John Tucci explores the current set-up.
In the 39 years since achieving independence, Singapore has developed into one of the wealthiest countries in Asia Pacific with annual GDP (on a per capita basis) being amongst the highest in the region. This is an impressive accomplishment for such a small country with very limited natural resources other than its people.
What is equally impressive, although less well known, is that Singapore is generally acknowledged as having one of the most successful healthcare systems in the world, in terms of both efficiency in financing and the results achieved in community health outcomes. This is quite an achievement compared to most other developed countries.
Figure 1 compares the total annual health expenditure (as a percentage of GDP in 2001) and ‘healthy’ life expectancy (averaged for males and females as at 2002) for a number of developed countries. The measure of ‘healthy’ life expectancy has been proposed by the World Health Organization as a measure of the expected number of years to be lived without reduced functioning due to illness or disability. As can be seen, the annual health expenditure for Singapore is less than half that of many developed countries even though its citizens enjoy comparable ‘healthy’ life expectancy (although this is at the lower end in the comparison).
Source: World Health Organization
Life expectancy is not the only indicator of the quality of healthcare. Singapore also performs well in relation to other indicators, including low infant mortality rates and acceptable waiting times for most forms of healthcare treatment (particularly in public health care facilities).
The key to Singapore’s efficient health care system is the emphasis on the individual to assume responsibility towards their own health and, importantly, their own health expenditure. The result is a system that is predominantly funded by private rather than public expenditure. For example, in 2002, private health expenditure in Singapore (that is, financed by individuals or employers on behalf of individuals) amounted to almost 67 per cent of total health expenditure with the remaining 33 per cent financed by the Government from tax revenue. As shown in Figure 2, this is not the norm for most developed countries (the US aside), where health financing is predominantly from public expenditure.
Source: World Health Organization
Singapore’s low public health expenditure is also reflected in the low individual tax rate environment that exists there (2 per cent to 28 per cent for individuals and 26 per cent for companies) compared to the other countries which need to draw higher taxation revenue to fund their public health expenditure.
The Singapore health system is based on a combination of government subsidies (through taxation) and individual responsibility. In order to assist individuals in meeting their component of personal medical expenses, the Government has established the ‘3M’ framework of Medisave, Medishield and Medifund that combine individual responsibility and is overlaid with government funding, particularly to provide a safety net to support the health needs of low income earners and poorer individuals.
The Government subsidises healthcare through taxation revenue, providing funds for public hospitals and health promotion. As discussed earlier, this amounts to approximately one third of Singapore’s total annual health expenditure.
Medifund is an endowment fund set up by the Singapore Government to assist those in financial hardship in funding their medical needs. The scheme is intended as a safety net for those who cannot afford the subsidised charges for hospital or specialist out-patient treatment, after allowing for any Medisave or Medishield funds. Qualification for Medifund provision is means tested, based on an individual’s financial circumstances at the time of application.
Medisave is a compulsory medical savings scheme with funds available to meet a portion of future personal or immediate family’s hospitalisation, day surgery and certain outpatient expenses.
Medisave is a subset of the mandatory Government pension scheme (the Central Provident Fund or CPF) to which a total of 33 per cent of wages is contributed (comprising 13 per cent employer contributions and 20 per cent employee contributions) to individual accounts to fund retirement and health related expenditure. Of the 33 per cent contribution, around 6 per cent to 8 per cent (depending on age) is credited to the employee’s Medisave account. In practice, Medisave covers approximately 85 per cent of Singapore’s population.
Medishield is effectively a national insurance scheme for catastrophic illness that is intended to cover a significant component of medical expenses from major or prolonged illnesses that are not covered by Medisave. Medishield operates under a scheduled reimbursement system based on days of hospitalisation and type of surgical treatment, offset by individuals sharing costs by way of co-payments and deductibles.
The Government has, in recent years, allowed the private insurance market to offer similar Medishield-type policies so individuals now have a choice of choosing between Medishield or a private alternative. Premiums for Medishield (or private insurance alternatives) can be paid from an individual’s Medisave account.
The Government has also recently introduced Eldershield, an extension to the ‘3M’ system. Eldershield is a private insurance scheme designed to help fund future medical expenses incurred in the event of severe disability, particularly at advanced ages.
In addition to individuals self-financing through Medisave, Medishield and Eldershield, a significant portion of workers (and their dependents) are covered by private health insurance. Private health insurance, which is often funded by employers on behalf of employees, covers a diverse range of medical expenses that are not typically reimbursed under the 3M system.
Invariably, individuals will still need to pay for part of their medical expenses directly, even after receiving reimbursements from Medisave, Medishield or private health insurance. These amounts generally relate to deductibles, co-payments (under Medisave or Medishield) or for over the counter prescription drugs not covered by private health insurance.
The key to Singapore’s efficient health care system is in its emphasis on the individual to make a significant contribution towards their own healthcare costs. With this focus, the Government has been able to maintain a relatively low level of public expenditure on health for many years with the major burden put on individuals and/or their employers.
The use of compulsory savings (that is, the Medisave account) has been very successful as the main source of private funding for hospital expenses.
Another key focus of the Government has been to ensure that overall health expenditure does not fall victim to the significant inflationary pressures that have been evident throughout the world. This has been achieved by actively regulating the supply and prices of healthcare services in the country.
Although the Singapore health system has been very successful, it is a very difficult system to replicate in many other countries for several reasons:
Nonetheless, the Singapore health system is one that is certainly worth studying by those countries who continue to be challenged by common healthcare issues such as:
|World Health Organization website (www.who.int)|
|Singapore Ministry of Health website (www.moh.gov.sg)|