Healthcare Financing: Tweaks or Tricks?
In his 2013 Budget announcement earlier this year, Deputy Prime Minister Tharman Shanmugaratnam said the government would look into lowering Singaporeans’ out-of-pocket health spending.
On Sunday evening, we learned more about how this may be achieved through Prime Minister Lee Hsien Loong’s 2013 National Day Rally (NDR) speech. In summary, these are the tweaks to healthcare financing Singaporeans can expect in future:
- Medisave usage will be expanded to more medical conditions;
- Medishield coverage, renamed Medishield Life, will extend to those above 90 and will be universal. It will be expanded to include those with pre-existing illnesses;
- There is no opting out of Medishield Life and premiums will be higher;
- A “Pioneer Generation Package” will be introduced to help elderly Singaporeans in their late 60s and above pay for their premiums under Medishield Life;
- Medisave contribution rate will increase;
- State spending on healthcare will increase;
- The Community Health Assist Scheme will be open to younger Singaporeans below 40;
- Means-tested subsidies will be increased for those with more serious conditions who need to visit Specialist Outpatient Clinic
Details will be finalized after a public consultation exercise (reports here and here).
The Good News (Fingers Crossed)
Universal coverage under Medishield Life, to include even those with pre-existing health conditions, is a good move. It means that those who are currently uninsured due to their medical conditions do not have to worry about draining their cash savings to pay for their medical expenses.
Expanding Medisave usage to more medical conditions and for preventive health screening is also long overdue.
As many Singaporeans have observed, it is pointless to have so much money in our Medisave account if we cannot utilize it.
Singaporeans are already “over-saving” in Medisave, according to Prof Phua Kai Hong, an expert on healthcare policy at the Lee Kuan Yew School of Public Policy.
Prof Phua said that the level of savings is equivalent to about 10 years of our annual health budget, when in fact a savings level of between three to five years is adequate (“Government to take on larger share of medical costs,” Today, 28 Feb 2013).
Now I know many readers are still skeptical of our government’s assurances, as I am.
While the healthcare changes outlined in the NDR speech sound reasonable, it is hard to say if the individual’s out-of-pocket healthcare expenses will actually be reduced till the finer details are confirmed.
As of now, the Medisave withdrawal limit for each premium (Medishield and Integrated Shield Plan) is up to $800 per insured person per policy year, and any sum above $800 has to be paid out-of-pocket.
How will the increased premiums under Medishield Life be funded?
PM Lee said that the state will spend more on healthcare. But he also said that the Medisave contribution rate will be raised.
In my earlier blogpost, I have pointed out that our out-of-pocket health spending is the highest among many developed economies.
The chart below shows that Singaporeans’ out-of-pocket health spending as a percentage of total health spending is a staggering 54%, about 20 percentage points higher than that of Hong Kong, Taiwan and South Korea.
And this is not including funding from Medisave, which, technically, should be counted as out-of-pocket spending since it is a compulsory deduction from our income. In other words, our out-of-pocket health spending is in fact higher than 54%.
(Data sources: WHO Data Observatory, Taiwan & Hong Kong). Note that Medisave is not counted as out-of-pocket spending in the Singapore figure.
In view of the already heavy burden on the individual, therefore, I do not think Medisave contribution rate should be raised to fund the growing healthcare expenses, especially if this eats further into employees’ take home income.
Channeling more money from the CPF ordinary account to the Medisave account also does not lessen the individual’s financial burden. Considering that many of us are using our monthly contribution in the ordinary account to pay for our housing loan, such a move is as good as taking money from our left pocket to fill our right pocket.
On the other hand, increasing state spending on healthcare is only right, given that our public spending on health as a percentage of total health spending is very low in comparison to other East Asian economies. It is from 10 to 20 percentage points lower than our East Asian neighbors, and close to 50 percentage points lower than that of Japan.
It is high time our government takes on a bigger role in funding health spending in Singapore.
Ha ha … u really think all these goodies will be paid by the Govt? Already, PM said “rates will go up”, “to breakeven ..”, “means test”. Basically, this will mean that unless you’re proven to be absolutely desititute (ie. your account cleaned out, you’ve obeyed the Govt’s orders and downgraded to a 2-room flat, and your children/wife/mother/father/brother/sister’s accounts are also dried), you will have to pay more for the “goodies”. Subsidy, if any, is primarily for absolutely destitute case. Or to partially subsidise the increase for most Singaporeans and even then, for the initial period only. This is part of the PAP’s DNA. Will never change until they’re given a really tight slap.
the main theme of NatCON should be political reform. When that happens, suddenly medical cost , transport cost will go down accordingly. Politics as contest of power by PAP is what the driven the PayAndPay policies in military, economic, medical, transport, social , education etc … Not that we do not know what PAP is thinking just like those who want to maintain power like in the last day of Qing dynasty.
If you observe , simply asking the people to pay more by law (since no opt out medishield , and with increasing premium) without addressing how to lower the cost of healthcare can be perceived as just as good as transferred more money into PAP organization. Didn’t we know that NTUC is linked to PAP and pervalent in money making business related to national policies ?
Reblogged this on Jentrified Citizen and commented:
JentrifiedC– Agree with Singaporearmchaircritic, our government needs to take on a bigger role and spend more on healthcare to lighten the people’s burden.
Like the word “retire”, in relation to the top dogs, the phrase “out of pocket” in relation to healthcare costs, has taken a peculiarly Singaporean meaning.All payments out of the medisave account is from your own pocket.What they mean is payment over and above what you paid from that account. This peculiar meaning is also assigned to payment for your HDB flats when you own CPF savings is used. When you have little money left after these deductions it is really patronising to talk of helping you with “out of pocket expenses.”.
[…] ‘personal responsibility’ to thinking about ‘nation’ – Singapore Armchair Critic: Healthcare Financing: Tweaks or Tricks? – The Heart Truths: National Day Rally 2013: But How Much Will The Government Pay? – […]
All of this is just a bunch of gimmicks where they just want to suck your money. It may be for our good, but not so much..
[…] my earlier blogpost on healthcare funding, I highlighted that our government spending on healthcare is the lowest among […]
[…] my earlier blogpost on healthcare funding, I highlighted that our government spending on healthcare is the lowest […]