Relooking Singapore’s Healthcare Philosophy for Equitable Distribution

In Budget 2013, the Ministry of Health (MOH) has announced that the government will increase its “share of national spending, to provide Singaporeans with greater assurance that care will remain affordable and accessible … We will in fact take on a greater share of national spending, from the current one-third to about 40 percent and possibly even further.”

I had written about this in a previous article, where I had surmised that even though Singapore has one of the highest GDP per capita in the world, our government spends the lowest proportionate expenditure on our healthcare in the economically developed countries. For a government with our GDP per capita, the government should be spending at least 60% on healthcare expenditure, and not the paltry less than 40% that we are on now. Even South Korea with a GDP per capita of about half of Singapore’s, the government spends about 60% on healthcare expenditure, almost twice that of the Singapore government.

On MOH’s website, they share that Singapore’s healthcare financing philosophy is that the “financing system (is) anchored on the twin philosophies of individual responsibility and affordable healthcare for all. Through a mixed financing system, use of market-based mechanisms to promote competition and transparency and the adoption of technology to improve the delivery of healthcare services, we have secured good healthcare outcomes for our population. We have done so with a national healthcare expenditure of below 4% of our GDP, which is low among developed countries (although this is expected to grow with an ageing population).”

Fair? – Market Forces to Determine Healthcare Access?

Essentially, this is what the government is saying – we will allow the capitalistic market forces of demand and supply to determine what the right price of healthcare is, and the government will spend as little as it can, so that the individual has to make the final decision as to whether it’s financially wise and feasible to engage in the health service, or not.

But is this fair?

  1. First, healthcare should be a basic and essential need for the livelihood of an individual.
  2. Second, healthcare costs have been rising much faster than people’s wages – where healthcare costs have continued to rise in tandem with inflation, real median income has remained stagnant over the past decade or so.
  3. Third, the government’s “mixed financing system, with multiple tiers of protection” of Medisave, MediShield and Medifund, has seen continued increases of the individual’s investment before these tiers are accessible by the individual. The Medisave Minimum Required Sum has been increasing by 20% on average annually over the past few years. The premium for MediShield has also risen, while the premium covered has become lesser per dollar premium. Also, not all Medifund applicants are successful in accessing Medifund for their healthcare bills.

Taken these into account, is it still fair for the government to rely on market demand and supply forces to determine whether an individual should access healthcare, or rightfully speaking, would be able to afford healthcare? Even if the government increases their proportionate expenditure to 40%, is this enough?

Social and Psychological Impact to Unmet Basic Healthcare Needs

MOH might say that, “These features of the Singapore system have been recognised in various international assessments.” However, what are the implications to a system which has become so economically viable? What are the social and psychological implications? Imagine for a second, that if you are a low-income individual and if you have a need to see a doctor, no matter how urgent, you would want to postpone seeing the doctor until it is absolutely necessary; because you would hope that you would be able to get better without having to spend the low income that you have to see a doctor, when you can spend on food or even on your children’s education. Imagine then for a couple, one person might want not to see a doctor but the other might insist that he or she should and an argument ensues, simply because they do not want to have to spend their meager income on seeing the doctor, when there are other basic necessities that they need to look out for, even as healthcare should rightfully be a basic necessity as well.

Underpinning the decision by our government to rely on the people to take responsibility over their own health, through using market forces to determine their consumption, is a thinking that healthcare isn’t a basic necessity. If it were seen as so, healthcare costs would have been kept low, with lower price inflation and higher governmental subsidies. But is that the right thinking – to think of healthcare as a non-basic necessity?

According to Paul Swanson, in his book, ‘An Introduction to Capitalism’, he says that, “A person without money – no matter how desperately they may want or need a particular good – has no demand. Lack of money corresponds to lack of influence in the market; the market does not respond to those without money.” Clearly, MOH’s “use of market-based mechanisms to promote competition” thus prices out a certain segment of the population from healthcare who would also require the most support to seek healthcare. Indeed, Swanson effectively sums it up when he says that, “An individual in dire need of medical care, judging by his/her physical condition, will receive it only if they have money. In the parlance of the market, individuals with need and no money have no demand. The motivation to satisfy their need is money – hunger or pain is not sufficient. This means that supply, as the other side of the coin of the market, is directed towards those with money.” What’s this means is that the Singapore’s healthcare system is a failure to our poor and continues to favour the rich and wealthy.

Need to Relook Our Healthcare Philosophy

A relook of our financing, and indeed, healthcare philosophy is required. It is not a matter of just the government increasing the proportion of government expenditure in healthcare. Even then, an increase to 40% is nothing to shout about as it would still be the lowest among all economically developed countries and an embarrassment for a country with one of the highest GDP per capita in the world. 40% is especially insignificant, when compared to ever-increasing healthcare costs and stagnant wages. Does the increase to 40% even compensate for the price and wage changes?

In order for our healthcare to adequately meet the needs of the people, the healthcare philosophy should look not only into the proportionate expenditure by the government on our healthcare, but also on the proportion of GDP allocated to healthcare expenditure, but more importantly, on the increase in healthcare costs and increase in real wages of the people. If healthcare costs continue to increase beyond the increase of real wages, more and more people will feel the strain of healthcare on their incomes. The healthcare system might then be able to adequately curb people’s overuse of the healthcare resources but underlying people’s decision not to access medical help, is it because they do not want to stress the system or is it because they would rather become more sickly than to have to seek medical help?

As a planner, the government might look at market dynamics as having been able to effectively manage demand for healthcare and our statistics continue to show a people who have one of the longest lives in the world. Yet, if we live long lives, but unhealthy ones and if we live long lives but suffer from continued psychological and social stresses, does it bode well for a people who are continually stressed, even as they do not seek support for it?

Looking Beyond A Financing Mechanism to Prices, Wages and Subjective Well-Being

A relook into our healthcare philosophy is required, and one that does not only look into the financing mechanism and statistics. The healthcare philosophy needs to also be holistic where the government intervenes actively into the market, to prevent price increases that are not on parity with the people’s incomes. If the government does not see it fit to intervene in market forces, then the government would need to intervene to ensure that the people’s incomes grow on parity. In a market economy, the people’s incomes will always grow at a much slower pace and prices at a much faster pace. The government’s role is to ensure parity and equitable distribution and thus it needs to first, manage the price and income growth for parity, and second, to ensure a tax model that allows healthcare financing to be equitably distributed.

Simply put, healthcare should be a basic need for all individuals. It requires a government to remodel its thinking to understand this. As long as we live in a capitalistic system, individuals who do not have comparative financial freedom are disadvantaged in a market economy. If the healthcare system is left to market forces, the individual will be unfairly penalised simply because he or she is systematically disadvantaged by the system – continued price increase and low wage growth is beyond his or her control. The government has to overhaul its thinking to look beyond the financing mechanism and statistics to make its decisions, but to also look into the price and wage mechanism, and more importantly, at the people’s subjective well-being in developing a truly fair and equal healthcare system for all.


  1. George

    After reading this book – – by a Cambridge Economics professor, it is clear that the govt has failed to do this:
    It has refused to trickle down proportionately more resources to benefit Singaporeans despite an ever increasing GDP. It has preferred to keep the huge surpluses in its coffers and used them to invest in its pet ambitions like investing in unfortunately mostly failed or failing financial and other investments. We have one of the largest SWF in the world, per capita, but unlike the picture in most 1st world countries, the gap between the rich and poor is a yawning chasm.

    There is a huge difference between what the govt has often deride as welfarism and upping the general well being of the people when it has the means to do it. It is a scrooge system that thinks that the people owe it a living and are always out to ‘steal’ from it at every turn and opportunity, including when they are sick! One wonders how sick a mind the govt has to be to hold such belief against the people who require medical help.

    • eremarf

      @George and other readers – Chang Ha-Joon is a very worthwhile read – he’s easy to understand too. To other readers – give him a try, you won’t regret it.


      Re: Singapore govt’s aversion to “welfare” – if you believe people like Donald Low, from what I remember he seems to attribute it to “ideology” (as opposed to evidence-based reasoning). (Sorry Donald if I’m misrepresenting you – caveat to readers, I remember him saying this at a discussion on social policies at Tembusu College, NUS – so my memory might be unreliable.) It’s in the modern PAP’s DNA – and it’s absolutely inconsistent with the very liberal use of subsidies and taxation to encourage desirable behaviours and discourage undesirable ones.

      My take (as a former junior civil servant) with the PAP-cum-government conglomerate (i.e. the ought-to-have-been independent civil service, judiciary, GLCs, etc) is that they face some problems with organizational/institutional culture:

      1. Inability to criticize themselves. Because any criticism is double-edged – criticism sets out to improve public service, but it always potentially challenges the “infallibility” and hence legitimacy and hegemony of the PAP, which has been made inviolate. The quality of public service has been subordinated to the need to maintain support for the PAP (at ridiculous levels no less – 60% is considered a poor result? Get real!).

      2. Setting KPIs that do not align well with (or are far narrower than) their purported goal, or the general goal of serving the public, leading to perverse (dis-)incentives, so public servants end up gaming the system – which over time shapes the leadership within the civil service, to be those who are good at gaming the KPIs, rather than those who are good at achieving the “true”, or purported, broader goals of public service.


      @Roy – healthcare isn’t a free market anyway (like Chang Ha-Joon says, there are no completely free markets). The supply of healthcare providers isn’t very elastic (look at how stringent the barriers to being a doctor are – it’s like a medieval guild) – just because there is demand does not mean supply can increase instantaneously (it takes time to train doctors) – unless you can import doctors, in which case – it’s more elastic, but perhaps not perfectly, and also, are foreign doctors perfect substitutes?

      Furthermore – I don’t have the figures for number of doctors per capita in Singapore – but we know hospital beds have not increased proportionately – so I make a very wild guess that our doctors per capita figures have become worse in recent times.

      From an economics point of view – I would rather the government step in to improve these things:

      1. Reduce costs of treatment – there are greater economies of scale in purchasing drugs, equipment, etc. Treatments also get chosen based on efficacy (or cost-efficiency), rather than based on how profitable they are to hospitals/doctors (who might prescribe drugs based on profit margins or commissions rather than patient interest). At the very least, the existence of a public sector which cannot be captured by big pharma will keep the private sector competitive in that regard.

      2. Promote a long-term perspective, e.g. legislation which disallows denial of coverage forces insurers to care for their customers’ long-term health. Knowing they cannot fob off people who become unhealthy, or quibble about which medical procedures are covered and which are not, means they will focus more on long-term health (e.g. early treatment to prevent later problems).

      3. Healthcare and other social safety nets might have the negative effect of dampening drive and initiative, but they also encourage people to innovate, take risks, pursue passions, knowing that the cost of failure isn’t as high as in societies without safety nets. Afterall, personal bankruptcy laws and limited liability laws are precisely desirable because they make risk-taking more “affordable” (c.f. Chang Ha-Joon). Empirical data that suggests the positives outweigh the negatives:

      4. What’s the point of insurance but to pool risk? By allowing insurers to cherry pick people they want to cover (via differential premiums, exceptions, denial of coverage, etc) – we miss the point of insurance, i.e. some people never get peace of mind and security – it’s not available to them in the market. Nobody hopes to get cancer in order to enjoy the benefits of their insurance coverage. People argue that being covered might encourage people to take part in riskier behaviour, e.g. smoking – but that comes more from our cognitive biases e.g. our poor abilities at estimating tiny probabilities (it’s the same reason why people bet on games of chance, or fear plane crashes) – it’s hardly “rational” decision making (but we assume people price their insurance needs rationally!).

      And even if you persist that differential premiums influences decision-making, where are you going to draw the line, e.g. when genetics gets involved? Do some people just have to accept that since their genetic profile shows such and such a risk of contracting some disease (and genetics are not a decision) – they cannot be insured (or are loaded) for that? (Okay, this is actually about ethics not economics – but it IS cruel: by no fault of theirs than genetics, people face potentially financially crippling insurance or healthcare costs.) A similar situation exists already – babies cannot get insured against congenital defects here in Singapore. Welcome to casino nation. Good luck in the roulette of life!

      • My Right to Love

        Hi eremarf,

        Actually we share very similar viewpoints – I actually agree with all your points brought out and think likewise. But I haven’t thought in as much detail as you have – I’ve thought mainly about the broad strokes, so thank you for the elaboration.

        On the overall – this means that the government needs to reform. PAP will either need to reform within to change the principles of their governance, or the government will be reformed by them being overthrown by the people either at the next general elections, which will be smoother, or through a more tumultuous exit at the subsequent general election, after 8 years of conflict by then.

        Of course, the government has given itself 3 years to fix things, by the next general election – this can be seen from the Budget 2013 initiatives. But whether the government is able to make swift and bold enough changes by then is still very questionable at this point – I’m perplexed by how they had tried to increase wages (by favoring employers) and how they had wanted to increase taxes (but only on the wealth and not incomes of the rich), then at the same time increasing prices once again – of tuition fees and electricity, and most probably of water next year.

        The problem with this government is that it doesn’t have the boldness to carry through with its plans that it knows it has to. It starts to backtrack and go back to its original goal of wealth accumulation as can be seen with the increase in prices. When the government has no consistency and no carry through, it causes confusion among the people and at the rate it continues with what is perceived by the people as a constant flip-flop in decision and backtracking, it will only create uncertainty and further dissent among the people, which will result in political change that will be more unsettling than it needs to.


        As with healthcare – we need a reform as well. And I’ve discussed before that we cannot look at healthcare on its own. We need to take a look back at the ideals. What do we want healthcare to mean for the people, and then we will operate from there. At the moment, it’s pretty much left to market demand supply forces but should this be how our healthcare should be operated on? It needs to provide more for people, from a perspective of basic needs. And when that happens, the cost and the proportionate expenditure by the government will similarly be adjusted accordingly.

        Within the ideology of how the doctors are paid premium and only certain students qualify to be educated as a doctor lie in the ideal of meritocracy that PAP propagates and is thus based on elitism. We have corrupted our ideals of being a doctor somewhat because the doctors who are being selected and trained believe that they are godsend and are better than the other healthcare professionals – this is the problem of the backbone of our healthcare sector. The problems might not present itself now, but in the longer term, when the efficiency of things become compromised, it might be too late to look back and decide that elitism isn’t the best approach towards managing healthcare.

        Finally, we cannot look at healthcare on its own – it needs to be looked at holistically, in comparison with income, for example. If healthcare costs continue to increase, yet incomes do not increase at the same pace, it will only dwindle the savings of the people and prevent them from accessing healthcare. This will then cause the model of asking people to take care of their own needs to be severely compromised, as it is now. Again, our health outcomes, on paper, look acceptable for now. But this government has constantly relied on statistics, without having an adequate understanding of other qualitative measures, such as the subjective well-being of patients. If the look at that, they will start to realise the pitfalls of our healthcare system.

        I worry about the fate of our nation because reform is in dire need but the people who need to be reformed are the ones who want to protect their power – when our political leaders turn towards protecting themselves and their power, rather than do what is necessary for the nation, our country will go down the path of where most other countries which had resisted its people had gone – towards oblivion.


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