LECTURE 1: Singapore

Reading: Please refer to reading list

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Land and People
Population is 5.4m. 76.2% Chinese, 15.1% Malay, 7.4% Indian, Others 540,000. PRs
532,000 (half of them with degrees). Citizens plus PR: 3.81 million (so 1.5m are non-
residents: excludes 11 million tourists). Singapore citizens 3.31million. NB: 79,167 PR
granted in 2008, 29,891 in 2012

Population is currently growing by 1.6% (lowest in nine years), citizen population by
1.1%. [Population of Beijing is 20m. (strain on infrastructure, housing, hospital beds,
water; not all are registered).] Foreigners: 32% of labour force

Population density: 7422/sq.km. Cf. Nigeria 145, China 137, world average 45. NB:
cities are different, eg Delhi 11,000,Mumbai 20,000, BUT India as a whole 336.

GDP in 2013 S$363,941bn. at current prices (0.39% of world total)

Average household size: 3.5

Mean years of schooling: 9.7. Secondary or higher qualifications: 89.9. Worldwide:
another year of schooling raises earnings by 10% (20% in LDCs). Greying grooms: 29.8
years old at time of first marriage (26.7 for brides)





4
People and Land
Standard of living has increased thirteenfold since 1965. GDP per capita was (PPP
adjusted) US$69,050 in 2013 (3
rd
highest in the world after Qatar and Luxemburg).
US: US$53,101; Congo: US$648.

EU average US$33,014, OECD average about US$34,155, world average about
US$12,139. Median incomes per Singapore household have grown by 20% (after
inflation) in the last decade; lower income households by 7%.

Although noted for its economic growth, Singapore in fact spends a great deal of
money on social projects. Health, education, social and family development, and
culture, community and youth account for 40% of government budget.

Landmass 715.8 sq.km (12.6% larger than at independence due to reclamation);
population 100% urban: world as a whole is 47%). Perimeter: about 168 km.
Approximately 54 islands (not clear how to classify South Ledge). Built up areas are
50%: the rest is parkland, forest, reservoirs, military areas; roads (12%). Highest
peak: Bukit Timah, 164 metres above sea level.

Mobile phones per 1000 population: 1375.
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The Singapore Economy
Labour force participation rate (% of population 15 years, no ceiling):
66.6% (76% male, 57% females) (NB: female participation rate in
Scandinavia is 78.6% and the average fertility rate is 1.9) [Singapore: 1.11
per woman, 1.29 per married woman], but: subsidies, high taxes.)
Unsatisfactory growth in labour productivity: from plus 1.3% to minus 2.6
in recent years. Governments target is 2-3% over next 10 years. More K/L
(business investment accounted for 73% of productivity growth in 1990s,
29% now, a major shortcoming), quality of workers/education, level of
technology. If there is to be reduction in foreign labour, growth to support
tax-base will depend more on productivity. Wages will rise. Will profits
fall? Will multinationals relocate/
Mean years of schooling: 8.5 in 2001, 10.2 in 2011. Human capital is
rising.
Low skilled workers can be phased out. More R & D (now 2.7%, Govt.
target: 3.5% of GDP). Grants, subsidies, tax deductions. Increase in
PMETs: 44% of (resident) labour force in 2001, 52% now
GDP by sector: agriculture 0, industry 28.3%, services 71.7%
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Inflation, Unemployment and Trade
Inflation by CPI 2013-2014: about 2.5%. More than half is
imported (cost-push) but much is due to labour-intensive
components in CPI: health care (10%), housing (1.1%),
education (3.3%), private road transport (5.7%).
BOP in surplus every year since 1987 (both merchandise and
services)
Unemployment (citizen and PR) about 2.1%; (lower for PRs,
higher for new graduates)
Economic growth 2007-2013 averaged 5.6%, in 2014 perhaps
2.5%-3.5%.


7
The World Economy
EU debt crisis (financing, refinancing) now over. EU 9.4%
of exports, 12.3% of imports. Malaysia and HK: each 12%
of exports, US 11%, Indonesia and China, each 9%
Although Singapore banks have relatively low exposure
and are relatively well capitalised, world interest rates are
likely to rise rise/credit tightening.
A good sign: Asian banks mainly cover loans with retail
deposits so they are not dependent on wholesale market.
Asian governments (except Japan) are not heavily indebted.
Singapore government debt is 106% of GDP, all held
internally.
Healthy BOP and fiscal balances in East Asia; current
account surpluses as buffer against speculation (and even
RMB is floating); region is growing by about 8%
8
Savings and Investment
High (precautionary) savings due to absence of safety nets and
cultural patterns (low C); also compulsory S in Singapore, Malaysia,
HK.
Consumption in Singapore (38.6%) and China (36.4%) (both
declining) is below Asian average of 55% of GDP. Consumption in
USA is 71% of GDP.
High cost of property. Asset rich, cash poor. Saving to acquire
property.
High Gini coefficient concentrates income in high-S groups.
Budget surplus in Singapore (FY 2013) is S$3.86 billion. State-
owned companies (also family-owned companies) have no
obligation to distribute. Low returns to savers leads them to save
more, not less.
Note that budget surplus will become a deficit of S$1.16 billion
since the Pioneer Generation Package is being funded of this years
budget.
9
Health Status: The Statistics
Infant mortality rate (IMR) 2.59 per 1000 live births
(USA:7, Sweden and Japan 3, SE Asia as a whole 56)
Life expectancy at birth (LEB) (4
th
in the world, after
Japan, Switzerland, San Marino): 79.6 for men, 84.3
for women, but rising (USA: 75 and 80, Japan 77 and
84, SE Asia 62 and 64). Life expectancy at 65: 14.6
and 19.3.
Healthy life expectancy (HALE) 69, 71 (USA: 67,
71)
WHO (2000) ranked Singapores health system 6
th

among its 191 member states by efficiency (France
was 1, Japan 10, USA 37). In terms of fairness
ranking was 101
st
.
10
Health Status: Some Problems
But much illness falls through the net. Only 40% of women go
for breast screening (60% in US) (cost may be a deterrent in
lower income groups); 10% of colorectal cancer cases are
diagnosed before the cancer spreads (39% in USA) (heart
disease outstrips cancer deaths in most developed countries but
not Singapore)
Only 4% of women have been vaccinated against cervical
cancer (the sixth most common cancer among women)
38% people with high blood pressure do not know they are ill
although tests are affordable/subsidised (e.g.50% discount
from HPB for women over 40).
Compulsory screening? But not everyone has a (private) plan
that is automatically renewable if there is a preexistent
condition.

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Health Status: More Problems
More than half of 10-year-olds are myopic
50% of Singaporeans do not see a dentist regularly
One-third exercise less than 150 minutes per week
80% eat less than the recommended two servings of
fruit/vegetables per day
11% of Singaporeans are obese (ie 20% above ideal weight)
(7% in 2004, 35% USA, 26% UK)
YET 90% of Singaporeans know what it takes to stay
healthy
A lesson from world data: changes in behaviour reduce
prenature deaths by 40%, improvements in medical care
only 10%, changes in social circumstances 15%.



12
Health Status: Diabetes
11% of Singaporeans aged 18-72 are diabetic (8% in 2004).
A further 14% are pre-diabetic. 30% of over-60s are
diabetic. There could be 1 million diabetics in Singapore in
2050.
A silent disease, initially asymptomatic: 50% of diabetics
are not aware they have diabetes
More than half of diabetics in Singapore do not take
medication regularly; 70% do not monitor blood glucose
levels themselves; 60% do not exercise at least three times a
week
63% in a study conducted by the Diabetic Association said
they did not want additional information about
measurement of blood glucose. Some did not want to pay
cost of test strips (about $80 for about 3 months) and
complain about nuisance (2-4 times a week)

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Causes of death: Singapore
1950: Today:
Tuberculosis 12.0% Cancer 28.5%
Infantile convulsions 11.1% Ischaemic heart disease 18.7%
Pneumonia 10.9% Pneumonia 15.7%
Gastroenteritis 8.9% Cerebrovascular disease 8.4%
Diseases of early infancy 6.6% Injuries /accidents 5.5%
Heart Diseases 4.6% Urinary tract infection 2.5%
Injuries /accidents 4.0% Diabetes 1.0%

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Cancer in Singapore
Women: 205.9/100,000 currently suffer from some sort of
cancer: breast 60/100,000, colorectal 27, lung 15.
Mortality: 77/100,000
Men: 230/100,000 mainly colorectal 40/100,000, lung 39,
prostate 27. Mortality 118/100,000
Men: higher incidence, higher mortality
Chinese have the highest incidence rate among the three
races
The above data is age-standardised. It does not take into
account the fact that the risk of cancer increases with age.
Declining morbidity in last decade: increasing awareness
(eg healthier diet), early detection (males detected later than
females).
Yet only 10% of men, 40% of women over 50 go for the
relevant screening

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CAUSES OF DEATH: CAMBODIA
HIV/AIDS 10% of deaths
Tuberculosis 8%
Diarrhoeal diseases 7%
Perinatal condition 7%
Lower respiratory infection 5%
Ischaemic heart disease 5%
Meningitis 4%
Cerebrovascular disease 4%
Hypertensive heart disease 2%
Malaria 2%
16
Health Care Inputs: Doctors
Doctors: primary care, specialists; medical education: three
domestic medical schools, 160 foreign schools recognised
(doctor shortage expected: growing population, foreign
patients)
As of 2013: 10,953 doctors on the register (4124 of them
specialists)
Foreigners (mainly Asians) are half of the new doctors hired
annually: one in three of doctors in public sector, one in six of
doctors in private sector.
Doctor-patient ratio is 1.9 per 10,000 population): 67
th
in the
world, below Mongolia, Egypt. Afghanistan: 0.2, Australia:
3.9, Cuba 6.7, US 2.4, UK 2.8. WHO norm: 2.0 per 10,000.



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Nurses
There are 36, 075 nurses. Just over half of the new nurses
hired since 2007 have been foreign. 4000 Philippine
nurses work in Singapore.
The nursing shortage will become more acute with
opening of new hospitals.
How to attract Singaporeans into nursing?
Status: graduate intake
Income: higher pay
Retention and reentry: 2280 nurses in Singapore are 60 or
older





18
Medical Education
In last 3 years: 685 new doctors recruited were
trained locally and, 1246 (two-thirds) trained abroad
(of which 176 Singaporeans).
NUS capacity intake: 280-300 pa, NUS-Duke: 60,
NTU about 50 p.a. (link with engineering:
pacemakers, dialysis machines)
By 2016 Singapore will train about 500 doctors p.a.,
also more nurses, dentists and pharmacists.
The need for foreigners/overseas Singaporeans will
remain. More hospitals will require more doctors.
Singapore currently has a doctor per 537 people:
Australia 334, USA 390.

19
Health Care Inputs: Hospitals
There are 22 hospital beds (chronic plus acute) per
10,000 population (US 30, UK 30, Netherlands 47,
France 66, Japan 137, OECD average 34) .
Total beds: 10,756 (9180 in public sector)
Restructured (8;12 by 2030): eg NUH, SGH,
Changi General, Tan Tock Seng, Khoo Teck Puat
(89% of beds).
Specialist Centres (12): eg National Heart Centre,
National Eye Centre, National Cancer Centre
Private Hospitals (12): eg Gleneagles, Mount
Alvernia, Mount Elizabeth
Rehabilitation/convalescent centres (10): eg Ren Ci,
St. Lukes



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More about hospitals
Location saves lives: median time in getting treatment
for a blocked artery was 95 minutes in 2007, 66
minutes in 2011.
This is one reason why the number of heart attacks
has risen but deaths from heart attacks has fallen.
Awareness/speed in obtaining treatment has improved
as well
Hospitals: the wards A, B1, B2, C
Inpatient or day-case


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Hospitals: Some Current Issues
Pairing: Ng Teng Fong Hospital in Jurong (2014. 700 beds):
integrated care community hospital next door run by VWO,
St. Lukes (200 beds), step-down care for less expensive
recuperation, esp. elderly. Need to link this with day care, home
care and hospice care
Further partnerships: St.Andrews Community Hospital/Changi
General, Tan Tock Seng/Ren Ci, also follow-up through GPs
with link to hospital
Beds are subsidised: 80% C, 65% B2. They are also means-
tested by patient: 80% in C if annual income is S$3200 or
below, 73% above
Foreigners: no subsidy. PRs (5% of subsidised hospital
patients: 13,000 persons, total subsidy to them S$56 million);
since 2012 25% less subsidy. A PR in B2 receives 40% subsidy
(annual income under S$3200), 29% (above).


22
Public and Private
Medisave can already be used in private or public hospitals
(including 12 in Malaysia)
Occupancy rates in the Singapore private sector average
55%-70%; the public sector 80%-95%. The State hospitals
can lease beds from the private sector, eg Changi General
from Parkway East: doctors and charges remain public
The opening of Sengkang General Hospital in 2018 will
help. Yet more patients are being warded (immigrants, the
aged, rising expectations).
Demand is growing faster than supply. Non-urgent surgery
is already being postponed. Professionals in any case are
difficult to recruit. World as a whole is short of 4.5 million
healthcare workers.


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Rising Costs
Health care expenditure normally rises faster than inflation.
Cost of medicines is going up. Not just price but quantity
and quality: better/new technology; new and expensive
(patented) medicines, ageing population, co-morbidities.
Health care is labour intensive.
Public sector doctors received a 20% pay rise in 2012,
nurses/other hospital staff 17% rise. The Government
provided S$200 million to fund the rise in the first year.
Later it will be passed on to patients. Higher pay is
necessary for recruitment: 50% more public sector medical
personnel by 2020
Retention a problem: 456 doctors (including 138 specialists)
doctors left public hospitals in the first half of 2012 (local
private sector or abroad). Workload less, higher pay, later
retirement 5-day week are the attractions.

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New drugs: example of liver cancer
Sofosbuvir costs US$1000 daily, US$84,000 for
a course of 12 weeks
Sorafenib costs US$10,000 per month for the
rest of the patients life
Yttrium-90: US$10,000-US$20,000 for a course
of treatment
Soliris (the most expensive drug today) to
treat a rare disease that attacks red blood
cells: US$600,000 a year
25
Rising Costs: Countervailing Forces
But maybe also more reliance on GPs, community hospitals?
Only partly offset through reduction in inefficiency (IT, bulk
procurement) and over-consumption (co-pay system).
Longer waits
New hospitals are opening in Jurong (2015) and Sengkang
(2018); additional community hospitals are also planned
Work permits now being restricted. Yet the ultimate effect is
unpredictable: pay might increase even faster.




26
The Role of Computers
The National Electronic Health Records is an
centralised database which makes a uniform
transcript/medical history instantly accessible to
hospitals and GPs (duplicate testing eliminated). It will
be fully implemented in 2016: up to 15,000 users.
It stores information from public sector hospitals,
polyclinics, community hospitals, the armed forces and
specialist centres. The private sector, nursing homes
and general practitioners (except for a test sample) will
not initially be included.
The information includes medical problems,
medications, allergies, results of diagnostic tests

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Affordable Health Care: Five
Fundamental Objectives
To nurture a healthy nation by promoting good health
To promote personal responsibility for ones heath and
avoid over-reliance on state welfare or medical
insurance
To provide good and affordable basic medical services
to all Singaporeans
To rely on competition and market forces to improve
service and raise efficiency
To intervene directly in the health care sector, when
necessary, where the market fails to keep health care
costs down

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Medisave: the contributions

Medisave (1984): compulsory, including self-employed
7% of wage (above S$1500) below age 35, 8% 35-44, 8%,
45-60, 9%, 60+, 9.5%

Minimum Sum: S$43,500; maximum S$48,500 (raised
annually in July); average S$18,000 (2005: S$12,000);
average balance at death S$2700 (2012)

Interest rate 4% (coincidentally, same as borrowing rate
on new issue of Temasek 40-year bonds. GIC which
manages governments assets generates returns of 5.2%-
6.5% on its diversified portfolio) (NB 5% for lower
balances up to S$20,000)

2
9
Medisave: claim limits

Deductibles and co-payments (individual responsibility)
Claim limits (eg $7550 for a surgical operation,
S$450/day ward charges)
Where subsidised (B2, C) wards are used, more than 90%
of hospital bills are covered
Recent change for LT care: can claim S$3500 for
community care, S$3000 for convalescent care
S$400 annually can now be drawn for fifteen outpatient
procedures: management of diabetes, high blood
pressure, chronic obstructive pulmonary disease, stroke,
asthma.
Also: kidney disease (S$450 per month), HIV (S$550 per
month for antiviral drugs)



30
Medisave: Scope for Reform?
Services included: mainly hospitalisation. Should be more
outpatient?
Services excluded: rheumatism, joint degeneration associated
with ageing (eg. hip replacement), etc. Should eligibility be
extended?
Dispersion in Medisave follows dispersion in earnings:
median monthly salary of managing director S$15,000, foreign
exchange dealer $10,562, construction labourer S$618.
Medisave is designed primarily to meet needs of lower-income
households, esp. in B2/C class wards
Should less be held in Ordinary Account, more in Medisave?
Especially for the over 45: especially since they have
cleared/are about to clear HDB loan.
31
Medisave: Mental Health
About 10% of Singaporeans will suffer from mental
illness at some time in their lives (problems of early
detection due to stigma)
Schizophrenia, major depression, covered by Medisave
since 2009 (approximately 20,000 residents are afflicted),
bipolar disorder (1.2% of the population: 1069 seen at
IMH in 2010, mainly 18-34, equally men and women)
and dementia (6% of Singaporeans over 65) since 2011
are now included in the ten conditions
The cap on withdrawals is S$400 annually and this is for
all chronic diseases together. It can, however, be
augmented by family members: up to 10 Medisave
accounts can be used for one claim



32
Medishield: the existing system
Insurance, not savings. Introduced in 1990.
A national risk-pool: no cream-skimming, low transactions costs.
Redistributes from the healthy to the sick (But NB: not from rich to
the poor since there is up to now no public-sector contribution out of
progressive income tax)
Premiums: single standard of age. At age 30 S$66 (2005: S$12), at
age 50 S$220 (2005: S$36), at age 70 S$540 (2005: S$132), at age 90
S$1190 a year. The young cross-subsidise the old: not
sustainable/socially acceptable due to changes in demography. One
premium for all? Greater levelling (higher than now for young, lower
for old).
A public-sector scheme, administered by CPF: 93% of resident
population, virtually all of 21-60s, 3.5m. members in all. Pays
roughly S$116 million in claims pa. Not profit-seeking.
But 35% of over-75s not in Medishield: private schemes, pre-existent
conditions, risk-pooling not effective because numbers too small
33
More about MediShield
Catastrophic insurance: mainly for large bills/hospital
care; B2/C wards in public hospitals.
Maximum claim: S$70,000/policy year, S$300,000
lifetime
Deductible: S$1500 in class C (2005: S$500), S$2000
in B2 (2005: S$1000). Co-insurance: 10%-20%.
Medisave can be used for smaller bills
Can the old/poor/those with small Medisave balances
afford health care?
More services, eg inpatient psychiatric care up to
S$100/day.
Opt-out, not mandatory


34
Medishield premiums: a note
Have to increase: claims were S$88m in 2005, S$282m
in 2013.
More people are in Medishield.
Also, per insured person, claims are rising by 13% a
year
There are more old people. Besides that, people in all
age groups are demanding more treatments, including
new drugs plus discretionary interventions such as knee
replacement to improve quality of life.
Technological innovation is costly.
Medical care inflation about 10% pa, (partly due to
public sector pay rises).


35
Medishield: financial aspects
Outgoings are currently less than receipts because of
young population: builds up reserves. The position will
reverse due to demography. Since 2008 premiums
collected have been rising by 10% p.a., payouts by
21%. As with all of CPF, at some stage the surplus will
become a deficit.
Excludes drug addiction, self-inflicted injuries (eg
attempted suicide), ambulance fee, dental care. Yet the
scope of Medishield is always under review. Will it be
extended to include hospitalisation of psychiatric
patients? Will lifetime limits be increased?
The average inpatient bill in Tan Tock Seng Hospital
B2 is S$1940 (But at 95
th
percentile: S$6752). Mount
Alvernia: S$4582.



36
Medishield: Supplementary Cover
Other private plans (if Medishield-eligible) can be bought with
Medisave provided that the client has basic Medishield. Other plans
will cover the higher charges of A and B1 wards.

A ceiling age of 90 (no limit? There are already 11,000 Singaporeans
aged 90 and above. No maximum entry age such as 75.) NB
IncomeShield, below, has no age limit.

Within the Medishield system, superior packages are available
through the independent (State-affiliated) insurer NTUC Income.
IncomeShield basic package costs $48 annually (under 31), rising to
$413 (age 61-65) and $1669 (age over 100). The superior plan costs
$119, $1435 and $6237 respectively. PRs pay slightly more.

Basic Medishield cannot be unilaterally terminated by supplier so
long as the premium is paid; for top-up plans (if a chronic disease is
diagnosed) not always. Guaranteed renewal is an incentive to the
insurer to provide screening/early treatment, eg for cancer.




37
MediShield: Inclusion
Some groups are outside the system: the poor, the old, 200,000
housewives, students, and there are plans to get them into the
system. From 2013, 400,000 children were included unless
their parents opted out.

A rough calculation done at NTU suggests that Medishield
could be made all-inclusive if every member paid at a flat rate
of $76. The figure is not robust but it shows that a flat rate
could be affordable.

Many people in Singapore (both foreigners and Singaporeans)
have private insurance. They regard Medisave and Medishield
as a safety-net only. It is very common for middle-class people
to have several insurance policies. The Government believes
nonetheless that no Singaporean should be without any cover.

38
Medishield and Congenital Conditions
Congenital conditions (about 3% of babies, 9000 a
year: cleft palate [less serious] congenital heart
disease, Downs syndrome [lifetime care] were
excluded until 2013. Even in B2 or C, bills could
exceed S$5000.
Premiums would rise for cross-subsidy (about
S$12 per year per member), perhaps healthy would
opt out (jeopardise risk pool), perhaps Government
subsidies or simply a pre-natal add-on bought
before baby is born and ending at age 1.
Note that MediShield is pegged at subsidised rates
in public hospitals but 50% of babies in Singapore
are delivered in private hospitals.
39
Medishield Life
At the NDR 2013 the Prime Minister launched a consultation process to
discuss move to more universal health cover from 2015
(1) compulsory: no opt-outs (eg people with private insurance)
(2) no age-limits or exclusion for pre-existent conditions (but higher
premiums); no lifetime maximum for claims (currently S$300,000); annual
claim limit raised to S$100,000 (currently S$70,000); guaranteed renewal
(3) premiums: not yet front-loading/young pay more (cross-
subsidisation) or income-related (higher percentiles pay more?) In any
case, premiums will rise, maybe taxes as well. Ideally: from current years
Medisave, not cash
(4) Govt. pays premiums for over-80 (not means-tested). Pioneer
generation: one-off for present-day 65+ for life. De facto tripartite.
Question: who will pay deductibles, etc
Premiums subsidised for households with monthly household incomes of
up to S$2600 pc (2/3 of Singapore households)
Deductible as before: S$1500-S$3000. But copayment rate reduced from
10%-20% to 3%-10%.
Cherry picking if people can continue to use Medisave for private
(Integrated Shield) plans




40
Other reforms announced in 2013
(1) CHAS (Community Health Assist Scheme): no
lower age limit; household monthly income
under S$7200 (if individual, S$1800); must be
Singapore citizen. Half of Singaporeans will
qualify.
(1) Medisave: more chronic conditions, more
outpatient care (including cost-effective
screening) . But contributions will go up.
(2) Govt. share in total health expenditure to rise to
40%

41
Medifund
Class C wards receive an 80% subsidy and senior citizens get a
75% discount at polyclinics. The Community Health Assist
Scheme subsidises medical/dental fees for Singaporeans aged
over 40 with a monthly per capita income of S$1500 or less.
But sometimes it is not enough to serve as a safety valve for
needy Singaporeans.

In 1993 Medifund was established. It currently has a capital of
S$3 billion (topped up when there is a budget surplus). Only the
interest can be spent. Medifund surplus unspent in 2010 was
S$10m.

In 2011 481,869 patients could draw upon it for medical care in
class C or B2 wards, outpatient care or nursing home. In that
year S$78 million was disbursed (22% more than in 2010).

About a quarter goes to old people (new fund: Medifund
Silver). Average payout: S$94. (outpatient), S$1321 (inpatient).

There is also Medifund Junior for children (18/below) with
large medical bills. New endowment was created


42
Medifund, Medisave and Medishield
Children are required by law (Maintenance of Parents Act) to care
for aged relatives. There is also the East Asian ethical system (filial
piety, Confucian values)
83% of Singaporeans aged 85 and above stated in the Census of
2010 that their main source of financial support was allowances
from their children: earnings on savings came second, at only 8%.
For all over 65s, and focusing on medical care: about 37% of the
medical expenditures of the current cohort of old people are paid for
through Medisave accounts of family members
Only 30% of medical expenditures of old people are paid for out of
their own Medisave and 11% out of their own Medishield. This
reflects the fact that Medisave and Medishield were introduced
when they were already middle-aged. It will change over time.
Medishield Life is compulsory: should reduce burden on Medifund.
Transfers subsidy from Government to Medishield membership.
Higher premiums will result.

43
Medifund: The Future

Medifund is means-tested (by household: family members
under a different roof are not included); wealth-tested (not
open to owner-occupiers, although the rule is applied flexibly)
Supplemented by private charities: 250 under the blanket of
the National Council of Social Service. Eg the National
Kidney Foundation facilitates inexpensive renal dialysis.
Current controversy: middle-income groups are excluded until
all assets have been liquidated. Should Government make
them eligible in the case of very expensive drugs (eg cancer).
What to do about a patient earning S$5000 who must pay
S$5000? But should also be supplementary cost-benefit
analysis: should Medifund be denied to older patient because
of low return?

44
The Three Ms and the State
Total health expenditure as a percentage of GDP: 3.9% (Japan
8.3%, UK 9.3%, US 16.2%)
Government health expenditure as a percentage of total health
expenditure: 41% (Japan 80%, UK 83%, US 48%,
Zimbabwe/Indonesia 25.9%, OECD average 70%), ie
Government spends 1.6% of GDP on health (mainly through
subsidies to lower-cost wards).
The world average is 6% of GDP. But taxes are higher. One
estimate, perhaps exaggerated, is that to fund the 6% share,
rates of GST would have to rise from 7% to 20% or corporate
tax rates from 17% to 40%.
Three-fifths of health care is privately funded.
45
The Future of the Subsidy
The Household Expenditure Survey shows that the
average middle class household is currently spending
S$227 per month 5% of income on health.
Yet: expectations, technology, ageing are competing
with rising incomes
Income elasticity will make the figure rise: already 3%
of lowest-quintile patients are demanding treatment in
A-class wards, 14% in B1 (Interestingly, of the top
quintile, 10% are going into C class and 28% into B2).
Given the very high subsidy paid to C-class 80% - the
Government has had to introduce means-testing of bills.


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The Socialisation of Health
That is the average expenditure. The average inpatient bill
size is $1688. The average Singaporean is hospitalised
once every 11.4 years. Deductibles are high and not all
kinds of condition are Three M-eligible.
Chronic conditions and expensive medication are an
increasing cause of concern. Old dependents will be a
strain on family budgets. The deductible in Class C rises
at age 81 to $2000.


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Conclusion
The money has to come from somewhere. The Government
will double current health care spending from S$4billion to
S$8 billion by 2017. It will then be about 7% of GDP (just
under 4% now). UK 9.6%, USA 16%.
It is right to say that how the money is spent is at least as
important as how much is spent
To say the money should come from the State is to forget that
the State has to raise the funds from taxes and borrowing
(postponing the bill). It is not possible to reduce budget of
other ministries: government health expenditure is 10.6% of
total. Yet Singapore is an open economy where MNCs, locals
and foreigners can go abroad. Besides that, economic growth
is essential for the financing of health.

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