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Open Access Research article

Long-term care cost drivers and expenditure projection to 2036 in Hong Kong

Roger Y Chung1, Keith YK Tin1, Benjamin J Cowling1, King Pan Chan1, Wai Man Chan2, Su Vui Lo34 and Gabriel M Leung1*

Author Affiliations

1 School of Public Health, Li Ka Shing Faculty of Medicine, The University of Hong Kong, Hong Kong SAR, PR China

2 Family and Elderly Health Services, Department of Health, Government of the Hong Kong SAR, PR China

3 Research Office, Food and Health Bureau, Government of the Hong Kong SAR, PR China

4 Strategy and Planning Division, Hospital Authority, Hong Kong SAR, PR China

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BMC Health Services Research 2009, 9:172  doi:10.1186/1472-6963-9-172

Published: 24 September 2009

Abstract

Background

Hong Kong's rapidly ageing population, characterised by one of the longest life expectancies and the lowest fertility rate in the world, is likely to drive long-term care (LTC) expenditure higher. This study aims to identify key cost drivers and derive quantitative estimates of Hong Kong's LTC expenditure to 2036.

Methods

We parameterised a macro actuarial simulation with data from official demographic projections, Thematic Household Survey 2004, Hong Kong's Domestic Health Accounts and other routine data from relevant government departments, Hospital Authority and other LTC service providers. Base case results were tested against a wide range of sensitivity assumptions.

Results

Total projected LTC expenditure as a proportion of GDP reflected secular trends in the elderly dependency ratio, showing a shallow dip between 2004 and 2011, but thereafter yielding a monotonic rise to reach 3.0% by 2036. Demographic changes would have a larger impact than changes in unit costs on overall spending. Different sensitivity scenarios resulted in a wide range of spending estimates from 2.2% to 4.9% of GDP. The availability of informal care and the setting of formal care as well as associated unit costs were important drivers of expenditure.

Conclusion

The "demographic window" between the present and 2011 is critical in developing policies to cope with the anticipated burgeoning LTC burden, in concert with the related issues of health care financing and retirement planning.