The political stream

Major political parties, legislators, representatives of business communities, medical doctors, scholars, and the public reacted negatively to the Harvard Report. The 1999 health financing reform ended in failure because of three main reasons: (1) a disjointed political system, (2) the difficult economic circumstances, and (3) the institutionalization of old ideas.

A disjointed political system

First, a disjointed political system made it impossible for the HKSAR government to gather wide political support for health financing reform. There was the lack of cohesion within the Executive Council (ExCo), a poor relationship between the ExCo and senior civil servants, and a tense relationship between the ExCo and the Legislative Council (LegCo). Being the first Chief Executive of the HKSAR, shipping tycoon Tung Chee-hwa lacked political legitimacy. He ‘was seen as essentially selected by Beijing’ (Cheung 2005: 141) and endorsed by the undemocratically constituted Selection Committee consisting of 400 proChina and business elites (Cheung 2005; Luk 2014a). The ExCo, which was an organization assisting the Chief Executive in policy-making, consisted of members coming from a wide variety of backgrounds (Ma 2007: 62). These members included top government officials, previously pro-British figures, pro-China figures, members from pro-government parties and representatives from big businesses (Cheung 2005: 139; Ma 2007: 62). ‘Such a mix was not conducive to forging a cabinet-style leadership sharing common interests and a collective agenda’ (Cheung 2005: 139).

The ExCo presided over by the Chief Executive had a poor relationship with senior civil servants because of mutual distrust between the two sides as well as the rivalry between the two sides for policy-making powers under two competing ‘executive-led’ paradigms - one centered on the supremacy of the Chief Executive and the other centered on the traditional notion of bureaucratic polity

Hong Kong 47 (Cheung 1997,2004,2007). Being a businessman and an outsider to the bureaucratic polity, Tung did not share the same visions, ethos, and norms with the British-groomed senior civil servants (Ma 2007: 64-5). He thought that the civil service was unable to serve him well (Cheung 2005: 142). Meanwhile, senior civil servants’ suspicion of communism and vigilance over possible intervention by Beijing made them mistrustful of Tung Chee-hwa, who declared loyalty to Beijing (Fong 2015). From Tung’s perspective, the ‘executive-led’ principle was tantamount to a more presidential kind of executive government whereby the Chief Executive ‘should take the lead in agenda-setting and expect full support and cooperation from his civil-servant ministers’ (Cheung 2004: 5). From senior civil servants’ perspective, however, the ‘executive-led’ principle meant adherence to the colonial-era tradition of government by civil servants, with the Chief Executive, like the previous governors, giving formal approval to top civil servants’ policy recommendations at the ExCo (Cheung 2004: 5). ‘Despite the change of sovereignty and government, top civil servants [were] still keen to keep their policy-making powers largely intact’ (Cheung 1997: 735). They perceived themselves as playing a leadership role in policy-making (Lee 1999: 947-8). But Tung’s paternalistic political personality and his aspiration to be a strong leader made him treat senior civil servants as his subordinates (Lee 1999; Lau 2002a). Hence, his relationship with senior civil servants was very poor and ‘there was a general lack of respect and support by top bureaucrats for his vision and reform agenda’ (Cheung 2005: 142).

In fact, Tung’s decision to commission scholars from Harvard University to review the existing healthcare system and recommend reform options for improving healthcare finance was due to his belief that overseas scholars were more competent and more experienced, and the fame and reputation of Harvard University could easily win public acceptance (Luk 2014a: 124). Senior civil servants who were in the Steering Committee and the Working Group only provided assistance and guidance for the Harvard Team. In reality, the Harvard Team did not work with the Steering Committee well because these two parties lacked communication and interaction. Being the member of the Steering Committee and legislator representing the medical profession in the LegCo, Dr. Che-hung Leong complained in the LegCo meeting held in May 1999 that the Steering Committee did not have the opportunity to discuss the issue of healthcare financing with the Harvard Team and monitor the work of the Harvard Team. According to Dr. Leong,

this Committee was never given the chance to steer the consultation, its comments and criticisms were seldom taken on board nor were they ever explained nor even acknowledged by the consultant. Incidentally, the Steering Committee never received, let alone endorsed, the Report before it went to the print.

(The Legislative Council 1999)

There was no further information about why there was the lack of communication and interaction among the Harvard Team and the Steering Committee. Butit reflected that the government-appointed Steering Committee failed to carry out its roles during the process of health financing reform. Meanwhile, some members of the Steering Committee were not happy about the composition of the Steering Committee or had reservation about the findings of the Harvard Team. As Dr. Leong said in the LegCo meeting, the lack of grassroots input such as patients’ rights groups was another fallacy of the Steering Committee (Hong Kong Standard 1998; The Legislative Council 1999). Since patients were the users of the health system, their input could have helped overseas experts understand what local patients really wanted and increased the acceptance of the Harvard Report. Professor Peter Yuen, who was a member of the Steering Committee, had reservations about the HSP because of ‘the huge administrative cost that it would incur and the likelihood that it would change providers’ behaviour and create additional expenses’ (Legislative Council Secretariat 1999b). Besides, he thought that the Harvard Team had overestimated the growth in healthcare expenditures because the Team made the projection based on some questionable assumptions (Legislative Council Secretariat 1999b). He suggested that the government consider exploring ‘alternative ways to enlarge its income for financing health services such as by raising user fees or increasing taxation especially in profits tax’ (Legislative Council Secretariat 1999b). If there was sufficient communication between the Steering Committee and the Harvard Team, the latter could have proposed reform options that were more acceptable to communities.

The tense relationship between the ExCo and the LegCo also limited the capacity of the HKSAR government to secure majority support from legislators for its health financing reform (Luk 2014a: 122). Under the Basic Law, there was a clear separation of power between the ExCo and the LegCo, and there was no overlap of membership as in colonial days (Cheung 2007: 20). With the delinking of the ExCo and LegCo, ‘there was no guarantee that the legislature would necessarily support government, not to mention give it a majority’ (Cheung 2007: 25). The ExCo had a low political reputation because most of the ExCo members appointed by Tung had strong connections with big business and were pro-China (Lau 2002a: 13), and ‘their own business and professional interests [were] a constant source of conflict-of-interest allegations’ (Lau 2002a: 13). Most of the ExCo members were detached from the local population and did not have any political networks to mobilize popular support for Tung’s policies (Lau 2002a: 13). On the contrary, the LegCo was the most representative political institution constituted by election (Ma 2002: 365). It ‘regarded its role as mainly a watchdog over the government’ (Cheung 2000: 2) and was a key arena for policy debates (Cheung 2004: 9). This caused the ExCo to accuse the LegCo of being over-critical of the government (Ma 2002: 349), and some ExCo members to question if the LegCo ‘had in effect become an “opposition” body’ (Cheung 2000: 2). While legislators did not have constitutional powers to overturn a government policy decision (Cheung 2004: 9), they could veto government bills, funding requests, or even the budget (Cheung 2000: 2). Hence, the government could not ignore views from legislators at the policy panels (Cheung 2004: 9) and had to ‘seek policy legitimation through answering to the LegCo’

(Ma 2002: 367). In the LegCo, there were 18 panels that roughly corresponded to the policy bureaus of the HKSAR government (Ma 2002: 359). These panels allowed legislators to pass motions, express their views on certain issues, demand government officials in charge of the respective policies to provide information or take certain actions, or push for policy changes (Ma 2002: 359). The Panel on Health Services monitored and examined government healthcare policies and provided a forum for legislators to exchange and disseminate views on healthcare policies (The Legislative Council Commission 2019). It was where the meeting and debate on the 1999 health financing reform took place.

The introduction of the indirect election oflegislators based on functional constituencies in 1985 and the direct election oflegislators in 1991 ‘saw the emergence of political parties and elected legislators as new political actors’ (Cheung 2007: 22). The Democratic Party, Democratic Alliance for the Betterment of Hong Kong (DAB), and the Liberal Party were three dominant political parties exhibiting divergent views on the politics of Hong Kong (Lam 2003: 225). In theory, the HKSAR government could get support from the DAB and the Liberal Party for the Harvard Report because the former was the pro-Beijing and pro-government party, while the latter was the pro-business party. In reality, however, health financing reform involved lots of vested interests (Luk 2014a: 124) so that even the DAB and the Liberal Party could not easily support the government for fear of jeopardizing their future electoral fortunes. In fact, legislators from both the DAB and the Liberal Party shared a similar position with that of the Democratic Party that the mandatory health insurance scheme would bring economic hardship to the local people in times of economic downturn. Hence, the 1999 health financing reform was shelved due to lack of LegCo support.