37.     An ageing population will bring about a substantial increase in demand for health care services. Currently, nearly half of the total expenditure of the Hospital Authority is used to provide health care services for the elderly. The cost of providing such services to the elderly is on average six times that for other groups.

38.     On the other hand, advances in medical technology, the use of new diagnostic techniques, new drugs and new treatment methods all combine to continually drive up medical costs. Because of these factors, it is expected that the increase in overall expenditure on health care services will, on average, be two percentage points higher than the actual economic growth rate in the next 20 to 30 years.

39.     According to an external study, if the existing health care system were to remain unchanged, expenditure on public health care services would increase from $38 billion in 2004 to over $180 billion in 2033, an increase of almost 400 per cent in real terms. The share of the cost of public health care services could increase substantially from the present 15 per cent of government recurrent expenditure to over 27 per cent. Although we will increase the share of public health care expenditure to 17 per cent of government recurrent expenditure in the next few years, there is still a big gap between this figure and the forecast expenditure on public health care services for 2033. If we do not introduce new financing arrangements, the provision of quality public health care services cannot be sustained.

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