Thursday, September 02, 2010

Healthcare competition 3: Hong Kong

Hong Kong is among the freest economies in the world based on a number of annual international studies like the economic freedom index, world competitiveness index, and doing business surveys. HK is famous for its free trade policy which attracts millions of foreign visitors and shoppers every year. The situation is like this: HK is importing various goods and commodities in large containers (like the 20-ton containers) from many countries around the world, and HK is exporting or re-exporting such goods in hundreds of millions of shopping bags and luggages when foreign visitors and shoppers fly back to their home countries.

The healthcare system of HK is expected to follow its generally free market economy, where there are plenty of private healthcare organizations and enterprises competing with each other in attracting customers.

While such situation is indeed happening, what was rather unexpected is the growing participation of the HK government in providing healthcare to the citizens.

The Economist Intelligence Unit (EIU) in its October 2009 Report, as reprinted by the Asia Healthspace blog, noted the following:

Spending on healthcare... ticked up to an estimated 6.2% of GDP in 2009, based on WHO definitions. This is still low compared with healthcare spending of 16.3% of GDP in the US, 10.6% in Germany and 7% in Japan.

The structure of healthcare expenditure has been changing. In the early 1990s the bulk of expenditure was accounted for by the private sector. However, in recent years public-sector expenditure has become more significant, and it now accounts for well over one-half of all health spending—a proportion that will continue to rise....

healthcare in government hospitals is not free but is heavily subsidised, and costs can be waived for those receiving comprehensive social security assistance. The disadvantage of this is that waiting lists can be long. Public subsidies cover around 95% of care costs: virtually all in-patient care costs are covered, but there is a slightly lower proportion of coverage for outpatient care.... the vast majority of outpatient consultations are provided by private doctors.

Never fails. When you provide something at "almost free" cost, you should expect that demand will outpace supply several times. Resulting in rationing of such good or service. In healthcare, such rationing is shown in the form of long waiting lines or long waiting period, before "almost free" treatment would come.

But waiting for several days or weeks for treatment while one is sick is itself costly. The disease may mutate and evolve within the body of the patient, or some complications may develop, and so on.

Like in many economies in Asia, there may not be any government-owned restaurant or food shop in HK, all such enterprises are privately-owned, and it is the stiff competition among themselves that act as the main regulator for the various players to sustain their good service and/or cheaper price (relatively speaking), if not keep improving the services. And public welfare is assured.

So why can't competitive capitalism be allowed to flourish in HK's healthcare system, or at least keep the level of government participation in healthcare to the minimum, like being limited to the poorest households and in cases of disease epidemics like the recent SARS and H1N1 virus.

Check also the observation and advice of an expat based in HK, about healthcare system in that place here, Healtcare in Hong Kong.

See also:
Healthcare competition 1: Switzerland, August 28, 2010
Healthcare competition 2: Singapore, August 29, 2010

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