Hong Kong s Health Spending 1989 to 2033 Gabriel M Leung School of Public Health The University of Hong Kong
What are Domestic Health Accounts? Methodology used to determine a territory s health expenditure patterns OECD s System of Health Accounts compatible with other macroeconomic statistics eg National Income Accounts Describe the flow of funds through a health system Who finances health care? How much do they spend? Where do their health funds go, i.e., what is the distribution among providers and ultimately among services provided? Who benefits from this health expenditure pattern?
The 3 Principal Dimensions Financing Sources: provide health funds Answer where does the money come from? e.g., GGR, households, external sources Providers: are end users of health care funds, entities that actually provide / deliver the health service Answer Where did the money go? e.g., hospitals, clinics, pharmacies Functions: are actual services delivered Answer What type of service was actually produced? e.g., curative care, preventive care, medical goods
2002/03 2003/04 2004/05 Fiscal year coverage 1990/91 1991/92 1992/93 1993/94 1994/95 1995/96 1996/97 1997/98 1998/99 1999/00 2000/01 2001/02 2003 2007 Chronological year 1989/90 1999 2000 2001 2002 2004 2005 2006 DHA1 (Harvard consultancy) external input (IPS/IHP) DHA2 (HKU) DHA3 (HKU) local capacity
Trends in Health Spending Compared with GDP Per Capita 12,000 250,000 10,000 200,000 Per capita TDHE (HK$) 8,000 6,000 4,000 150,000 100,000 Per capita GDP (HK$) 2,000 50,000 0 1989/90 1991/92 1993/94 1995/96 1997/98 1999/00 2001/02 Fiscal year 0 Per capita TDHE Per capita GDP
Public and Private Spending as a % of GDP 3.5% 3.0% 2.5% Percentage of GDP 2.0% 1.5% 1.0% 0.5% 0.0% 1989/90 1990/91 1991/92 1992/93 1993/94 1994/95 1995/96 1996/97 1997/98 1998/99 1999/00 2000/01 2001/02 Public 1.6% 1.9% 2.1% 2.0% 2.1% 2.1% 2.3% 2.4% 2.5% 2.9% 2.9% 2.9% 3.1% Private 2.2% 2.2% 2.2% 2.2% 2.2% 2.2% 2.3% 2.3% 2.3% 2.4% 2.3% 2.3% 2.3% Fiscal year
Mix of Health Financing 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 1989/90 1990/91 1991/92 1992/93 1993/94 1994/95 1995/96 1996/97 1997/98 1998/99 1999/00 2000/01 2001/02 Fiscal year Government Households Employers Insurance Non-profit institutions Others
Private Spending by Source 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 1989/90 1990/91 1991/92 1992/93 1993/94 1994/95 1995/96 1996/97 1997/98 1998/99 1999/00 2000/01 2001/02 Others 3% 3% 2% 2% 3% 3% 3% 2% 2% 2% 1% 1% 3% Non-profit institutions 0% 0% 0% 0% 0% 1% 2% 1% 1% 2% 1% 1% 1% Insurance 2% 2% 2% 2% 2% 3% 5% 6% 6% 7% 8% 9% 9% Employers 20% 20% 20% 20% 20% 20% 20% 21% 21% 22% 21% 20% 19% Households 75% 75% 76% 76% 74% 73% 71% 71% 70% 68% 69% 70% 69% Fiscal year
50% 45% 40% 35% 30% 25% 20% Total health expenditure by provider, 1989/90 and 2001/02 15% 10% 5% 0% 1989/90 1990/91 1991/92 1992/93 1993/94 1994/95 1995/96 1996/97 1997/98 1998/99 1999/00 2000/01 2001/02 Fiscal year Hospitals Providers of ambulatory health care Provision and administration of public health programmes Other industries (rest of the economy) Nursing and residential care facilities Retail sale and other providers of medical goods General health administration and insurance Rest of the world
Total health expenditures by function, 1989/90 and 2001/02 Percentage of total health expenditures 0% 5% 10% 15% 20% 25% 30% 35% 40% Inpatient curative care Day patient hospital services Ambulatory services Home care Rehabilitative and extended care Long-term care 1989/90 2001/02 Ancillary services to health care Medical goods outside the patient care setting Prevention and public health services Health programme administration and health insurance Investment in medical facilities
http://www.hwfb.gov.hk/statistics/en/dha.htm
Total Expenditures on Health of OECD Countries and Hong Kong, 2001 Singapore (?) China Hong Kong SAR, China Taiwan Korea Finland United Kingdom Japan New Zealand Denmark Sweden Australia France Canada Germany Switzerland United States 0% 2% 4% 6% 8% 10% 12% 14% As a percentage of GDP Public Private
Most countries use the fruits of economic development to invest in health 10,000 Australia Austria Belgium Canada Denmark Finland Per Capita THE (US$ PPP) (log scale) France Germany Greece Hungary Iceland Ireland Italy Japan Korea Luxembourg Mexico Netherlands New Zealand Norway Portugal Spain 1,000 10,000 100,000 Per Capita GDP (US$ PPP) (log scale) Sweden Switzerland United Kingdom United States Hong Kong SAR, China
mostly through public financing 100% Australia Austria Belgium Percentage of Public Health Spending 90% 80% 70% 60% 50% 40% 0 10,000 20,000 30,000 40,000 50,000 60,000 Per Capita GDP (US$ PPP) Canada Denmark Finland France Germany Greece Hungary Iceland Ireland Italy Japan Korea Luxembourg Mexico Netherlands New Zealand Norway Portugal Spain Sweden Switzerland
but compare the different levels of public revenue between countries Share of public expenditure on health (%) 100 90 80 70 60 50 40 30 20 10 0 0 10 20 30 40 50 60 70 Public revenue as a % of GDP Australia Austria Belgium Canada Czech Republic Denmark Finland France Germany Greece Ireland Italy Japan Korea Luxembourg Netherlands Norway Portugal Spain Sweden United Kingdom United States Hong Kong SAR, China
Projection method Wanless projection method of the UK Treasury Key cost drivers Age Sex Unit cost* *incorporating the impact of certain key drivers of health care expenditure such as public s expectations, technological changes and potential productivity gains Activity level** (or volume) **implied by demographic change and assuming that age-sexspecific use and quality of care remain constant
Input parameters
Projected TDEH / %GDP Total expenditure on health as a % of GDP 0 5 10 15 20 Exemplar scenarios Demographic effects only Harvard projection 2 3 5 7 10 11 15 19 21 23 2000 2005 2010 2015 2020 2025 2030 2035 Year
Public-Private Shift
Total expenditure on health as a % of GDP 0 5 10 15 20 Projected TEH / %GDP with public to private market share shift Harvard projection Cases 1-3 Cases 4-6 2000 2005 2010 2015 2020 2025 2030 2035 Year Case 1 6.6 (46.1) TDEH as % of GDP (Public share %) 7.4 (44.7) Year 8.0 (45.3) 8.8 (45.7) 9.8 (45.8) 2 6.4 (50.6) 7.3 (45.9) 8.1 (45.4) 8.9 (45.7) 9.9 (45.8) 3 6.3 (52.5) 7.1 (49.4) 8.0 (46.0) 8.9 (45.5) 9.9 (45.6) 4 6.5 (48.7) 7.1 (47.8) 7.8 (48.5) 8.5 (48.9) 9.4 (49.2) 5 6.3 (52.0) 7.2 (48.7) 7.8 (48.5) 8.6 (48.9) 9.5 (49.2) 6 6.3 (53.4) 7.0 (51.2) 7.8 (48.8) 8.7 (48.6) 9.6 (48.9)
Funding gap (HK$ billion) Case 1 Case 2 Case 3 20 20 20 0 0 0-20 -20-20 -40-40 -40-60 -60-60 -80-80 -80-100 2010 2015 2020 2025 2030 Year -100 2010 2015 2020 2025 2030 Year -100 2010 2015 2020 2025 2030 Year Case 4 Case 5 Case 6 20 20 Case 6 20 0-20 -40-60 -80-100 2010 2015 2020 2025 2030 Year 0 20-20 0-40 -20-60 -40-60 -80-80 -100 2010 2015 2020 2025 2030 Year 0-20 -40-60 -80-100 2010 2015 2020 2025 2030 Year 19% 17% 15%
Policy Implications Population ageing and associated health care use contribute relatively little to overall spending growth. Technology diffusion (reflected in the net medical inflation rate) is the major long-term cost growth driver. It is possible to limit that growth to below 10% by 2033 which is low by international standards. There is little sensible reason to preset an arbitrary level of health spending and related growth. We should instead aim for a health system that results in a Pareto optimum incremental value commensurate with that provided by other sectors (e.g. education, housing, security) of the economy.
Caveats Uncertainty surrounding the model prediction increases with time and the results should be interpreted qualitatively beyond say 2016 as long-term trends instead of year-to-year exact expenditure levels An actuarial model cannot account for behavioural changes of the population regarding health care seeking patterns in response to policy interventions, which would require an econometric component although data limitations preclude its application locally e.g. US CMS(HCFA) model