• Public health vs rights based approaches

Public health vs rights based approaches

This paper argues that if policies are left unchanged, population ageing could adversely affect growth and living standards in Hong Kong. While higher labour productivity growth and increased migration of younger skilled workers from the Chinese mainland, would attenuate the economic impact of ageing, they would not offset it fully. Ageing will also put pressure on public finances, particularly as a result of rising health care costs.

Thus, an integrated and early response is needed to address the impact of population ageing. As the demographic effects will start setting in about 2015 when the labour force support ratio is projected to peak, this leaves a window of opportunity during the next 10 years to design specific countervailing policies which could mitigate the impact of ageing.

The report suggest that specific measures could be taken to mitigate the impact of the likely rise in health and long-term-care spending on public finances, including:

• strengthening the fiscal position which could be achieved through a mix of continued expenditure restraint, especially in non-age-sensitive areas
• continuation of the ongoing reforms in health care provision, including introducing private health insurance system and raising user fees - with safeguards for the needy
• welfare reforms and revenue-enhancing measures

Other measures could also be taken to shift the associated health care costs of ageing to the private sector which could include the introduction of a Medicare-type levy on employees to be administered by the Mandatory Provident Fund.

The Hong Kong SAR authorities are already considering some of these measures These combined with continued success at fiscal consolidation would go a long way in mitigating the impact on the public finances of a rapidly ageing population. [adapted from authors]

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