Does Hong Kong Have the World's Best Health Care System?

  • Nathan Lewis Fund manager and author of "Gold: the Once and Future Money"


The United States was founded on libertarian principles. There wasn't even an income tax for the first 124 years of U.S. history -- to 1913 -- and even that took a Constitutional Amendment, as it was deemed unconstitutional before.

The U.S. has been something of a disappointment to us libertarian types since 1913. Today, one of the best examples of the potential success of a libertarian approach is Hong Kong. Over the last fifty years, it has evolved from a tiny exporter of cheap consumer junk to one of the wealthiest and most prosperous places in the world.

Hong Kong was one of the first places to adopt the kind of "flat tax" system that people like Jack Kemp or Steve Forbes have long advocated. The top income tax rate in Hong Kong is 17% for individuals, and 17.5% for corporations. There is no sales tax, VAT, payroll tax, capital gains tax, inheritance tax, tax on dividends or interest income. There is also not much of anything in the way of a government pension system, like our Social Security.

The bottom 60% of earners pay no income tax at all. The top 100,000 taxpayers pay 57% of all taxes.

Even after sixty years, the entire tax code is 200 pages long.

Hong Kong is the last place you'd think of as having a "nanny state."

However, Hong Kong has a system of government-operated hospitals, which constitutes the majority of the health care system. People also have the option of a private hospital if they wish. There are more than fifty public hospitals, and twelve private ones.

Hong Kong's 6 million people are one of the healthiest populations in the world. The life expectancy is 84 for women and 78 for men, the second-highest worldwide.

Here is how it looks to a Hong Kong citizen:

To many of us who have worked and lived overseas, the Hong Kong health care system was the ultimate social safety net that never failed to lend us a strong sense of security. It was comforting to know that if we ever fell ill, we could always return home for care.

I was rushed to hospital after a bad car accident in Hong Kong many years ago. None of the nurses or doctors asked me if I had insurance coverage, or enough money to pay the bill. They just gave me the medical care I needed. The next morning, a stern-faced hospital administrator came to visit me in the ward. I did not know what to expect until she asked me if I needed social service assistance for myself and family.

I stayed in hospital for a week and was charged only for the meals. The total bill was HK$35 [US$4], and the food was actually not bad at all.

There must be millions of other people in Hong Kong who, like me, look upon our health care system as sacrosanct. Any attempt to tamper with it would arouse our strong suspicions and deep concerns.

This system of government-operated hospitals, open to all citizens, costs the Hong Kong government about 3% of GDP. Three percent! Private hospitals, used mainly by the wealthy, and all other health care services bring Hong Kong's total health care spending to about 6% of GDP. Compare that to about 16% in the U.S. today, and rising.

Three percent of GDP is less than half of the 7.5% of GDP that is already being spent by U.S. governments on health care.

There you have it. In terms of both cost and effectiveness, the Hong Kong system of public hospitals is one of the best in the world. It does not interfere in any way with Hong Kong's libertarian approach to economic policy in general.

Indeed, you could even say that it helps. Hong Kong corporations have no excessive health care burdens. Workers are happier and more productive. You might even argue that, when people aren't worried about health care, they are more likely to set off on their own and start the kind of entrepreneurial businesses that have made Hong Kong great.

We don't have a government here in the U.S. that is capable of anything but stealing taxpayer money. However, other people in other places, like Hong Kong, have faced problems like our own and solved them brilliantly.