on, and for many the idea of spending more when you can get for less is tough to accept. Saving HK$650 and waiting 10 more weeks is second nature. The government’s solution is insurance. But this is still a hard sell alongside the virtually free public-sector alternative. At least one insurer started to offer ‘middle class’ health insurance a couple of years back, with attractive packages (pretty fair coverage for 40-somethings at HK$15,000 a year), and there were no takers. So the government will have to offer a tax break – also known as a subsidy – to suit Hong Kong’s zero-sum financial psychology. In exchange for giving up something cheap (public hospital care), you will get a different but exciting bargain-discount-bonus-no extra charge deal; it might help to get Louis Vuitton or someone to do the marketing, so it becomes something you brag about.
Assume that capacity expands in line with resources, say through importation of overseas nurses, etc. Will the private sector play along and provide ‘affordable’ care? At the moment, apart from primary-care providers in poorer neighbourhoods, private health services have little hope of competing against the public sector, so they focus on the opposite end of the spectrum and aim to maximize revenues from the highly insured and rich. Not all private providers are scumbags, but at least some perform unnecessary operations to stuff their wallets. Would these guys be interested in the patients at ‘middle-class’ hospitals, with their government-scrutinized insurance cover and caps on fees? It’s like expecting property developers to voluntarily build apartments for Hongkongers rather than Mainlanders.
Ultimately, it would probably make more sense for the government simply to set up a second tier of somewhat-less-subsidized-but-somewhat-better public hospital service. Something like the Home Ownership Scheme in housing. That way, at least you get some more resources coming into the system without the government paying every extra penny. Or just fund the public hospitals properly and be done with it. (Or make it illegal to perform unnecessary operations?)