This article is a compilation of the key points of the five-part series of healthcare articles written by Leong Sze Hian and me.
In 2011, government subsidies accounted for only 22.7% of total health expenditure. This is much lower than the more highly publicized “80%” figure.
Also, the statistics further showed that Medisave had accounted for only 5.5% of total health spending, MediShield just 2.1% and Medifund at an even more minuscule amount of 0.7% (Chart 1).
Chart 1: Ministry of Health
Although Prime Minister Lee Hsien Loonh said the MediShield scheme is “universal”, it might be difficult to justify the “universality” of the scheme as being so, since it had only foot a marginal 2% of the total health spending. In PM Lee’s context, MediShield might be “universal” because “everyone” will now be required to pay into the scheme, but whether there is adequate coverage for each and every Singaporean is another matter. Everyone might be covered, but for some, perhaps inadequately.
While the 3Ms are considered to be the pillars of Singapore’s healthcare system, these “pillars” prop up only 8% of the total health expenditure. Together with the subsidies, they make up only 31% of total spending. Meanwhile, Singaporeans are made to pay for 69% of the spending either by themselves or through medical benefits provided by their employers.
Also, to apply for Medifund, applicants would need to undergo the tedious and cumbersome processes of submitting numerous forms and income statements of all their family members as well as their own personal documents. From anecdotal evidence, many applicants have been put off from the process and chose to give up accessing healthcare, rather than receive financial assistance.
Mr Gerald Giam from the Worker’s Party had also asked the Health Minister “whether Government restructured hospitals are currently able to tap into patients’ CPF or IRAS records (with their consent) to process Medifund”. The minister replied in the affirmative and said that the hospitals use the information “for financial counselling, means-testing for subsidies, and applications for Medifund or other assistance.”
If this is the case, the Medifund system can be easily overhauled to allow for automatic payouts to patients who meet the Medifund requirements, rather than for them to have to go through lengthy processes and waiting times to receive Medifund assistance. Why has this not been done?
(You can read more in Part 1 here.)
The next question is, do Singaporeans have in their MediShield and Medisave right now? And is there a need for Singaporeans to pay more, either through additional premiums or taxes?
For Medisave, in 2012, there was a total balance of $60 billion but the amount withdrawn for direct medical expenses was only $768 million – this effectively makes up only 1.3% of the total balance.
For MediShield, Parliament had also revealed that the MediShield surplus is $850 million for the last 10 years. In 2011, only $282 million MediShield claims were made. This means that only 24.9% of the known MediShield reserves had been claimed.
Finally, for Medifund, in 2012, the capital sum is $3 billion. Of this, only $98.2 million was disbursed in 2012. This represents only 3.3% of the capital.
If we take these figures as an annual average, the withdrawals from Medisave make up only 1% of the balance, MediShield only 25%, and Medifund only 3% (Chart 2).
Chart 2: Ministry of Health
Adding them all up, there would be about $64 billion in balance in the 3Ms. The total of $1 billion spent would make up only 1.8% of the total 3M balance.
The question to ask: What happened to the rest of the 98.2% – or $63 billion – of the 3M balance?
(You can read more in Part 2 here.)
Now, what if we increased the total 3M expenditure by 10 times, from 1.8% to 18%? Even then, there would still be another 82% in the 3M balance which is untouched. But more importantly, just by increasing the 3M expenditure by 10 times, we might just be able to fully cover the total health spending of all Singaporeans.
Along with what was covered in part one, we surmised that the 3M expenditure of about $1.095 billion accounts for only 8% of the total health spending.
Similarly, by increasing the spending by 10 times, at $10.95 billion, the 3Ms would be able to cover 80% of the total health spending, with the rest being covered by subsidies. And even then, we would still have more than $53 billion in untouched balance in the 3M (Chart 3)
Chart 3: Ministry of Health
Clearly, the government could easily increase the 3M expenditure by 10 times and allow all Singaporeans to be adequately covered. There wouldn’t be a need to buy private insurance for healthcare, and everyone would be covered, whether you are rich or poor. One wonders if the government is aware of the massive surpluses in the 3M scheme, and that it could increase its spending to offer full financial coverage, a necessary step towards true “universal healthcare” for Singaporeans, and still be able to retain at least 80% of the balance untouched.
Ironically, MOH said that “MediShield is a not-for-profit insurance scheme focused on protecting Singaporeans against large subsidised bills.” At this point, MediShield withdrawals make up only 25% of the MediShield reserves and only 2% of the total health expenditure.
Meanwhile, MediShield operates on a 75% surplus, while Singaporeans still have to pay out-of-pocket or through private insurers 69% of their own healthcare needs. Does the “not-for-profit” argument still stand? And can the Singapore government do more to truly allow Singaporeans to enjoy “universal healthcare”?
As reported in The Heart Truths, “For the CPF, ‘the Ordinary Wage Ceiling is $5,000’. This means that the ‘maximum amount of CPF payable’ for anyone is based on a wage ceiling of $5,000. So, if you earn above $5,000, you still pay a 20% CPF based on a $5,000 monthly wage, or $1,000 every month. You don’t have to pay CPF for the rest of your income.”
What this means is that everything else being constant, after the $5,000 wage level, a person who earns more than $5,000 does not pay 20% of their wages into the CPF. Instead, the more they earn, the lower the proportion they pay into their CPF. Thus for someone who earns $10,000 every month, for example, he or she would only be paying 10% (S$1,000) of his wage into the CPF (Chart 4).
Chart 4: The Heart Truths
If everyone were to contribute an equal proportion of 20% of their wages into the CPF and risk-pooled, the increase in the 3M reserves would be quite substantial. A greater pool of reserves would allow more low-income families to more readily access healthcare and allow for a higher balance to be accumulated in the 3M reserves.
(You can read more in Part 3 here.)
When compared to the world, even though Singapore has the lowest per capita total expenditure, Singaporeans actually pay the most out-of-pocket for their healthcare, compared to people in other developed nations (Chart 5).
As a proportion of our nation’s total healthcare spending, we also pay more compared to people in other developed nations (Chart 6).
Not only that, if we compare the trend of Singapore’s health spending with other countries, you can see the government’s expenditure has remained low, relative to other developed countries, over the past ten or more years (Chart 7).
Meanwhile, out-of-pocket expenditure for Singaporeans have grown to be the highest among the other countries, at a rate that is faster than other countries (Chart 8).
(You can read more in Part 4 here.)
If you look at the trend in health expenditure, you can see that in 2000, the gap between what Singaporeans were paying out-of-pocket and what the government was spending was quite small, but the gap has since widened where Singaporeans are now footing their healthcare bills even more heavily (Chart 9).
Even though the other developed countries have higher per capita total expenditure, their governments would step in to help defray the costs for its people. However, because of the low government expenditure in Singapore, Singaporeans are forced to pay for their medical expenses out of their own pockets at an even higher rate.
According to the World Health Organisation (WHO), high out-of-pocket expenditure on healthcare poses significant challenges, such that there is “restricted physical and financial access by the poor” and the healthcare system becomes “extremely inequitable” (Chart 10).
Chart 10: World Health Organisation
Indeed, the burden of healthcare costs is actually most heavily shouldered by the lowest income group.
For the poorest 20% in Singapore, they have to spend 6% of their incomes on healthcare, whereas the richest 20% only need to spend 4.8% (Chart 11).
Chart 11: Ministry of Health
This is not forgetting that for the highest-income earner, because they do not need to pay 20% of all their incomes to CPF, they would be paying an even overall lower proportion on healthcare than the lower-income earner.
In effect, while we might seem to be prudent in our national healthcare expenditure, the reality is that when compared to other developed countries, this prudence reflects a significant lack in how our government sees itself supporting the healthcare needs of citizens.
Singapore is facing higher income inequality, with fewer able to afford basic healthcare. The 3M system is not adequately covering all healthcare needs, and with higher out-of-pocket expenditure, more Singaporeans are likely to defer early detection and treatment of potentially catastrophic illnesses.
(You can read more in Part 5 here.)
So, do taxes and the GST need to be increased?
Since the overall 3M balance is more than adequate to cover for all health expenditure in Singapore, there is in fact no need for Singaporeans to buy private health insurance, since they can be all covered under a national public health insurance plan. The current system creates unnecessary duplication.
As such, there is a very strong case to be made that before the government even considers increasing Singaporeans’ burden, the government should first and foremost increase its own share from the 3M investment profits, and allow for Medisave to cover a larger proportion of healthcare bills, and for a wider variety of uses.
Second, before a rise in a broad-based tax such as the GST is introduced to all Singaporeans, the government should equalise the CPF contribution rates for everyone, regardless of their income level.
Increasing the government’s expenditure and equalising the CPF contribution should be more than enough to ward off any need to increase taxes broadly on all Singaporeans for many years.
It is very clear that there is currently no need for Singaporeans to pay for the expected increase in healthcare costs, as there are substantial surpluses in the 3M balances and there is no major pressing financial reason for doing so.
Singaporeans would have very good reasons to question any proposed increase in MediShield premiums and the Medisave contribution rates, as well as any increase in taxes and GST, if it does come to that. It might be worthwhile for the government to share with Singaporeans the computation behind the 3M schemes, to convince Singaporeans on the long-term planning behind these schemes, as well as their utilization, before the government proposes any other increases to Singaporeans’ 3M contribution.
(You can read more of the series summary conclusion here.)
Has The PAP Created A Situation of Under-Consumption Instead?
The government might harp on preventing over-consumption as a planning principle, but has it instead been the case that Singapore’s health spending is low because of under-consumption?
Does the government capture these statistics to assess the rate of under-consumption? In fact, how does the government support its claim that Singapore’s system prevents over-consumption? What are the statistics to prove this?
MK Lim had also explained in the Annals, Academy of Medicine, Singapore that, “The 3M system was explicitly designed to curb over-consumption … (but) the result has (only) been the successful moderation of the government’s share of total expenditure, but not private spending. It can be observed that total health care spending has in fact risen exponentially, despite the 3M system being in place.”
Of course, the claim from our government would likely be that each country has unique circumstances. But the figures that stare us in the face clearly point to the fact that, in terms of supporting citizens for their healthcare needs, Singapore can hardly be called First World.
As a high-income country and a city which has become the 5th and 6th most expensive in the world, the high prices have placed immense pressure on Singapore’s purchasing power, which is now the lowest among the high-income countries. There is a clear responsibility from the government to ensure that Singaporeans will continue to be able to access affordable and quality healthcare, and it is time to stop being wishy-washy about it.
There is enough justification for the government to raise government expenditure for healthcare, before expecting Singaporeans to fork out even more.
Our high GDP per capita, the massive balance in the 3M balance, and the potential of raising revenue through a more equitable CPF contribution rate are all potential resources that the government can consider.
Until and unless the government can clearly show Singaporeans how their current contributions to the 3Ms have been and will be spent, and explore ways to maximise the efficiency of existing funds, it cannot reasonably expect Singaporeans to accept raising 3M contribution rates and taxes as a solution to fund current and future healthcare needs.