Health care insurance subsidies eyed Chronic patients expected to get aid Ella Lee Updated on [FONT="]Feb 09, 2010[/FONT] Should people with pre-existing illnesses be forced to pay higher premiums for private health insurance? Insurance companies say yes, but the government says no, and insurers and medical activists now expect it to resolve the impasse by offering to subsidise the premiums of patients with pre-existing conditions. The issue has emerged as the major roadblock in negotiations with the industry over a voluntary medical insurance scheme about which the government plans to consult the public this year as a way to relieve the financial pressures on the heavily subsidised public health sector. Insurance providers are in talks with health officials about the scope of the coverage and on how to use the scheme's HK$50 billion start-up fund to attract more people to sign up for voluntary insurance. In a recent submission to the government, the insurance sector outlined an agreed "basic plan" that removes exclusions for mental illnesses and congenital diseases and makes premiums age-specific. But the sector is standing firm on not including people with pre-existing conditions in the basic plan, meaning chronically ill patients would have to pay a higher premium for coverage. The government asked the Hong Kong Federation of Insurers yesterday to reconsider its position. A health care professional familiar with the negotiations said the government had to devise an insurance plan that truly pooled risks. "The government cannot design a plan that only benefits the insurance sector and covers only healthy people, who may not use the services," the professional said. Cheung Tak-hai, vice-chairman of the Alliance for Patients' Mutual-help Organisations, said some health officials had raised the possibility of subsidising the higher premiums insurers will charge people with pre-existing conditions. "We think this is acceptable because it is a voluntary scheme not a mandatory one," Cheung said. Funded out of tax revenue and charging low medical fees, the public health care system has been financially burdened by an ageing population, costly advances in medical technology and the higher expectations of patients. The government hopes at least 500,000 people will join the voluntary insurance scheme so that their health risks will be shared and more people will opt for private services. Officials hope the scheme will be able to provide choices and better services to patients who can afford private insurance, and will set standards for private medical services and insurance plans. The insurance industry's proposed "basic plan" covers only inpatient services and local medical claims. Patients would be able to choose various kinds of "top-up" packages for more benefits, such as overseas claims and better private services. There will be caps on claims and patients will have to pay part of the treatment costs to discourage unwarranted use of the services. The industry has warned that providing a flat rate for everyone would make the premium too expensive, and as a result the plan would not be marketable and sustainable. Health officials have said the exclusions in existing medical plans have discouraged people from buying them. Some chronically ill patients have difficulty getting coverage or have to pay a very high premium. Peter Tam Chung-ho, executive director of the Hong Kong Federation of Insurers, said the sector was "sincere" in reaching a consensus with the government. "However, the basic plan cannot be too ambitious at the start or there will be many problems in the implementation. We can always improve it in the future," he said. Tam said the industry believed there should be different rates for healthy people and those with pre-existing conditions, "otherwise there will be a downward spiral effect with healthy people having to share the high premiums, and the plan will become unpopular and, at the end of the day, unsustainable. There is a gap between us and the government and we want to narrow it." Elaine Chan Sau-ho, a member of the federation's health care reform task force, called on the government to make good use of the HK$50 billion start-up fund to make the pool as big as possible for the maximum sharing of risk. Tax exemptions for medical expenses would benefit only taxpayers so the government should also consider premium subsidies and savings for the needy, Chan said. About 3.2 million Hongkongers are covered by medical insurance, one million by individual plans and the rest by company plans.