Haitong: There is still room for improvement in total healthcare expenses, and the proportion of personal healthcare expenses is expected to decrease slowly.

Haitong released a research report stating that from 2010 to 2023, China's total health expenditure has maintained a growth trend, with a continuous increase in proportion to GDP. However, compared to developed countries, there is still room for improvement. Among them, government health expenditure as a proportion of fiscal expenditure is showing an increasing trend, with the government taking on the responsibility of subsidizing social insurance expenditure; the proportion of personal expenditure in health expenses is relatively high, and residents bear a heavy burden of medical expenses. In the future, the proportion of personal health expenditure to total health expenditure will continue to show a slow decline. The main points of Haitong are as follows: China's total health expenditure is maintaining a growth trend, with a continuous increase in proportion to GDP. From 2010 to 2023, China's total health expenditure has increased from 1.998 trillion yuan to 9.0576 trillion yuan, with the growth rate decreasing from 21.85% to 6.15%. From 2010 to 2023, the proportion of China's total health expenditure to GDP has increased from 4.9% to 7.2%. There is still room for improvement in China's total health expenditure as a proportion of GDP compared to developed countries. Government health expenditure as a proportion of fiscal expenditure is showing an increasing trend, with the government taking on the responsibility of subsidizing social insurance expenditure. From 2015 to 2023, the proportion of government health expenditure as a proportion of fiscal expenditure has increased from 7.1% to 8.8%, rising to 9.2% during specific periods of infectious disease prevention and control. We believe that there is still room for improvement in central government health expenditure, and medical assistance plays a bottom-up role in the multi-level guarantee system of "1+3+N". The proportion of personal expenditure in China's health expenditure is relatively high, and residents bear a heavy burden of medical expenses. Data shows that in countries such as the United States, Japan, and Europe, government and social expenditure dominate healthcare expenditure, with personal health expenditure accounting for 9%-15% of recurrent health expenditure, while in China, this proportion is currently as high as 34.8%. In 2023, the proportion of personal health expenditure to total health expenditure in China is 27.3%. According to the expected targets of the "14th Five-Year Plan" for all people's medical security to decrease to 27% by 2025 and the "Healthy China 2030" plan to decrease to around 25% by 2030. Therefore, the proportion of personal health expenditure to total health expenditure is expected to continue to show a slow decline in the future. Risks: The risk of drug and medical consumables procurement policy cuts exceeding expectations, the risk of current deficits in medical insurance funds, the risk of a slowdown in the funding growth of medical insurance funds, and the risk of a decline in the growth rate of fiscal health expenditure.