Hong Kong domestic health spending: Financial years 1989/90 to 2006/07

Abstract

This report presents the latest estimates of Hong Kong domestic health spending for fiscal years 1989/90 to 2006/07, cross-stratified and categorised by financing source, provider, and function. Total expenditure on health (TEH) was HK$75 048 million in fiscal year 2006/07, which represents an increase of HK$4405 million or 6.2% over the preceding year. Represented as a percentage of gross domestic product (GDP), TEH increased from 3.6% in 1989/90 to 5.6% in 2003/04 and then decreased to 5.0% by 2006/07. Taking population growth into account, total health spending per capita (at constant 2007 prices) grew at an average annual rate of 5.1%, which was faster than the average annual growth rate of per capita GDP by 2.1 percentage points. In 2006/07, government financing of health expenditure was HK$37 417 million (49.9% of TEH), which was the first time it was surpassed by private spending (HK$37 631 million) in the last decade as a result of the continued growth of private spending (averaging 9.5% per annum in real terms since 2002/03). The second important source of health financing was out-of-pocket payments by households (35.2%), followed by employer-provided medical benefits (7.4%) and private insurance (5.6%). Private insurance has taken on an increasingly important role for financing private spending, whereas household and employer expenditure together has shown a corresponding decrease during the same period. Of the HK$75 048 million total health expenditure in 2006/07, current expenditure comprised HK$71 888 million (95.8%), whereas HK$3161 million (4.2%) was for capital expenses (ie investment in medical facilities). Analysed by health care function, services for curative care accounted for the largest share of total health spending (66.2%) which was made up of ambulatory services (35.2%), in-patient curative care (27.1%), day patient hospital services (3.4%), and home care (0.5%). In response to the escalating demand for private health care, private hospitals had increased capital expenditure leading to an observed increase in investment in medical facilities from 2.2% to 4.2% of total spending over the period 2002/03 to 2006/07. Analysed by health care provider, hospitals accounted for the largest share (42.7%) and providers of ambulatory health care the second largest share (30.9%) of total health expenditure in 2006/07. The downward trend in hospital share after 2002/03 was primarily driven by the reduced public spending on hospitals, albeit with continued growth in corresponding private spending since 1997/98. Meanwhile, expenditure at providers of ambulatory services accounted for an increasing share of health spending after 2003/04, mainly due to increases in the volume and expenditure for private services. Not taking into account capital expenses (ie investment in medical facilities), public current expenditure on health amounted to HK$35 437 million (49.3% of total current expenditure) in 2006/07 with the remaining HK$36 451 million made up of private sources of funds. Expenditure on hospital care (HK$32 069 million) was predominately funded by general government revenue (83.8%), whereas that on providers of ambulatory health care (HK$23 201 million) was by private household out-of-pocket payments (67.3%). This reflects the mixed health care economy of Hong Kong, where public hospitals generally account for about 90% of total bed-days and private doctors (including western and Chinese medicine practitioners) provide about 70% of the out-patient care. Although both public and private spending were mostly expended on personal health care services and goods (92.2% of total spending), the distributional patterns among functional categories differed. Public expenditure was targeted at in-patient care (53.3%) and substantially less at out-patient care (24.4%), especially first-contact care. In comparison, private spending was mostly concentrated on out-patient care (48.7%), whereas medical goods outside the patient care setting (22.4%) and in-patient care (18.9%) comprised the majority of the remaining share. Compared to the Organisation for Economic Cooperation and Development countries, Hong Kong has devoted a relatively low percentage of GDP to health care in the last decade. As a share of total spending, public funding (either general government revenue or social security funds) was also lower than in most comparably developed economies, although commensurate with its public revenue collection base.