Tagged: Medishield

National Day Rally 2013: Bolder Moves To Reform Our Healthcare Financing Needed

At Sunday’s National Day Rally 2013, Prime Minister Lee Hsien Loong announced a slew of tweaks to existing healthcare policies to benefit some groups of Singaporeans – older Singaporeans, low-income families and those who attend outpatient treatments.

The main announcement was that Medishield will be “revamped” as Medishield Life, where the age ceiling of 90 years old will be removed. Also, Medishield will also become compulsory and provide coverage for everyone, including those with pre-existing illnesses.

For older Singaporeans, which the government had termed as the “pioneer generation”, PM Lee also introduced the Pioneer Generation Package, which he had said will pay for their healthcare bills, under Medishield Life.

For low-income families, PM Lee announced that the age floor of 40 years old for the Community Health Assist Scheme (CHAS) for low-income families will be removed, so that children from these families can also be subsidised for outpatient medical treatments. Subsidies for lower and middle-income patients to specialist outpatient clinics will also be increased.

Finally, PM Lee said that the government will explore expanding the use of Medisave for outpatient treatments.

These tweaks are small steps in the right direction towards ensuring the the poor and elderly in Singapore are better protected in Singapore. However, the tweaks are what they are – small tweaks. Small tweaks were made to Medishield to remove the age ceiling and incorporate Singaporeans who had previously been missed out. Tweaks were made to CHAS to remove the age floor to benefit everyone in low-income families. Medisave might also be reconfigured to allow for usage for outpatient treatments.

Medishield Premiums and Medisave Contributions Will Go Up

The major component of the announcement, however, was that Medishield premiums and Medisave contribution rates will go up as well, but it does not seem that the government would be footing the majority of the increases. Rather, the burden will still predominantly rest on Singaporeans to bear the weight of the increasing healthcare costs.

This is a concern because the Singapore government currently spends the lowest proportionate expenditure of GDP on healthcare, which at around 4%, is the lowest among the developed countries. Also, the government’s expenditure of between 32% to 39% of total health spending, is also the lowest among developed countries. For countries with similar GDP per capita, such as Norway and Japan, their governments spends around 80% on total health spending for their citizens.

At the same time, Singapore is the richest country in the world by GDP per capita. We also have the highest reserves per capita in the world, and GIC and the Temasek Holdings, which our reserves are invested in, are the 8th and 10th largest and richest sovereign wealth funds in the world. Altogether, our reserves would currently stand at, at least $800 billion.

Which is why there is a very strong argument that the government should step in to shoulder the burden of increasing healthcare costs, before passing on the buck to Singaporeans to do so. Already, the median wages of Singaporeans have remained stagnant for the past decade and for the lowest-income Singaporeans, they have seen their real wages dropped. Also, Singaporeans are paid the lowest wages among the developed countries and have the lowest purchasing power, but are yet, spending the highest out-of-pocket expenditure on their health spending.

Against the huge disparity in the government’s financial strength and the people’s weak relative financial position, it only makes sense that the government should take on a larger responsibility by increasing it’s healthcare expenditure, as a proportion of GDP to around 8% (to the average of other developed countries) and increase its proportionate expenditure of health spending to around 50%.

Medishield Coverage Is Dismal

Furthermore, if we look specifically at the Medishield, in 2011, Medishield covers only 2% of the total health spending. In 2011, the total Medishield claims was only $282 million. The Medishield Claim Limit for one year is $70,000, and assuming that claims were made in full, only about 4,000 people would have been able to benefit from Medishield. On the other hand, if all the 3,257,000 Singaporeans had made claims to Medishield in 2011, each Singaporean would have been able to receive only $86.58.

As such, even though the lifetime claim for Medishield is $300,000, would we ever be able to claim anything near that amount, considering the limitations of the Medishield, and small amounts that can be claimed? The Medishield had made up only 2% of health spending. The other “M”s, Medisave and Medifund, and government subsidies, altogether made up only 39% of total health spending in 2011. For the rest of the 61%, Singaporeans would need to purchase insurance or make out-of-pocket payments for their health spending. But with their dwindling incomes, would the poor and elderly be able to do so?

Additionally, for older Singaporeans and future generations of older Singaporeans who do not belong to the “pioneer generation”, would their health spending also be subsidised by the Pioneer Generation Package?

The Government Needs To Do More To Finance Healthcare Spending In Singapore

In this light, it is thus imperative that the government shoulders a larger responsibility in Singapore’s healthcare financing because it is in a stronger financial shape than Singaporeans to do so, and it also has more resources to do so. More importantly, the poor and the elderly are not able to receive adequate coverage under the current healthcare schemes, as the government’s financial assistance would only cover up to 40% of their health spending.

It is welcomed that the government will be widening the scope of existing initiatives to cater more for the poor and the elderly, but in order to provide more protection for them, the government should increase the interest for Medisave from 4% to at least 5% and increase the payout for Medishield and Medifund to cover a higher proportion of the health spending, at least for the poor and the elderly. Whereas the upper middle- and high-income families would have the financial ability to buy insurance to finance the rest of the 60% of their health spending, the poor and the elderly are most likely unable to do so. As such bolder government intervention towards enhancing their health protection is necessary.

In Sweden, the Swedes would pay an average tax rate of 32% (which provides coverage for social security as well) to receive fully-paid healthcare coverage from the government. In Singapore, the highest tax rate that Singaporeans pay is 20% while Singaporeans contribute another 20% into their CPF (or social security). However, the government would only pay for between 32% to 39% of their health spending. With similar tax and social security rates that is paid in other countries as in Singapore, is there room for the government to increase its financial coverage for the people to attain the level of universal healthcare that the other countries are able to achieve? This is a high possibility.

It might be time for the conversation to be opened where Singaporeans have access to the government’s method of computation on how they had derived the coverage for our Medisave, Medishield and Medifund. With the money that Singaporeans are putting in, what is a reasonable payout that they should be able to receive, while ensuring the sustainability and longevity of the healthcare financing system? Perhaps when Singaporeans are shown the sums and are encouraged to also come out with their own calculations, we would be able to come to a better agreement as to the amount of contributions and premiums that Singaporeans should be setting aside, and the interest rates and payouts that Singaporeans should be receiving.

Only with greater access to information will Singaporeans have greater trust and belief in the system, and be more assured that their monies are invested wisely, and for the protection of themselves and that of other Singaporeans.

Roy Ngerng, of The Heart Truths

I had written this article for the We The Citizens Of Singapore citizenry journalism website. The article was initially published at this link here

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Are Singaporeans More Ambitious To Want Higher Pay?

(Note: this article was written last week.)

jobsDB had conducted the Asian Consumer Market Survey which it said, “has found that workers in Singapore are becoming more ambitious and seeking out new, higher paying job roles, even in their later years”.

I am not sure if it is entirely accurate to suggest that workers in Singapore “are becoming more ambitious”.

According to the jobsDB, “42% of workers in Singapore are seeking positions with a salary between 1,500 to 3,499 SGD” (Chart 1).

42% of workers in Singapore are seeking positions with a salary between 1,500 to 3,499 SGD

Chart 1

In an article that I had written last week, I estimated that a Singaporean who is single would need to earn a starting pay of at least $2,000 in order to be able have a basic standard of living in Singapore. For a family of four, each parent would need to earn a starting pay of at least $3,500 in order to do so.

As such, in this light, it is not “more ambitious” for workers in Singapore to seek positions which pay them between $1,500 to $3,499, but is entirely reasonable. It is no wonder that in the same survey, it was reported by the Today newspaperthat, “77 per cent of respondents would look to move jobs to ‘secure a higher income.”

Mirroring another survey that was conducted by The Straits Times and Degree Census Consultancy last Saturday where workers “associate a good job … work-life balance,” “work/life balance” was rated as extremely to highly important by 83% of respondents when looking for a prospective employer.

However, as mentioned in a previous article, Singaporeans work the longest hours in the developed world (Chart 2), which thus put paid to their hopes that they would be able to find a job that would allow them to have good work-life balance.

Singapore works longest hours

Chart 2

jobsDB had also said that, “In Singapore, we’ve noticed the developing trend around the demand for higher paying job roles amongst the older age range, which leads us to believe that Singapore workers are not wholly satisfied with their current role and salary and are looking for change in the lead up to their impending retirement.”

Again, this is also reasonable because according to the Ministry of Manpower, the wages of high and upper-middle income earners start to stagnate after they turn 40, while that of low and lower-middle income earners start to drop past 40 years of age (Chart 3).

Incomes Of Low Income Earners Drop Over Lifetime

Chart 3

As such, it is understandable why workers in the “older age range” would look for “higher paying job roles”.

Yesterday, the Today newspaper reported that, “the Government will be announcing measures “soon” to help the pioneer generation of Singaporeans who were unable to reap the full benefits of Singapore’s economic rise during their working life.” Deputy Prime Minister Tharman Shanmugaratnam had also “noted this group of Singaporeans did not manage to accumulate much savings in their Central Provident Fund because their salaries were relatively low,” and that, “now when they retire, they find the cost of living is high.” He reiterated that, “Now we will defend them as they retire and as they grow older … We owe it to them and we want to do something special for this group of Singaporeans.”

Today reported that the Tanjong Pagar GRC Member of Parliament (MP) Chia Shi-Lu, who sits on the Government Parliamentary Committee (GPC) for Health had suggested that possible announcements could be “a more streamlined process for older Singaporeans to receive assistance for healthcare costs” and that “the Ministry of Health is looking into greater differentiation between help with healthcare costs for the pioneer generation vis a vis other Singaporeans.”

This would be a welcomed move. However, bolder steps would also need to be taken to alleviate their state of poverty. Mr Tharman had said that older Singaporeans, “did not manage to accumulate much savings in their Central Provident Fund (CPF) because their salaries were relatively low”. As such, the interest rates for their CPF should be increased to allow them to accumulate more savings. The Medishield and Medisave coverage should also be widened to cater for them. Finally, their salaries should also be increased.

According to the CPF Board, there are currently nearly 40% of Singaporeans who earn less than $2,ooo (Figure 4). If a Singaporean would require a starting pay of at least $2,000 to earn a basic standard of living, there would be nearly 40% of Singaporeans who would not be able to do so.

Slide3

Chart 4

In another report, also by jobsDB, it was shown that after a minimum wage law was implemented in Hong Kong in 2011, ‘most of employers claimed minimum wage has no effect on benefits, bonus / double pay and no. of staff.” In fact, “42% of the companies increased salary adjustment after the introduction of minimum wage,” which benefitted workers. Also, only “36% of the companies increased product /service price (Chart 5)”.

HK Minimum Wage Impact

Chart 5

It was also reported by The Huffington Post that, “low-wage workers spend more when the minimum wage is raised, according to a 2011 study by the Federal Reserve Bank of Chicago (which) … in turn boosts the economy and job growth, according to the Economic Policy Institute.” Also, “a number of studies have found that raising the minimum wage does not reduce total employment by a meaningful amount.” Moreover, “prices apparently don’t rise in response to minimum wage hikes”.

As such, a minimum wage law not only has benefits for the economy, but would also allow more workers to have a better standard of living.

I look forward to the announcements that are expected to be made by Prime Minister Lee Hsien Loong at the National Day Rally 2013 evening of Sunday, 18 August 2013.

Dynamic approaches towards shaping a more livable landscape for Singaporeans to be taken by the government. Any less would fall below the expectations of Singaporeans. But nonetheless, any action that is taken to alleviate poverty and improve the living standards of Singaporeans, especially for the poor and elderly, would be welcomed.

Roy Ngerng, author of The Heart Truths

I had written this article for the We The Citizens Of Singapore citizenry journalism website. The article was initially published at this link here

*****

YOU CAN ALSO SEND YOUR COMMENTARY TO WE THE CITIZENS OF SINGAPORE.

You can also send your thoughts on any issue that matter to you.

Send in your commentary with your name (or pseudonym), age and gender to:

  1. Our email at email to us at wtcosg@gmail.com, or
  2. Our Facebook Page at https://www.facebook.com/WeTheCitizensOfSingapore

You can read more about the commentary guidelines here.