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Hong Kong’s out-of-pocket medical expenses set to double by 2020 / Cost of tobacco-related diseases, including passive smoking, in Hong Kong

Dear Legco Panel on Health Services,

Full Report attached: Cost of tobacco-related diseases, including passive smoking, in Hong Kong

Please find the self explanatory information herewith showing the need for Government to amend current legislation to place the onus on all workplace licensees and managers to keep their premises smokefree or lose their licences to operate, to annually  increase tobacco taxation to prevent youth smoking and to implement a display of tobacco products ban with tobacco products sold only in plain packaging, following Australia’s example.  Meanwhile, sue Big Tobacco for the costs of treating the diseases caused by use of their consumer product as directed and enhance mandatory penalties against users and sellers of duty-not-paid tobacco.

Kind regards,

James Middleton


Charity and NGO

Cost of tobacco-related diseases, including passive smoking, in Hong Kong (at 1998 costs – now will be higher)

Results: In the Hong Kong population of 6.5 million in 1998, the annual value of direct medical costs, long term care and productivity loss was US$532 million for active smoking and US$156 million for passive smoking(total HK$ 5.366 billion)  ; passive smoking accounted for 23% of the total costs. Adding the value of attributable lives lost brought the annual cost to US$9.4 billion (HK$ 73.32 billion).

Conclusion: The health costs of tobacco use are high and represent a net loss to society. Passive smoking increases these costs by at least a quarter. This quantification of the costs of tobacco provides strong motivation for legislative action on smoke-free areas in the Asia Pacific Region and elsewhere.

Published on South China Morning Post (

Home > Hong Kong’s out-of-pocket medical expenses set to double by 2020

Hong Kong’s out-of-pocket medical expenses set to double by 2020

Submitted by admin on Dec 14th 2012, 12:00am



Tom Holland

A survey examining expected growth, the rise in population, and relatively high inflation rate for medical services proves painful reading

Hong Kong has a health problem. I’m not talking here about pollution, bad diets or the stress of living in such a crowded city, although they are all serious enough. I’m talking about a health funding problem.

This year the city will spend around HK$100 billion on health care, or roughly 5 per cent of our gross domestic product.


The government will foot much of the bill – around 46 per cent – from its tax revenues. A further 17 per cent will be covered by corporate health schemes and private insurance.

And Hongkongers will pay the rest – some HK$37 billion – straight out of their pockets (see the first chart).

At the moment people seem fairly satisfied with this arrangement. But it’s not sustainable in the longer term.

In a new projection, analysts at reinsurance company Swiss Re have tried to work out how the city’s health care costs will change between now and 2020.

They started by looking at Hong Kong’s expected economic growth, the growth in our population, and the relatively high rate of inflation for medical services (see the second chart). As a result, they estimated that the city’s health care costs will almost double by 2020.

Then they assumed that the government will keep a tight rein on its health care budget – already 17 per cent of recurrent expenditure – holding spending steady at 2.3 per cent of GDP. And for good measure they assumed that the level of corporate and private coverage will also remain the same relative to GDP.

Given those assumptions, they concluded that the cost of medical services Hongkongers will have to meet from their own pockets will surge from HK$37 billion this year to HK$77 billion in 2020 (in current Hong Kong dollar terms).

That’s a real increase of 108 per cent in out-of-pocket health care expenses.

If anything, Swiss Re’s projection is likely to be an underestimate.

Between now and 2020, the number of Hongkongers aged 60 and above is likely to rise from 1.4 million to 2 million. More elderly means greater spending on medical services.

And because health care isn’t easily tradeable, the extra demand will naturally push up prices at an even faster rate, further increasing the city’s health costs.

Of course Swiss Re has conducted its study because it wants more people to buy private health insurance.

But there are problems with private insurance. For one thing, insurance companies prefer to sell policies to the young and healthy, who are less likely to run up heavy bills. For the old and frail, health policies can be ruinously expensive, or simply unavailable.

Secondly, experience in other markets has shown that private health insurance programmes tend to lead to massive cost escalation.

That can mean policies cover less and less as time goes on, leaving the policy-holders still facing heavy out-of-pocket expenses.

And of course, private health insurance is simply too expensive for many people, pricing the poor out of the health care market.

That means private health insurance is never going to be the sole solution to Hong Kong’s health care funding gap.

Tax-funded government spending can’t fill the hole either. Rising health costs would soon begin to crowd out spending in other sectors like education and welfare.

The solution will have to reside in some form of stand-alone social health insurance fund to which everyone of working age contributes, with the rich subsidising the poor, the healthy subsidising the sick, and the young subsidising the elderly.

But the government had better get its skates on and set it up soon, or before long the city’s people will find themselves seriously out of pocket. [2]


Health Care

Hong Kong Economy


Health Insurance

Social welfare

Source URL (retrieved on Dec 14th 2012, 6:07am):


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