Health spending for 'peace of mind'

The Government wants to give patients "peace of mind" by increasing the state's share of the health-care bill. This is a change from past messages about keeping health-care spending down. What has caused this change?

By Salma Khalik, The Straits Times, 25 Apr 2013

TWENTY years ago, the White Paper on Affordable Healthcare in 1993 expounded personal responsibility for health care, with the state providing basic health needs for the poor.

In 1999, the Inter-Ministerial Committee on Healthcare for the Elderly upheld that philosophy. It said: "Ultimately, every Singaporean is personally responsible for his own health and well being... Elderly persons should try to work for as long as possible... They need to have adequate financial resources to take care of their own health-care costs in old age."

Both papers stressed, however, that the Government will pick up the tab for basic medical treatments for the needy. Those who are better off - the middle income and the rich - are expected to take care of their own needs.

As recently as 2007, when then Health Minister Khaw Boon Wan announced a $2 billion expansion in health-care infrastructure over 10 years, he took pains to stress that even though the Government will remain the largest payer for subsidised facilities, patients should expect their co-payment to go up as the total cost of health-care delivery goes up.

Peace of mind

BUT this mantra of personal responsibility appears to have been given a new twist recently. While still stressing personal responsibility for health and co-payment, the emphasis lately has been on giving people "peace of mind" on health-care bills as they age.

This dimension surfaced in last year's Budget speech, when Finance Minister Tharman Shanmugaratnam revealed the Government would raise its health-care expenditure over five years from $4 billion a year to $8 billion. This would raise the share of health-care spending to 2 per cent of gross domestic product (GDP). Spending will rise further to 3.5 per cent of GDP or more by 2030.

Then, in December, Health Minister Gan Kim Yong told The Straits Times in an exclusive interview that not only will the Government be spending more on health care, but it will also take on a larger share of patient bills. That was also when he revealed that the Ministry of Health was undertaking a major review of health care, spurred on by three key factors: advances in medical drugs and treatment, greater accessibility to these treatments, and a rapidly ageing population.

During last month's Budget debate, Mr Gan also said that the Government will foot 40 per cent or more of total health-care costs, up from the current 30 per cent, leading opposition MP Low Thia Khiang, a long-time advocate of greater government spending on health, to say: "I'm happy to note that the Ministry of Health has shifted its focus and mindset from how to avoid health-care expenditure escalating, to how Singaporeans can have peace of mind in health-care needs, especially for those who have little Medisave in their accounts."

To be sure, Singapore's health financing does not depend only on patients bearing the brunt of the bill. There is community risk pooling via MediShield. Many hospital services are also heavily subsidised. But the message has always been that patients must bear overall personal responsibility for their own health-care costs.

And as Mr Low noted, the rhetoric has previously been on keeping health-care spending down, rather than on the Government spending more to share patients' financial burden.

Why the change

SO WHAT has spurred this radical shift?

When asked this, Mr Gan said: "It would not be fruitful to look back." He added: "One of the key drivers for the major shifts we are contemplating is the ageing population profile. Our health-care policies need to evolve as we prepare for the future and the new challenges."

That the population is rapidly greying has been obvious for the last two decades, and the country has been gearing up for this "silver tsunami" for some time. Witness the setting up of an Inter-Ministerial Committee to look into just this problem.

And while the Health Minister is correct to say that looking back is not fruitful, it does help to see governmental policies and actions in perspective over the decades.

So what has changed?

Several things, which taken together, make the change in stance almost inevitable. After all, Singapore's fiscal situation remains strong, and citizens have been clamouring for higher state spending on health.

Rising affluence also raises expectations and demand for health care. Medical advancements also mean more and better treatments are now available.

The biggest driving force, however, is demographic, with a bigger proportion of elderly folk in the population. Those aged 65 years and older, who formed only 8.2 per cent of the population in 2010, will grow to form 18.4 per cent of the population by 2030.

Life expectancy has also increased, raising the number of post-retirement years in which people need to draw on their savings to provide for themselves. In 1965, people retired at the age of 55 with life expectancy of 65 years. Today, they are encouraged to work till 65, with life expectancy of 83 years. This means having to stretch savings to cover longer retirement years, when savings dip while medical bills rise.

Falling fertility levels also mean more elderly people have to fend for themselves and can no longer depend on their children to help pay for medical bills.

Taken together, the trends of an ageing population, the expansion of more and costlier medical treatments, and rising affluence will raise demand of - and spending on - health-care services.

If people are left to pay the lion's share of their medical bills, the high cost will put some treatments beyond the reach of many, leading to greater social inequality - and unhappiness.

Associate Professor Paulin Straughan, a sociologist, said: "Unlike housing, where you can choose to buy a smaller flat or choose to delay upgrading, and car ownership, we cannot choose not to get ill and avoid disease episodes."

Knowing about a cure but not being able to afford it while others can will only lead to bitterness among those deprived of treatment that could improve or prolong their lives.

With a better-educated population and the advent of social media, such unhappiness will get significant airing. This "people's outpouring" has been seen in other areas of Singapore life - such as during the various public transport system breakdowns.

There is, of course, a political dimension to the shift as well. As the population ages, a greater number of voters will be elderly folk who want to see more spending on health care. Raising government spending to relieve their financial burden - to give "peace of mind" - is a vote-getter.

Singapore's health spending is also low for a wealthy country. It has the seventh highest per capita GDP, according to the United States' Central Intelligence Agency, but spends only 4 per cent of its GDP on health - less than half the 9.5 per cent of GDP that countries in the Organisation for Economic Cooperation and Development spent in 2010.

Hence the shift to raise spending to give citizens greater peace of mind is the correct move to ensure that this large bloc of people do not live in constant worry over whether they can continue to afford good health treatments as they age, without becoming unduly dependent on their children.

Just how will the Government raise its share of the medical bill?

Given the current Government's track record, it will act within its fiscal limits and remain prudent. So the co-payment philosophy is likely to remain, even if the patient's share may dip. The emphasis on preventive care and the need to take responsibility for one's own health outcomes will also remain.

Whatever the details of the review, this shift in approach from minimising health-care spending to spending enough to give peace of mind, is a welcome one - not only for parliamentarians on both sides of the House to applaud, but for all Singaporeans too.