The Rising Tide of Mainland Pregnant Women Giving Birth in HK

1
The Rising Tide of Mainland Pregnant Women Giving
Birth in HK

• Ricky Leung
• (Class 1001B, fall semester 2006)

2
Content

• Part One
• Why Are They Rushing To HK?
• Some Facts And Figures
• (The Right Of Abode
• The One-child Policy)
• Explanation Using Cost-benefit Analysis

• Part Two
• How Can The Government Gain More Profits
  From Hospital Service?
• Maximizing Condition Of A Price Searcher /
  Monopolist
• Single Pricing
• Price Discrimination
• 4 Conditions For Price Discrimination
• The Result
• Appendix

3
Part One Why Are They Rushing To HK? Some Facts
And Figures

• In recent years, there are more and more pregnant
  women from mainland China giving birth in HK.
• Most of them enter HK using the document called
  two-way exit permits. They get it from the
  mainland government easily.

Source Oriental Daily (online edition on 28-9-06)
4
The number of mainland mothers giving birth and
its percentage in the total number of delivery
Year Number
2002-03 8736 23
2003-04 8727 25
2004-05 12293 31
Source http//www.info.gov.hk/gia/general/200506/
08/lcq10_e.pdf
5
Services (obstetrician and neonatal services)
Charges
HK Citizens 100 per day
Mainland Women 20000 33000 deposit payment (for three days)
Source http//www.baotoo.com/down_zhazhi.asp?id7
0
Source http//www3.ha.org.hk/pwh/content/patinfo/
payment/charge_c.html
6

• Obstetrician and neonatal services in public
  hospitals are filled to capacity.
• The government proposes to increase the charge on
  mainland women to 48000, the same as that in
  private hospitals.
• Can it stem the tide?

Source http//www.takungpao.com/news/2005-8-16/GW
-442846.htm
7
The Right Of Abode

• According to the judgment of a case in the Court
  of Final Appeal in July 2001, the mainland
  womens babies born in HK can get the right of
  abode, even though the parents are not HK
  citizens.
• A person having the right of abode can enjoy
  benefits such as education, health services and
  so on in HK, which have higher qualities than
  those on the mainland.

Source http//morimorihongkong.gateau.jp/the_cour
t_of_final_appeal_001.htm
8
The One-child Policy
With Hong Kongs declining birthrate, Chinas
One Child Policy is not a problem.
Source http//www.earthycartoons.com/cartoonviewe
r.asp?cid1292
9

• It is a kind of birth control.
• The parents will be fined if they have an
  additional baby AND the baby is born on the
  mainland.

Penalty on having extra children (Examples)
Guangdong Province Second-class Towns the first extra child 30,000- 50,000
Guangdong Province Second-class Towns the second 70,000
Guangdong Province Second-class Towns the third 150,000
Jiangsu Province private entrepreneurs first extra child 420,000
Source Sun Daily (online edition on 24-7-06)
Source Sun Daily (online edition on 24-7-06)
10
Nevertheless, if the baby is NOT born on the
mainland, then parents do NOT have to pay the
fine.
Source http//chineseculture.about.com/library/ch
ina/cia/nmaphk.htm
11
Explanation Using Cost-benefit Analysis
Compare the benefit of giving birth in HK and its
cost Benefits (B) parents valuation on the
right of abode (V) the money saved from evading
the fine (P) Cost (C) money spent in HK
(payment to hospital service Expected hotel
food in HK transport expenses) (M) parents
income forgone during their stay in HK (I) For
the sake of simplicity, assume expected expenses
and income forgone are insignificant and
zero. BV (Very Great) P (e.g. 100,000) CM
(48,000, the proposed new charge) Then BgtC. Even
if the government implements the new proposal,
mainland women will come here.
12
Part TwoHow Can The Government Increase Profits
From Hospital Service?
Source http//www3.ha.org.hk/pwh/Index_c.html
13
Maximizing Condition For A Price Searcher/
Monopolist

• A price searcher/ monopolist faces a
  downward-sloping demand curve for the entire
  market. It maximizes profits where MRMC. It is
  not efficient.

P
Deadweight Loss
MC
P
Efficient output level
Output level
Q
D
MR
14
Single Pricing
Can it gain more profits?
P
MC
It charges a single price in the whole market.
P
Output level
Q
D
MR
15
Price Discrimination (Third-degree Price
Discrimination)

• Different prices
• Different groups of customers
• The same product/ service (with same production
  cost)

Source http//www.matchstick.com/matt/port/ww/mon
ey.jpg
16
P
P
P
Market 1 (High Elasticity)
Market 2 (Low Elasticity)
The Whole Market
P2
MC
P1
MR1 MR2
D1
MR2
D2
MR1
Q
Q
Q
Q1
Q2
Q1 Q2

• By market segmentation
• a higher price is charged on consumers with lower
  elasticity of demand,
• a lower price on those with higher elasticity of
  demand,
• so that MR in two markets are equal,
• and also equates with MC.
• Then profits will be larger than those under
  single pricing.

MR1MR2MC
17
4 Conditions For Price Discrimination

• The government has some monopoly
  (negatively-sloped demand) power.
• At least two groups of customers with different
  elasticities.
• (Mainland parents low elasticity, no substitute
  for benefits in HK.)
• Resale is not allowed.
• (Can we resell obstetrician and neonatal services
  in HK?)
• The government is able to ascertain which
  customers have high/ low elasticity.

18
The Result

• Will Profits Rise?
• The government can increase profits by practising
  price discrimination. Otherwise it would charge a
  single price.
• Normative Analysis
• The government should practise price
  discrimination in order to gain more profits from
  mainland women. It should carry out some measures
  to avoid mainland womens outstanding payment.
  The practice is beneficial to local people. My
  conjecture is that the price 48000 is not high
  enough to equate MR in the two markets.
• Will Output Rise?
• It can rise or fall. Even if it rises, its level
  is still lower than the efficient one.

19
THE END
Thank you

• Ricky Leung

Appendix Some information (Legislative Council
QA) about the issue
20
Appendix
LCQ19 Mainland women gave birth in Hong Kong
(26-11-03) link http//www.info.gov.hk/gia/genera
l/200311/26/1126192.htm

• Following is a question by the Hon Lau Kong-wah,
  and a written reply by the Secretary for
  Security, Mr Ambrose S K Lee, in the Legislative
  Council today (November 26)
• Question
• It is learnt that there is an upward trend in
  recent years in the number of cases in which
  Mainland women overstayed in Hong Kong after
  entering the territory on Exit-entry Permit for
  Travelling to Hong Kong and Macao (commonly known
  as "two-way exit permits"), and gave birth during
  the overstaying period. In this connection, will
  the Government inform this Council
• (a) of the measures to curb this trend whether
  actions will be stepped up to arrest and
  repatriate pregnant Mainland women overstaying in
  Hong Kong
• (b) whether childbirth by Mainland women in Hong
  Kong has put a strain on manpower and other
  resources in public hospitals and
• (c) whether it knows if the relevant Mainland
  authorities have stipulated that two-way exit
  permits should not be issued to women whose
  pregnancy has reached a certain number of weeks
  whether it will discuss with the relevant
  Mainland authorities so that they will be more
  prudent in vetting and approving applications for
  two-way exit permits from pregnant women?

21

• Reply
• Madam President,
• (a) The number of Mainland women who overstayed
  after entering Hong Kong on Exit-entry Permit for
  Travelling to Hong Kong and Macao, and gave birth
  during the overstaying period has mildly risen in
  recent years, from 6 442 in 2000 to 7 300 last
  year. The figure in the first ten months of this
  year was 6 462, representing an increase of 9.6
  per cent over the same period last year. It
  accounted for 16.5 per cent of babies born in
  Hong Kong during that period.
• About 84 per cent of the spouses of the women
  mentioned above are Hong Kong residents. Children
  of Hong Kong residents may apply to settle in
  Hong Kong in accordance with the law even though
  they are born in the Mainland. In the light of
  the prevailing birth rates, the birth of these
  babies in Hong Kong should not pose pressure on
  our population and social services facilities. As
  regards Mainland women who overstayed and gave
  birth during the overstaying period, they will be
  repatriated to the Mainland afterwards.
• Article 22 of the Basic Law provides that people
  from other parts of China must apply for approval
  for entry into the Hong Kong Special
  Administrative Region. Having obtained approval
  from the Mainland authorities and subject to
  normal immigration requirements, Mainland
  residents holding valid travel document and
  relevant visit permit may stay in Hong Kong as
  visitors, but they must leave before their limit
  of stay expires. Hong Kong's enforcement agencies
  will arrest, prosecute and repatriate all
  overstayers including pregnant women in
  accordance with established policy. The SAR
  Government does not, at this stage, see the need
  to take targeted measures against pregnant women.
  
• (b) The number of childbirths by Mainland women
  in Hospital Authority (HA) hospitals has been
  relatively steady in recent years. There were 7
  885 such cases in 2000, 7 377 in 2001, 8 235 in
  2002 and 4 214 in the first six months of 2003.
  Owing to the decline in the overall childbirth
  rate in Hong Kong, we have actually observed a
  decline in the total number of childbirths in HA
  hospitals during the same period. Therefore, the
  obstetric service of public hospitals has been
  able to cope with this workload.
• (c) Under existing arrangements, Mainland
  residents who wish to visit Hong Kong must apply
  to Exit-entry Administration Department of Public
  Security authorities at their place of household
  registration for an Exit-entry Permit for
  Travelling to Hong Kong and Macao and a relevant
  visit endorsement. We understand that whether or
  not the applicant is pregnant is not a relevant
  consideration when Mainland authorities examine
  such an application. As pregnancy per se is not
  against any existing regulations, the Government
  has no intention at this stage to request
  Mainland authorities to tighten the examination
  and approval of applications by Mainland pregnant
  women to visit Hong Kong.
• Ends/Wednesday, November 26, 2003

22
LCQ14 Mainland women giving birth in Hong Kong
(27-10-04) link http//www.info.gov.hk/gia/genera
l/200410/27/1027176.htm

• Following is a question by the Hon Li Kwok-ying
  and a written reply by the Secretary for Health,
  Welfare and Food, Dr York Chow, in the
  Legislative Council today (October 27)
• Question
• It has been reported that the number of Mainland
  women giving birth in Hong Kong has been on the
  rise, resulting in an upsurge in the demand for
  obstetrician and neonatal services in hospitals,
  and that some woman patients who are about to
  give birth or have just given birth have to rest
  in mobile steel wheeled beds which are normally
  used for transporting patients into and out of
  nursing wards. In this connection, will the
  Government inform this Council whether it
• (a) knows the respective numbers of cases in
  which Mainland pregnant women have used the
  services provided under the public health and
  medical care system in Hong Kong, and the
  resources involved, in 2002, 2003 and so far in
  2004, and the number of cases in which fees have
  not been paid and the total amount involved, as
  well as the measures the Hospital Authority (HA)
  has put in place to ensure that patients must
  settle the fees before they are discharged from
  hospitals
• (b) knows the current usage rates of obstetrician
  and neonatal services provided in public
  hospitals in various districts, whether they are
  being used to capacity, and the short-term
  measures adopted by HA to alleviate overcrowding
  in nursing wards as well as the pressure faced by
  front-line medical personnel and
• (c) has reviewed the demand for obstetrician and
  neonatal services in Hong Kong, having regard to
  its population policy and the trend of Mainland
  women coming to Hong Kong for childbirth if so,
  of the review results if not, the reasons for
  that, and whether it will review the relevant
  medical services in the light of the demand, and
  formulate long-term policies and measures
  accordingly?

23

• Reply
• (a) The number of non-resident Mainland women
  giving birth in Hospital Authority (HA)
  hospitals, the resources involved, the number of
  default cases and the consequential amount
  written off are shown in Annex.
• The following measures have been taken to
  minimize the write-off of medical fees
• On admission, private inpatients and
  non-eligible persons are required to pay
  deposits. At present, the amount of the deposit
  is fixed at 19,800.
• During hospitalization, interim bills are sent
  to patients on a weekly basis.
• In case a patient fails to settle the bills,
  his/her next of kin will be contacted for
  payment.
• Reminder and final notice will be sent to the
  patient after dispatch of the final bill.
• In addition to mailing, telephone calls will be
  made to patient or his/her next of kin to request
  for an early settlement of medical fees.
• If the bills remain outstanding, legal actions
  will be instituted where appropriate, taking into
  account factors such as the amount in arrears and
  the chance of successful recovery. These legal
  actions include submission of cases to the Small
  Claims Tribunal and execution of bailiff.
• In addition to the above,
• Patients are reminded of their responsibilities
  to pay hospital fees and provide correct
  correspondence details.
• To facilitate collection of outstanding debts
  from frequent defaulters, a 'frequent defaulter
  report' is generated on a weekly basis. The
  report lists out the amounts due by patients who
  are currently under maintenance at a particular
  hospital. Based on the list, hospital staff would
  follow up the outstanding fees with the patient
  and / or his next of kin.
• To facilitate payment by patients, various
  means of settlement are accepted including local
  and foreign currency cash and cheque, EPS, PPS
  and credit card. Settlement by Octopus card is
  being piloted and introduction of the China Union
  Pay card is being arranged.
• (b) The overall utilization rates of obstetrics
  and neonatology services in HA hospitals were in
  the range of 56 per cent to 78 per cent over the
  past few months and there was no evidence of
  substantial increase. There is a seasonal pattern
  of workload with relatively high usage rate
  between August and January each year. Also, the
  majority of NEP mothers, who have little
  antenatal care, often discharge themselves within
  24 hours after delivery, leaving very little time
  for optimal observation of the newborn babies and
  education of mothers on baby care. This has
  resulted in an increase in the number of babies
  requiring medical intervention because of
  infection, dehydration, severe neonatal jaundice
  or congenital anomalies.
• For individual hospitals, United Christian
  Hospital recorded a bed occupancy rate of 113 per
  cent in September 2004. Prince of Wales Hospital
  and Tuen Mun Hospital recently reported
  relatively large number of NEPs presenting to
  labour units after 12 midnight, resulting in an
  increase in workload for the night-shift staff,
  which is normally smaller in number compared to
  other shifts.
• To address rising workload of NEP deliveries,
  hospitals are improving mid-night staffing
  levels, with the deployment of more nurses with
  midwife qualifications to obstetrics units. To
  develop staff capacity, midwifery refresher
  courses are being organized for nurses with
  midwife background and more part-time nurses are
  being recruited.
• (c) Obstetric services in HA hospitals have, in
  the past, been adjusted in view of reducing birth
  rates based on population projections. The HA has
  all along been monitoring the trends in births
  rates and will continue to do so in the light of
  rising proportion of NEPs. It is predicted that
  there will be a continuous rise in total birth
  rates and obstetric workload for the coming year.
  The areas of our concern are lack of antenatal
  care for these NEP pregnancies and the short stay
  of NEP mothers, both of which would lead to
  increase of maternal and foetal complications and
  possible longer term health implications to
  mothers and children. Obstetric service and
  manpower will be adjusted accordingly. The
  Government and the HA are conscious of the
  importance of appropriate deployment of resources
  to ensure quality medical services for the local
  population, and are considering how best to
  tackle the rising trend of Mainland pregnant
  women coming to give birth in Hong Kong.
• Ends/Wednesday, October 27, 2004

24
LCQ3 Mainland women giving birth in Hong Kong
(10-11-04) link http//www.info.gov.hk/gia/genera
l/200411/10/1110201.htm

• Following is a question by the Hon James Tien and
  a reply by the Secretary for Health, Welfare and
  Food, Dr York Chow, in the Legislative Council
  today (November 10)
• Question
• The number of pregnant women from the Mainland
  giving birth in public hospitals in Hong Kong has
  been on the rise, putting pressure on staffing in
  hospitals in New Territories East and New
  Territories West, and may thus affect the
  provision of medical services for residents of
  the districts concerned. In this connection, will
  the Government inform this Council whether it
  knows
• (a) the monthly usage rates of obstetrician and
  neonatal services provided in public hospitals in
  the above districts over the past year, and the
  percentage of Mainland people among all the users
  of the services
• (b) as many Mainland pregnant women seek
  admission to public hospitals in the districts
  concerned after midnight, the number of such
  pregnant women over the past year, as well as the
  reasons for this phenomenon and
• (c) the estimated time for completing the
  night-time staffing improvement programme for
  labour wards, the staffing levels assessed to be
  adequate under the programme, as well as how the
  day-time staffing for such wards will be arranged?

25

• Reply
• Madam President,
• (a) The average utilisation rates of the
  obstetrics and neonatology services in public
  hospitals in the New Territories East (NTE)
  cluster over the past year were 72 per cent and
  86 per cent respectively, and in the New
  Territories West (NTW) cluster 67 per cent and 80
  per cent. The monthly utilisation figures are
  provided in the Annex. In NTE, 32 per cent of the
  pregnant women who used the obstetrics services
  were from the Mainland. In NTW, the percentage is
  30 per cent.
• (b) Of the pregnant women from the Mainland who
  presented themselves to a public hospital for
  admission to give birth over the past year, 29
  per cent of them have done so after midnight and
  before morning (i.e. from 12 to 6 am). This
  percentage is slightly higher than the proportion
  of local pregnant women who sought admission in
  the same time period of the day at 23 per cent. A
  possible explanation for the slightly higher
  percentage by Mainland women is the higher fees
  charged by the Hospital Authority (HA) for
  non-eligible persons, which is 3,300 per day as
  compared with 100 per day for eligible persons,
  that caused some Mainland women to wait until
  after midnight before presenting themselves at a
  hospital in order to avoid one extra day's
  charge.
• (c) In order to ensure that there is sufficient
  manpower to handle the added workload in the
  obstetrics wards, both the NTE and NTW clusters
  have made appropriate and flexible deployment in
  the light of the demand situation in their
  respective districts. The improvement measures
  taken include more flexible deployment of staff
  within the clusters, strengthening of the
  training for nurses on midwifery, recruitment of
  additional part-time staff and better arrangement
  of the staff level in all shifts at obstetrics
  wards. The HA will closely monitor the demand in
  obstetrics services in the New Territories. It
  will also determine the appropriate staff level
  to ensure the quality of its obstetrics and
  neonatology services, taking into account the
  workload at individual hospitals, the environment
  at the wards, the organisation of these
  departments, the relevant work procedures and the
  composition of the medical teams.
• To resolve the problem of the increasing use of
  HA services by non-residents, we are considering
  a number of proposals, which include -
• Increasing HA's medical fees (including
  imposing a minimum charge) for non-entitled
  persons
• Increasing the deposit to be paid by
  non-entitled persons upon admission into an HA
  hospital for emergency cases
• For non-emergency cases, requiring the payment
  of a deposit at the time when a non-entitled
  person makes an appointment for consultation at a
  specialist outpatient clinic or an elective
  procedure at a hospital instead of at the time of
  consultation and hospital admission respectively
  and
• HA refusing to provide further medical services
  to non-entitled persons who have yet to settle an
  outstanding fee.
• The Administration is still at an early stage in
  its assessment of the above possible measures.
  Once the assessment results are available, we
  will submit the Administration's recommendations
  to the Council's Panel on Health Services for
  discussion.
• Ends/Wednesday, November 10, 2004

26
LCQ10 Non-Hong Kong residents giving birth in
local public hospitals (8-6-05) link
http//www.info.gov.hk/gia/general/200506/08/06080
154.htm

• Following is a question by the Dr Hon Kwok Ka-ki
  and a written reply by the Secretary for Health,
  Welfare and Food, Dr York Chow, in the
  Legislative Council today (June 8)
• Question
•     The number of Mainland women (non-Hong Kong
  residents) giving birth in local public hospitals
  has surged and the amount of medical charges they
  have defaulted on is enormous. On the other hand,
  the authorities have proposed to introduce a
  minimum package fee of 20,000 for obstetric
  services in public hospitals, in order to address
  the problems that the existing charges of public
  hospitals are substantially lower than those of
  private hospitals and even below the Hospital
  Authority's own cost for obstetric services, and
  that the existing fee structure encourages
  non-eligible expectant mothers, including those
  from the Mainland, to deliberately minimise their
  length of stay in hospitals. In this connection,
  will the Government inform this Council
• (a)  if it knows the number of Mainland women
  (non-Hong Kong residents) who gave birth in local
  public hospitals over the past three years, its
  percentage in the total number of child-delivery
  in-patients, the types of identity documents held
  by such women (for instance, entry documentations
  such as Hong Kong Identity Card, One-way Permit,
  Permit for Travelling to and from Hong Kong and
  Macau (commonly known as "two-way exit permit")
  and that for travellers under the Individual
  Visit Scheme), the number of cases in which they
  defaulted on payment of medical charges and the
  amount involved, the percentage of such amount in
  the total amount of defaulted medical payment, as
  well as the number of cases in which the
  authorities succeeded in recovering the
  outstanding medical charges and the amount
  involved, broken down by individual hospitals
• (b)  how the authorities calculated the cost to
  be recovered when determining the proposed fee of
  20,000 whether they have taken into account the
  costs relating to the additional health care
  personnel required in the hospitals for the
  provision of such services, the extra medical
  services arising from the emergency medical
  consultations sought by expectant mothers from
  the Mainland who tried to minimise their length
  of stay in hospitals, and the medical incidents
  during delivery and
• (c)  whether it will consider strengthening the
  co-operation with the Central Government on
  deterring Mainland women from coming to Hong Kong
  for giving birth as well as the reasons for the
  Hong Kong authorities not establishing an
  inter-bureau working group to jointly examine
  various feasible measures and iron out the
  possible legal issues involved, thereby
  formulating effective and lawful measures to
  resolve the problems caused by such women coming
  to Hong Kong for child birth?

27

• Reply
• Madam President,
• (a)  The numbers of Mainland women (non-Hong Kong
  residents) who gave birth in a public hospital in
  Hong Kong over the three years, their percentage
  of the total numbers of child deliveries in these
  hospitals, and the amounts of medical fees
  outstanding broken down by hospital, are set out
  in the Annex. The vast majority of these Mainland
  women were holders of Exit and Entry Permit when
  they entered Hong Kong.  
• (b)  The proposed Obstetric package charge of
  20,000 for Non-Eligible Persons (NEP) giving
  birth in a public hospital is calculated on the
  basis of average inpatient cost of Obstetric
  services, which covers the full costs of the
  relevant staff, operation, procedures and
  consumables. The late presentation of expectant
  mothers at public hospitals would not
  significantly increase the costs of medical
  services provided to them, although medical staff
  would be put under great pressure to perform the
  relevant tests and investigations within a short
  time period.  
• (c)  We understand that there are difficulties
  for Mainland authorities to prevent pregnant
  women from coming to Hong Kong. There is no legal
  basis for Mainland authorities to refuse exit
  applications from Mainland women solely on the
  ground that they are pregnant. Furthermore, there
  would be practical difficulties for the
  authorities to ascertain whether the individual
  applicants are pregnant or not. According to the
  relevant regulations in the Mainland, the
  validity period for the exit endorsement on the
  Exit and Entry Permit to visit Hong Kong is
  usually three months. It would be feasible for
  pregnant women to file their exit application
  during the early stage of their pregnancy.
•     The Health, Welfare and Food Bureau, the
  Security Bureau and relevant Government
  Departments have been working closely to address
  the problem of the increasing use of public
  medical services by NEP pregnant women. We would
  explore all possible measures, give due
  consideration to the relevant legal issues, and
  brief Members of the Legislative Council when the
  results are available.
• Ends/Wednesday, June 8, 2005