Cost of caring for Hong Kong’s elderly to rise by billions

Previous estimates of health bill for ageing population ‘too low’, with advisers saying tax changes look likely to raise new revenue

PUBLISHED : Thursday, 29 August, 2013, 12:00am
UPDATED : Thursday, 29 August, 2013, 5:59am

Hong Kong will have to spend much more than expected on elderly health care in future, according to revised government predictions that show previous estimates were far too low.

Details have not been released, but sources close to the government say the projected annual growth rate of public health spending because of the ageing population is several times higher than an earlier estimate of 1.2 per cent.

It also outpaces current gross domestic product growth, which stood at 3.3 per cent in the second quarter this year, the sources say.

Based on today's figures, a rise of just 3 per cent in the annual HK$48.8 billion health bill would cost almost HK$1.5 billion.

This would go up steeply in future because the costs increase at a compound rate.

The Financial Services and Treasury Bureau declined to comment on the figure.

But the government's fiscal advisers said the discrepancy highlighted a need for urgent collection of data on changes in the population's make-up. They added that tax changes seemed inevitable to meet the cost. Liu Pak-wai, a member of the long-term fiscal planning working group set up in June, said the clock was ticking.

"The projected increase does not correspond to the increase in elderly population. It was underestimated," said Liu, a research professor at the Chinese University's Institute of Global Economics and Finance.

"The economy is slowing. More people are eating into their savings and women's life expectancy will go beyond 90." It is understood the revised estimate was tabled for the group's discussion this month.

Liu declined to give details of the meeting. But he said the lack of reliable data made it difficult for the government to address the problems of demographic change, on which the public will be consulted next month.

A government population report last year said the average annual growth in public expenditure on health care would be 1.2 per cent from 2004 to 2033 due to the ageing population.

Liu said Western countries like the US, UK and Germany had a much higher projection - 6 per cent on top of their current GDP growth in a similar period.

"International studies found elderly aged 85 face much more in medical expenses than those aged 65. They are more susceptible to chronic diseases and hospitalised more often," he said.

The Census and Statistics Department says the number of people aged 85 or above in Hong Kong will increase by 230 per cent by 2041, against a 77 per cent rise in those aged 65 to 69.

Another working group member, former Taxation Institute president Marcellus Wong Yui-keung, said the health care estimates should also include extra hospitals, beds and doctors.

He said tax reform was almost unavoidable: "It's a choice. Resources allocated to other departments would be further lessened without new revenue."

A Food and Health Bureau spokesman said the growth rate estimate took into account the costs of different age groups. The working group will make recommendations in December.