The burden of chronic illness and health financing in Hong Kong to 2010

The burden of chronic illness and health financing in Hong Kong to 2010 PowerPoint PPT Presentation


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Seminar at University of Hong Kong. 12 November , 2002. This presentation covers. Healthcare expenditures in OECD nationsOverview of healthcare reforms in Greater ChinaHealth care in Hong Kong: our reportConclusions:financing options for Hong Kong. 1. OECD DATA:COST CONTROL. The public-private i

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The burden of chronic illness and health financing in Hong Kong to 2010

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1. The burden of chronic illness and health financing in Hong Kong to 2010 Paul Gross Institute of Health Economics and Technology Assessment Australia, France and Greater China

2. Seminar at University of Hong Kong 12 November , 2002

3. This presentation covers Healthcare expenditures in OECD nations Overview of healthcare reforms in Greater China Health care in Hong Kong: our report Conclusions:financing options for Hong Kong

4. 1. OECD DATA:COST CONTROL The public-private interface

5. What drives national health expenditures in the 1990’s? Population growth and composition: 10% Prices and wages: 30-40% “Technological intensity”: 50-60% - the use rate per person - the amount of “technology”used per patient contact POLICY CHALLENGE: appropriate use of technology

6. CAGR real NHE per capita,1975-1998 local currencies at 1995 prices insurance v tax-based nations-%

7. Tax-based vs insurance funding, OECD data Tax-based versus insurance based health systems - there are no great differences in controlling costs over time Mixed financing , as in Australia, is equally effective AND The rising private share of total health care funding does not reduce the role of government over the long term

8. 2. OVERVIEW OF RELEVANT REFORMS IN HEALTHCARE FINANCING,GREATER CHINA

9. Taiwan National Health Insurance 1995 Increase in use rates of hospital and medical services Drop in household savings

10. Changes in coverage and access, Taiwan, 1994-1998 Source: S-Y Chou, J-T Liu and JK Hammitt.”National health insurance and precautionary savings: evidence from Taiwan”. Paper presented at AHEC 2001, March 2001, mimeo 23 pp. plus tables Source: S-Y Chou, J-T Liu and JK Hammitt.”National health insurance and precautionary savings: evidence from Taiwan”. Paper presented at AHEC 2001, March 2001, mimeo 23 pp. plus tables

11. Taiwan NHI:impact on savings and consumption Two impacts of NHI, 1995-1998 - average household savings: down 6.9% - average consumption expenditures: up 2.4% Source: S-Y Chou, J-T Liu and JK Hammitt.”National health insurance and precautionary savings: evidence from Taiwan”. Paper presented at AHEC 2001, March 2001, mimeo 23 pp. plus tablesSource: S-Y Chou, J-T Liu and JK Hammitt.”National health insurance and precautionary savings: evidence from Taiwan”. Paper presented at AHEC 2001, March 2001, mimeo 23 pp. plus tables

12. Taiwan:NHI and household savings Heaviest impact on precautionary savings - households with low savings - consistent with “decreasing absolute prudence” - means testing might offset this impact Source: S-Y Chou, J-T Liu and JK Hammitt.”National health insurance and precautionary savings: evidence from Taiwan”. Paper presented at AHEC 2001, March 2001, mimeo 23 pp. plus tablesSource: S-Y Chou, J-T Liu and JK Hammitt.”National health insurance and precautionary savings: evidence from Taiwan”. Paper presented at AHEC 2001, March 2001, mimeo 23 pp. plus tables

13. Taiwan:NHI and household consumption NHI yields larger welfare improvement - through consumption smoothing - for households with smaller savings Source: S-Y Chou, J-T Liu and JK Hammitt.”National health insurance and precautionary savings: evidence from Taiwan”. Paper presented at AHEC 2001, March 2001, mimeo 23 pp. plus tablesSource: S-Y Chou, J-T Liu and JK Hammitt.”National health insurance and precautionary savings: evidence from Taiwan”. Paper presented at AHEC 2001, March 2001, mimeo 23 pp. plus tables

14. Reforms affecting price, volume site, quality of care:Taiwan

15. Peoples Republic of China Largest population Highly privatised healthcare financing Significant challenges ahead:ageing,CI

16. China’s achievements Life expectancy gains in last 20 years Commendable willingness to learn from health insurance experiments Unparalleled width and complexity of current reforms in social security Commendable reforms associated with entry to WTO Development of health services research capacity and health economics expertise

17. Financing health care in China-%

18. China - per capita expenditure on medicines and medical services (1985-1998)

19. Forecast numbers of persons over 65 years, China Source:PF Gross.”Trends in national health expenditures in China”.Beijing, China Health Economics Monograph Series No.1, May 2001 Source:PF Gross.”Trends in national health expenditures in China”.Beijing, China Health Economics Monograph Series No.1, May 2001

20. Concentration of healthcare expenditures in China Hospital length of stay, chronic diseases - compared to Australian acute care - average stay 34-73% higher in China - 15% reductions in admissions possible Concentration of health expenditures - 10% of population generate 66% of expenditures - big problem for insurers Source:PF Gross. China Health Economics Monograph Series No.4, October 2001 Source:PF Gross. China Health Economics Monograph Series No.4, October 2001

21. Average % change in expense per hospital and range,1998 to 1999 Source:PF Gross.China Health Economics Monograph Series No.2, October 2001 Source:PF Gross.China Health Economics Monograph Series No.2, October 2001

22. Price,volume,site of care:gaps China Pricing policies: remove waste at high cost end Change compensation, reduce dependence on drug dispensing and Dx test revenue Increase staff productivity Introduce casemix classification and funding Introduce minimal information technology Introduce minimal Quality Improvement Convert excess acute beds to subacute uses Source:PF Gross. China Health Economics Monograph Series No.2, October 2001 Source:PF Gross. China Health Economics Monograph Series No.2, October 2001

23. 3. HEALTH CARE IN HONG KONG

24. Hong Kong’s achievements Heavy investment in public hospitals,clinics Increased public access to high quality care High retention rate of salaried doctors Early reviews of ability to pay for ageing society Political and social stability

25. Nine warning signals,HK

26. Nine warning signals,HK

27. Some imbalances needing fine-tuning in HK,2002 Expenditures and revenue Staffing of hospitals Public and private sector supply Charges and fee schedules in public and private care Provision of elderly care Lack of data available to public and private sector

28. Imbalance 1: revenue and expenditure 1. Excluding land, rent,admin overhead and depreciation1. Excluding land, rent,admin overhead and depreciation

29. Imbalance 2: mix of specialist staffing in HA 300 interns per year New contract requirements:6 years to specialist Gaps in age structure of HA specialists - young doing long shifts - old doing rounds/teaching Needed:role delineation of hospitals - designate TH’s to specific roles - shared services with private hospitals

30. Imbalance 3: public and private roles,1995 Source:Harvard Study, 1999Source:Harvard Study, 1999

31. Needed: a formal policy on privatisation Budget Paper 2001/2: hinted Policy question: what forms of privatisation would achieve specific goals of - access - higher quality care - cost/efficiency - lower government budgets

32. Imbalance 4: charges, fees and income in public and private sectors

33. Imbalance 4: charges, fees and income in public and private sectors Relatively high government salaries - HK$3 million - plus provident fund HK$0.5 million Consequence: - 2% turnover rate in HA doctors - large salary budget Prerequisites to private health insurance: - single fee schedule - delineation of hospital roles

34. Imbalance 5: public and private sectors in aged care

35. Imbalance 5: public and private sectors in aged care: issues 1. Fiscal burden of ageing,disability and technology - ageing is NOT the major driver - needed: policies to avert disability 2. Acute bed block:11% aged are - 37% of admissions to Group 1 and 2 hospitals - 53% of bed-days=2.6 million bed-days - needed:sub-acute care 3. Annual care plans for the elderly - needed: funding for PHC and community care

36. Imbalance 6: asymmetry of information in public and private sector

37. Imbalance 6: asymmetry of information in public and private sector:needs New government policies for data sharing Continuing education programs - HA,DOH and private sector managers Government guidelines - types of PHI that might be acceptable to government Roundtable discussions to enhance understanding Financial analysis of PHI funding options: - 1999 Harvard Report

38. 4. HEALTH FINANCING OPTIONS FOR REVIEW IN HONG KONG, 2002-2005

39. Conclusions: needs 1. New funding sources will be required for ageing and chronic illness 2. Chronic illness will require new strategies and resources 3. Economic incentives to reduce moral hazard on both the supply side and demand side must be in alignment 4. Realistic user charges in ER, OP clinics

40. 1. Health financing from the tax base The worker/dependent ratio is falling: tax revenue falls The use rate of hospitals rises rapidly after age 65- and this also puts pressure on government budgets

41. Annual growth rates, real national health expenditures in Asia, two guideposts Based on OECD nations 1990-1998 3-4% per year Based on People’s Republic of China,1990-1998 12% per year

42. 2. Why worry about chronic illness? 1. The concentration of expenditures in health insurance means that a few high claims can cause insolvency and today’s care is “technologically intensive” 2. The aged and chronically ill are high users of acute hospitals today, and they have a high “technological intensity” 3. The future long term care needs of the disabled are unplanned in most nations

43. 3. Why worry about ageing? Ageing is associated with rapid growth in health and social welfare budgets UK spending on elderly=50% of NHS budget PLUS 50% of social welfare budget Ageing is associated with higher disability Health promotion and risk factor reduction for the elderly has NOT been a high budget priority

44. 4. Four models of healthcare financing seem viable 1. Raising new revenue sources:user charges in most nations, new social health insurance (Japan long-term care insurance, Singapore Eldercare and Eldershield) 2. “Privatisation” in many forms ( private investment and contracting of hospital care: UK, China) 3. Private supplemental insurance ( UK, China,Indonesia) and LTC insurance (Japan) 4. Medical savings accounts with catastrophic insurance (Singapore, China, USA, South Africa)

45. 5. Two models of healthcare financing should be rejected 1. Comprehensive national insurance with heavy government controls (Taiwan, South Korea, Australia) 2. US style private health insurance with micro-management (“US managed scare”)

46. Some realistic options for review in HK, 2002-2005 1. Outsource health care and financing for civil servants 2. Long term care insurance and outsourcing 3. Personal savings accounts and new PHI 4. Restructure formula for population- based funding 5. User charges

47. Costing two PHI options:revenue

48. 6. Further efficiency gains can be derived through astute use of IT in the health sector Reducing medical errors Efficiency gains in EPR,telehealth Efficiency gains in Supply Chain Management Efficiency gains on demand side:consumer information Overdue: business case analyses that satisfy budgeteers

49. Price, volume, site, quality of care

50. Hong Kong : the challenge The sense of danger must not disappear: The way is certainly both short and steep, However gradual it looks from here; Look if you like, but you will have to leap. WH Auden "Look Before You Leap"

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