Page iiiExecutive Summary
Executive Summary
Healthcare Reform
Weputforwardacomprehensivepackageofproposalstoreformthehealthcare
systemintheHealthcare Reform Consultation Document“Your Health, Your Life” in March 2008.Theseincludefourhealthcare service reformproposalstoenhanceprimarycare,promotepublic-privatepartnershipinhealthcare,developelectronichealthrecord
sharing,andstrengthenpublichealthcaresafetynet,andahealthcare financing reform proposal toconsiderintroducingsupplementary healthcare financingviasixpossiblesupplementary financing options.
2. Weconductedthefirst stage public consultation onhealthcarereforminMarchtoJune2008andpublishedtheconsultationreportinDecember2008. Buildingonthe
viewsreceived,weare improving public healthcareand taking forward the service reforms,makinguseof the increasing government budget for health. Wehavealsoformulatedavoluntary Health Protection Scheme (HPS) asthenextstepinhealthcarereform.ThisdocumentmainlysetsoutourproposalsfortheHealthProtectionSchemeto initiatethesecond stage public consultation onhealthcarereform.
Page iv Executive Summary
First Stage Public Consultation (Chapters 1 & 2)
3. Thefirststagepublicconsultationreflectedawidelysharedconcernoverthe
long-term sustainability of our healthcare system. Thecommunityrecognized theimminentneedtotakeforwardcomprehensive reform to our healthcare system tomeetthechallengesofarapidly ageing populationandrising medical costs. Therewasabroadcommunityconsensustotake forward the healthcare service reform proposals.
4. Themajorityof thepublicagreed thatreform of both service delivery and financing arrangements would be needed. However, thepublicexpresseddivergent views over the supplementary financing optionsputforth.Theyexpressedreservations against mandatory supplementary financing options ingeneral. Agreaterproportionof thepublicpreferred voluntary choice for individualised healthcareandfavoured voluntary private health insurance.
5. The Government’s commitment to healthcare is set to continue to increaseaswereformourhealthcaresystembasedonthecommunity’sviews.Wewillcontinue to uphold the public healthcare system as the safety net for the whole population. TheGovernment’sannualrecurrentexpenditureonhealthhasincreasedfrom$30.5billionin
2007-08to$36.9billionin2010-11. Weaimtoincrease the health budget to 17% of the Government’s recurrent expenditure in 2012.
Second Stage Public Consultation (Chapter 3)
6. TheGovernmentiscommittedtocontinuingtoengagethecommunityandtake
forwardhealthcare reform through a step-by-step approach, withaviewtoenhancing the long-term sustainability of our healthcare system.Asannouncedinthe2009-10PolicyAddress, theGovernmentwouldput forwardavoluntary supplementary healthcare financing scheme for the second stage public consultation basedon the followingprinciples–
(a) Supplementary financing: publicfundingwillremainthemainfundingsourceforhealthcaresupplementedbyprivatefunding;
(b) Voluntary participation: theSchemewillbebasedonvoluntaryparticipationbythosewhoareableandwillingtoafford;
(c) Wider choice: theSchemewillprovideconsumerswithmorechoicesofvalue-for-moneyhealthcareserviceswithqualityassurance;
(d) Continuous protection: theSchemewillbedesignedtoprovidecontinuousprotectionforparticipantsintotheirolderages;and
(e) Consumer interests: theSchemewillbestandardizedandregulatedby theGovernmenttosafeguardconsumerinterests.
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7. Wepropose to introduceavoluntary Health Protection Scheme thataimstobetterensure the quality and value-for-money of private healthcare services and private health insurance. It takesastepinenhancing the long-term sustainability of the healthcare systembymakingprivatehealthcare,andprivatefundingashealthcarefinancingsupplementarytopublicfunding,moresustainable.
8. TheproposedHealthProtectionSchemealsoaimstoease the pressure on the public healthcare system, therebybenefitting those who depend on the public system for their healthcare. Itdoessobyencouragingindividualswhoareableandwillingtochooseandpayforprivatehealthcaretosubscribe to private health insuranceandenablingthemtouse private healthcare on a sustained basisas an alternative to public healthcare,whichwillstillbeavailabletoalleligibleHongKongresidents.
9. TheGovernmenthaspledged to draw $50 billion from the fiscal reserve to support healthcare reformafterthesupplementaryhealthcarefinancingarrangementsarefinalizedforimplementation. Wewillconsidermakinguseofthe$50billiontoprovide
incentivestoencouragethepublictoparticipate intheHealthProtectionSchemeona
sustainedbasis,thusrelievingthelong-termdemandforpublichealthcareservices.
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Proposed Voluntary Health Protection Scheme (Chapter 4)
Scheme Objectives
10. TheGovernmentwill regulatehealth insuranceplans tobeofferedunder
theHealthProtectionScheme toupholdtheprinciplesabove. Ouraimis toenhanceconsumer protection, price transparency, quality assurance and market competition in the private health insurance and private healthcare service sectors. TheHealthProtectionSchemeisthusdesignedwiththefollowingobjectives–
(a) Provide more choices with better protection to those who are able and willing to pay for private health insurance and private healthcare services.
(b) Relieve public queues by enabling more people to choose private services and focus public healthcare on target service areas and population groups.
(c) Better enable people with health insurance to stay insured and make premium payment at older age and meet their healthcare needs through private services.
(d) Enhance transparency, competition, value- for -money and consumer protection in private health insurance and private healthcare services.
11. Byenablingmorepeople touseprivatehealthcareonasustainedbasis, the
HealthProtectionSchemewillenablethepublichealthcaresystemtobetterfocusonits
targetserviceareas, includingservices forlow-income families and under-privileged groups,acute and emergency care,andcatastrophic and complex illnesses requiring high cost, advanced technology and multi-disciplinary professional teamworkwhichmaynotbereadilyavailableormayentailveryhighcostintheprivatesector.
Scheme Concept
12. The Health Protection Scheme is proposed as a standardized and regulated framework for health insurance under its aegis. HealthinsuranceplanstobeofferedundertheHPS(HPS Plans)arerequiredtomeetthecore requirements and specificationsforhealthinsurancestandardizedundertheHPS. Specifically, insurersparticipatingin
theHPSarerequiredtoofferstandardizedhealthinsuranceplansinaccordancewiththe
corerequirementsandspecifications(Standard Plans). ParticipatinginsurersarealsorequiredtocomplywithschemerulesandrequirementsspecifiedundertheHPS.
13. The HPS is designed to be modular:whileparticipatinginsurersareallrequiredtoofferStandardPlanswhichwouldattractgovernmentincentives,theyarefreetodesign
appropriatehealthinsuranceplansoftheirownofferingtop-upbenefitsorintegrating
additionalcomponentsbeyondthecorerequirementsandspecificationstosuitconsumers’
needs,e.g.betterservicesandroomsandboards,orcoverageofservicesnotincludedin
StandardPlanssuchasout-patientservices.However,thetop-upsoradditionswouldnot
beeligibleforgovernmentincentivesundertheHPS.
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14. Individualsmaychoose tosubscribe to HPSPlansofferedbyparticipatinginsurersonavoluntarybasis. Theywill enjoy theprovisions under the HPS for consumer protection and other advantages offered by HPS Plans,whichare notavailabletoprivatehealthinsuranceoutsidetheHPSingeneral. Employersmayalsochooseto
makeuseofHPSPlansthroughtheirinsurerswhenprovidingmedicalbenefitstotheir
employees.
Core Requirements and Specifications
15. ThecorerequirementsandspecificationsforhealthinsuranceundertheHPSwill
besettoensurethatHPSPlanscanproviderisk-poolingprotectionforunanticipatedand
costlyhealthcare.Weproposeto require HPSPlans to covermedicalconditionsrequiringhospital admissions or ambulatory procedures, includingtheassociatedspecialistout-patientconsultations/investigationsandadvanceddiagnostic imagingrequiredforthe
admissionsorprocedures,andchemotherapy or radiotherapy for cancer.
16. The core specificationswill set out the standardizedpolicy terms and
reimbursement levels (benefit limits)requiredundertheHPS. Weproposetoset the
benefitlimitsatalevelthatenablestheinsuredtoaccessaffordableprivatehealthcarefor
medicalconditionsrequiringhospitaladmissionsorambulatoryprocedures.Insurersare
freetooffertop-upbenefitsexceedingthecorespecifications(e.g.betteramenities,higher
benefitlimits,lowerco-payments,etc.).
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17. Weproposenot to include primary careasacorerequirementundertheHPSbecauseprivateprimarycareisrelativelymoreaffordable,andtheutilizationofprimary
careishighlyelectiveandmorepronetomoralhazards.Forsimilarreasons,wepropose
not to include specialist services and diagnostic imaging in generalthatarenotrequiredforhospitaladmissionsorambulatoryprocedures,andnot to include maternity coverage.Insurersareatlibertytoofferadd-oncomponentscoveringtheseservices.
Key Scheme Features
18. HPSPlansare required toprovideacombinationofkey features thatofferadvantagesoverexistingprivatehealthinsuranceproductsavailableinthemarket–
• No turn-away of subscribers and guaranteed renewal for life
• Published age-banded premiums subject to adjustment guidelines
• Cover pre-existing medical conditions subject to waiting period and time-limited reimbursement limits*
• Cap premium plus high-risk loading at 3x published premium*
• Make higher risk groups insurable with High-Risk Pool reinsurance*(*see the next section on “Access for Higher Risk Groups”)
• Offer no-claim discount up to 30% of published premiums
• Insurance plans portable between insurers and on leaving employment
• Transparent insurance costs including claims and expenses
• Standardized health insurance policy terms and definitions
• Government regulated health insurance claims arbitration mechanism
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19. Anotherkeyfeatureof theHPSis topromote transparent medical fees with packaged charging for common procedures. Privatehospitalswouldbeencouragedtoofferquality-assured,all-inclusiveandcondition-specificpackagedservicesandpricing.
HPSPlanswouldberequiredtosetreimbursementlevelsbasedonpackagedcharging
whereavailable, therebyenhancingtransparencyandcertaintyofmedicalcharges to
theinsured. Thisenhancesmarkettransparencyandcompetitioninprivatehealthcare
servicesandhelpssafeguardconsumerinterestsinmakinguseofsuchservices.
Migration of Existing Health Insurance
20. TheHPS isvoluntary for individuals andemployerswithexistinghealth
insurance,whomaychoosewhether tomigrate tohealth insuranceplansunder the
HPS. Basedondiscussionwiththeinsuranceindustry,weproposetorequireinsurers
participating in theHPSto facilitateseamlessmigrationofpolicy-holders fromtheir
existinghealthinsurancepoliciestoHPSPlansasfollows–
(a) For existing individual policy-holders:participatinginsurerswillberequiredtoofferthemanoptiontorenewtheirexistinghealthinsurancepoliciestoan
appropriateHPSPlanwhichmustmeetorexceedtherequirementsforStandard
Planswithnolesscoverageandbenefitsandwithoutundergoingre-underwriting,
andtoenjoyadvantagesofferedbytheHPSincludingpre-existingconditions
coveragesubjecttowaitingperiod,portability,no-claimdiscount,etc.
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(b) For existing group policy-holders (mainly employers):participatinginsurerswillberequiredtoofferthemuponrenewalanoptiontoswitchtoanappropriate
tailor-madeHPSPlanwhichmustmeet or exceed the requirements for
StandardPlansthatprovidesnolesscoverageandbenefitsandmeetsthecore
requirementsandspecificationsundertheHPS.Theinsurersmayoffertop-up
componentstosuitindividualemployers’needs.
Access for Higher Risk Groups
21. InformulatingtheproposalsfortheHPS,wehaveidentifiedanumberofkey
issuesontheHPSdesignconcerninghowindividualswithhigherriskshouldbeableto
subscribetohealthinsurance.Ourproposalsaresetoutbelow–
(a) How pre-existing conditions should be covered in health insurance? TheHPSrequireshealth insurance tocoverpre-existingmedicalconditions that
areusually excludedbyexistinghealth insurance. Awaitingperiodand
reimbursementratiosareneededtominimizeanti-selection.Weproposetostart
coverageofpre-existingconditionsafteraone-yearwaitingperiod,andprovide
reimbursementof25%inthesecondyear,50%inthethirdyear,and100%after
threeyears.
(b) How high-risk individuals may subscribe to health insurance? High-riskindividualsoftencannotgethealth insurancenowor thepremiumcanbe
prohibitivelyhigh.TheHPSrequiresinsurerstoinsurethemwithpremiumplus
high-riskloadingnotexceedingacertainlevel.Weproposetocapthepremium
plus loadingtobepaidbyhigh-risk individualsat threetimesthepublished
premiumsforStandardPlans.
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(c) How individuals already at older age may also get health insurance?Existinghealthinsuranceusuallysetanagelimitbeyondwhichentrywouldbedenied.
TheHPSaimstofacilitateaccessbythehigherriskgroupsbutallowingentryat
allagesmayintroduceexcessiveriskstoHPSPlans.Onbalance,weproposeto
requireinsurerstoallowpeopleaged65+tosubscribetoHPSPlanswithinthe
firstyearofintroduction,butwithnocapontheirpremiumplusloading.
High-Risk Pool Reinsurance Mechanism
22. Toenable thehigher-riskgroups tohaveaccess tohealth insurancewhile
ensuringthefinancialviabilityofthehealthinsuranceplansundertheHPS,itisnecessary
tointroduceaHigh Risk Pool (HRP),whichisanindustryreinsurancemechanismforinsurersparticipatingintheHPStoshareoutthehighrisksinsuredbytheirHPSPlans.
Allhigh-riskpolicies,definedasthosepolicieswithriskpremiumassessedtoexceed
thecapforpremiumwithhigh-riskloading(i.e. threetimesthepublishedpremiumof
StandardPlans)willbeputintothe
23. TheHRPisproposedtobeareinsurancemechanismoperatedbytheindustry
and regulatedby theGovernment, fundedby thepremiumofhigh-riskpolicies
(correspondingtoStandardPlans)andreinsurancepremiumfromparticipatinginsurers.
Wherenecessary,injectionbytheGovernmentwouldbeconsideredincasetheviability
oftheHRPisin jeopardyduetoalargeproportionofhigherriskpeople joininghealth
insuranceplansundertheHPS,whentheHRPpremiumcannotmeettheclaimspay-out
(see“Government Incentives”inparagraph25(a)below).
HRP.
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Saving for Future Premium
24. AkeyobjectiveoftheHPSistoencouragepeoplewithhealthinsurancetostay
insuredatolderage. However,age-bandedpremiumforvoluntaryhealth insurance
areboundtoincreasesharplywithageoftheinsuredastheirhealthriskandhealthcare
utilizationincrease. Onepossiblewaythatmayhelpensurethat individualscanstill
affordcontinuoushealthprotectionundertheHPSatolderagewhentheyneeditmostis
toencouragesavingsforpayingfuturepremium.Wethusproposethefollowingoptions
toencouragesavings(see“GovernmentIncentives”inparagraph25(c)below)–
(a) Required in-policy savings:HPSPlanswillberequiredtoincorporateasavingscomponent,where the insuredwouldpayahigherpremiumatayounger
age tooffset thepremiumincreaseatolderage. Incentivesviagovernment
contributionstothesavingscomponentofHPSPlanswouldbeconsidered.
(b) Optional savings accounts: individualssubscribingtoHPSPlanswillhaveanoptiontosavetoasavingsaccount,andtheaccruedsavingscanbefreelyusedon
orafterage65.Incentivesviagovernmentcontributionstothesavingsaccount
wouldbeconsidered,butwouldbesubjecttothesavingsbeingusedtopayHPS
premiumfromage65.
(c) Premium rebate for long-stay: individualssubscribingtoHPSPlansarenotrequiredtosave,butmaychoosetosaveontheirownmeans. Incentivesvia
apremiumrebateproportiontotheirlengthofstayinginsuredundertheHPS
wouldbeconsidered,providedthattheycontinuetopaypremiumfromage65
usingtheirownsavings.
Government Incentives
25. ToachievetheobjectivesoftheHPS,weproposethatfinancialincentivesmaking
useofthe$50billionfiscalreserveearmarkedtosupporthealthcarereformshouldbe
consideredinthefollowingdirections–
(a) Protection for high-risk individuals: toallowhigh-risk individuals to joinHPSPlanswithoutrequiringotherhealthyinsuredtopayexcessivepremium,
wepropose toconsidergovernment injection intoHRPwherenecessary,an
industry-operatedreinsurancemechanismfortakingonhigh-riskindividuals
andsharingouttheirrisks,tobuffertheexcessriskarisingfromtheparticipation
ofhigh-riskindividuals.
(b) Premium discount for new subscribers: toattract individualsespecially theyoungtojoinHPSPlans,weproposetoconsidergovernmentincentivesforall
newjoinersofHPSPlanstoenjoymaximumno-claimdiscounti.e.upto30%
discountontheStandardPlanpremiumimmediatelyonjoining.Weproposeto
makethisavailableforalimitedperiodaftertheintroductionofHPS.
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(c) Savings for future premium (see“SavingforFuturePremium”inparagraph24above): toenabletheinsuredtocontinuetoaffordhealthprotectionunder
theHPSatolderage,weproposetoconsidergovernmentincentivesforsavings
byindividualsforpayingfuturepremiumatolderage(say65orabove). We
proposethatthegovernmentincentivesshouldbeproportionaltotheirlength
ofcontinuouslystaying insuredunder theHPSandmaybeup toacertain
percentageoftheirStandardPlanpremium.
26. Uponreceivingviewsinthepublicconsultationovertheproposeddirections
forconsideringfinancial incentives,wewill formulatethedetailsof theproposals for
government incentivesunder theHPS,andworkout theuseof the$50billion fiscal
reserveearmarkedtosupporthealthcarereform.
Supporting Infrastructure for Health Protection Scheme (Chapter 5)
Private Healthcare Capacity and Manpower
27. ImplementationoftheHPSwillrequirecorrespondingexpansioninthecapacity
oftheprivatehealthcaresectortocopewiththepotentialincreaseindemand.Weestimate
thattheknownredevelopmentprojectsofexistingprivatehospitalsandthedevelopment
ofnewprivatehospitalsunderplanningshouldbeabletomeettheprojecteddemand
forprivatehealthcareservicesarisingfromtheHPS. Weshallcontinuetomonitorthe
demandforprivatehealthcareservicesandfurtherconsiderwaystoincreasethecapacity
asnecessaryaftertheHPSisimplemented.
28. Weconductmanpowerplanningexercisesonaregularbasis for thevarious
healthcareprofessionsforthepurposeofassessingtheeducationandtrainingneedsfor
healthcareprofessionals. Theexercisewilltakeintoaccountthepotentialdemandsfor
manpowerincrease,includingexpansionofthehealthcaresystemtocaterfordemographic
changesandimplementationofthehealthcarereforminitiatives.Thepotentialincreasein
demandforprivatehealthcareservicesarisingfromtheimplementationoftheHPSwillbe
takenintoconsideration.
Requirements for Insurers and Providers
29. ImplementationoftheHPSrequiresparticipationofprivatehealthinsurersand
privatehealthcareproviders.Tothisend,theproposalsfortheHPSaredesignedwitha
viewtosafeguardingconsumerinterestsinprivatehealthinsuranceandprivatehealthcare
services,whileensuringthatitshouldbepracticallyfeasibleandfinanciallyviabletooffer
healthinsuranceplansandprovideprivatehealthcareservicesundertheHPS.
30. Toensurecompetitionandchoiceunder theHPS, there isaneed formore
interestedprivatehealthinsurerstoparticipateandoffersufficientandattractivechoices
ofhealthinsuranceplansundertheHPS.TheHPSisformulatedtakingintoaccountthe
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viewsof the insurance industry,andweexpect thatprivate insurers in the insurance
industrywouldbeinterestedinparticipatingintheHPS. However,shouldtherebea
generallackofinterestsfromtheindustryinofferinghealthinsuranceplansunderthe
HPS,theGovernmentwillconsidersettingupitsownmechanismtoprovidethepublic
withmorechoicesofhealthinsuranceplans.
31. For the implementationof theHPS, there is aneed forprivatehealthcare
providers toprovideservices thatmeet therequirementsunder theHPS,especially
healthcare services atpackaged charging. To this end, fornewprivatehospital
developments at the fourpiecesof landearmarked for such,we shalldesign the
developmentrequirementstakingintoaccounttheneedtosupporttheHPS, including
servicescope,pricetransparency,andtherequirementtoprovideservicesatpackaged
charges. Wewill alsoexploreways to facilitate localprivatehospitals toprovide
healthcareservicesatpackagedcharginginaccordancewiththeHPSthroughproviding
ofnecessaryinfrastructuralsupport.
32. Tosafeguardconsumer interests,aproposedrequirementunder theHPS is
forprivatehealth insurersparticipating in theHPSandprivatehealthcareproviders
providingservicestotheinsuredundertheHPS(includingprivatehospitalsandtheir
engagedorassociateddoctors) toparticipate inahealth insurance claims arbitration mechanism tohandledisagreementsbetweenpatients,private insurersand/orprivatehealthcareprovidersoverhealthinsuranceclaims. Thearbitrationmechanismwillbe
regulatedby theGovernmentwithaviewtomaintaining impartialityandensuring
consumerprotectionintheprivatehealthinsuranceandhealthcareservicemarkets.
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Supervisory Structure
33. Tosuperviseeffectivelythe implementationandoperationof theHPSandto
monitor theachievementof theobjectivesof theHPS in theprivatehealth insurance
andprivatehealthcaremarketsinHongKong,weproposeasupervisorystructurewith
separateagenciestoperformthefollowingessentialfunctions–
(a) Prudential regulation:theOfficeoftheCommissionerofInsurancewillcontinuetoservethefunctionsof theprudentialregulator tosupervise, interalia, the
financialsoundnessof insurersparticipating in theHPSandtoensure their
financialcapabilitytodischargeobligationstotheinsured,andtooverseeany
complainthandlingmechanismsapplicabletoinsuranceingeneral.
(b) Quality assurance: theDepartmentofHealthwillbestrengthenedin itsroleas the regulatoryand licensingauthority forprivatehospitals to serve the
functionsofqualityassurance,includingtoenforcetheregulatoryrequirements
andlicensingconditions, tosupervisethequalityandstandardofhealthcare
servicesprovided,tooverseehospitalaccreditationandclinicalaudits,tocollect
servicestatisticsandbenchmarkinginformation,andtoadministerotherquality
assurancemeasures.Theprofessionalregulationofhealthcareprofessionalswill
continuetorestwiththerelevantstatutoryboardsandcouncils.
(c) Scheme supervision:anewdedicatedagencyisproposedtobeestablishedtosupervisetheimplementationandoperationoftheHPS, includingregistering
health insuranceplans,administering theHPScorerequirements,collecting
informationandstatisticsaboutprivatehealth insuranceplans, compiling
benchmarkinginformationandservicestatisticsofprivatehealthcareservices,
compilingnecessarypricingandcostinginformationofprivatehealthcareunder
theHPS,andadministeringmechanismsforconsumerprotectionspecifictothe
HPSincludingclaimsarbitration,complainthandlingandcasereview.
34. Legislative changewillbe required to support the implementationof the
abovesupervisorystructureandfunctions. Wewillexamine thedetailed legislative
requirementswhenfinalizingtheHPSproposalforimplementationafterconsultation.
We Need Your Views
35. Weareconsultingthepubliconourproposals to introduce theHPSandwe
wouldappreciateyourviews. Yoursupportandviewsareimportantforustofindout
thebestwayforward.Pleasesendyourviewsonthisconsultationdocumenttousonor
before7January2011throughthecontactbelow.
Address: Food and Health Bureau 19/F Murray Building Garden Road Central, Hong Kong
Page xvi Executive Summary
Fax: (852) 2102 2525
e-mail: [email protected]
Website: www.MyHealthMyChoice.gov.hk
36. Pleaseindicateifyoudonotwantyourviewstobepublishedorifyouwishto
remainanonymous. Unlessotherwisespecified,allresponseswillbetreatedaspublic
informationandmaybepublicizedinthefuture.