The SDP healthcare plan made simple

Singapore Democrats

There has been much interest generated in The SDP’s Healthcare Plan since it was launched last Saturday. As a result, many questions have been raised.

This is understandable since it is the first time that a comprehensive alternative healthcare system has been drawn up. We breakdown the components of our Plan and present them in an easy-to-undertand format.

We know that Singaporeans want to see our healthcare made affordable and caring. To this end we ask you to spread the message and email this article to all your family and friends.

1. What is the gist of the SDP’s healthcare plan?

We propose:

  • scrapping the 3M system of Medisave, Medifund and Medishield and return the Medisave money to one’s CPF Ordinary Account,
  • a single-payer system by establishing the National Health Investment Fund (NHIF) where the government and the people contribute into,
  • compulsory individual contributions to the NHIF to be taken from one’s CPF. The amount will average $427 per year per person (or $40 a month) depending on one’s level of income,
  • that the payment covers basic health, accident and pregnancy,
  • co-payment with cap – to emphasise personal responsibility and reduce abuse,
  • issuing a Healthcare Benefits Smart Card upon payment of annual contribution which entitles holder to subsidies. The card also stores medical information, utilisation history and payment (reduces administrative costs),
  • single-ward class which provide same treatment for all; treatment based on clinical need and not on ability to pay.


2. Why have you come up with this plan?

We currently have a system where former government hospitals are now being run as profit centres where healthcare is treated as a commodity and given out based on ability to pay (basic treatment is available to all but more advanced treatment is available to only those who can pay).

An overhaul is necessary instead of piecemeal remedies which address parts of the overall problem but not the root of the problem, which is the 3M system.

3. What is wrong with the 3M system?

Singaporeans are paying more out of pocket medical expenses in absolute and percentage terms under the 3M system compared to what other peoples in comparable economies pay.

Statistics from the credit bureau show that medical debt is a major reason for debts (20.9% in 2011) held by Singaporeans.

There are many instances where Singaporeans cannot afford treatment. How is this a “good and affordable” healthcare system as the government claims?

The 3M system is further complicated by additional complex schemes to address emerging medical issues (e.g. Medifund “Silver”; Medication Assistance Fund; Community Health Assist Scheme).

This confuses the public and shows that 3M as it stands now is not able to meet the increasing medical needs of the people.

4. The MOH says that Singapore Health’s system is “one that has received praise and recognition both locally and internationally.” Is there a need to change it?

Yes. The reason is that the current system, with it’s huge dependence on out-of-pocket expenditure, means that significant numbers of Singaporeans are badly affected by healthcare costs. With the world’s fastest aging population, there is an urgent need for a universal, affordable and sustainable healthcare system.

5. How is the Plan funded?

We propose a government health expenditure of $10.5 billion (3.2% of GDP) right away, compared to the government’s $4 billion. There a difference of $6.5 billion.

The difference can be funded via reduction in defence spending and tax increase in several areas, and annual contributions from the people to the NHIF. It is supplemented by investment income from an endowment fund called the Healthcare Contingency Fund.

We believe that the benefits achieved from improvements in healthcare provision would benefit Singapore as a whole and the benefits would more than offset the reduction in spending in other areas.

6. Do you intend to withdraw from the reserves to fund your Plan?

The Plan does not require withdrawal from the reserves. It must be added, however, that healthcare expenditure in the people is an investment, not a raid on our reserves. We are proposing a systematic, sustainable way of ensuring that all Singaporeans receive good quality healthcare. We need to change our mindsets of calculating healthcare solely in terms of money.

7. Do you think the SDP healthcare plan is sustainable over the long-term?

We recognise that the cost of providing healthcare will continue to rise. This is a worldwide trend and it is inevitable that Singapore will face the same problem. One key feature in our healthcare proposal is the Healthcare Contingency Fund. This fund functions essentially as an endowment fund; it is set aside from the reserves. With a conservative returns-on-investment of 6% we should be able to finance any future increase in government healthcare expenditure of up to 10% without touching the principal.

Overall, containing healthcare costs requires action on several fronts. Capping government expenditure by transferring the expenditure to the private individual, as is the case now, is not sustainable. We have proposed a framework on how the overall healthcare expenditure can be handled.

8. Are you certain that the “Full Subsidy” element of your healthcare plan is sustainable?

Under our plan, the poor and unemployed will receive Full Subsidy (FS) of their healthcare expenses, in other words they do not have to pay for the treatment they receive. The Plan is engineered to function with up to 25% of the population under the FS scheme. That being said, we think that an economy in which one quarter of the population cannot afford healthcare would be in serious need of structural adjustments.

Whilst we agree that those who cannot afford to pay for their healthcare should not be deprived of care, we also feel that subsidised care must not be abused. There are restrictions in place in the FS scheme to prevent widespread abuse. For example, a young able-bodied, able-minded person who is on unemployment benefit and does not seriously seek employment, will be required, once his unemployment benefit expires, to re-new his FS status 3 monthly, then 2 monthly, failing which he will automatically revert to APS status, i.e. he would be required to co-pay for medical services.

In addition, there will be strict audit of people on the FS scheme to prevent abuse.

9. How do you prevent abuses of the system?

As mentioned, those on the FS scheme will be subject to strict audits. No system, however, is fool-proof. When loop-holes are uncovered, steps will be taken to rectify them.

But we cannot ignore the needs of the overwhelming majority just because we fear that a tiny minority may abuse the system.

Whilst preventing abuse can, and must, be dealt with we must remember that healthcare is a human issue, not a purely monetary one.

10. Don’t you think it is better to make improvements to the current system instead of doing a major overhaul? Isn’t this risky?

What is risky is that the current healthcare financing model fails to keep pace with escalating healthcare costs faced by Singaporeans. The current 3M scheme is not stopping Singaporeans from getting into financial debt.

11. The SDP plan is unfair as the rich pay more. In a pure insurance scheme, premium is calculated based on risk which is fairer. The SDP plan penalises the rich for being rich!

The SDP healthcare plan is such that all participants collectively contribute to the well-being of Singapore as a whole. We do not set out to make the rich pay more; the premium is the same for all but those earning less will receive more subsidy.

Through this healthcare plan, we hope to encourage both Singaporeans as well as the government to consider how all of us can collectively move Singapore towards a more cohesive, compassionate and caring society.

12. Under the SDP plan, younger people have to pay more compared to current Medishield premium. This doesn’t seem fair. They are also new to workforce and may not be able to afford the contributions.

The contributions for the younger generation may be more than the current Medishield premiums, but Medishield premiums increase with age. Under the SDP healthcare plan, there is no escalation in the contributions that one pays. Also, the coverage is much wider under our Plan than the Medishield scheme.

The SDP Plan also covers aged parents and children so that these young adults do not have to bear double or triple burden, which is the case under the 3M system right now. We estimate that with our Plan, the amount paid into the NHIF is about half of what Singaporeans are currently paying out now in both Medishield and Medisave.

13. How does SDP hope to implement this plan since it is not the ruling party?

We are putting this out now so that people will know what to do in 2016. We want the word to get out. Beginning with healthcare but extending through other sectors of our society, we are presenting an alternative vision that we believe is in line with the hopes and aspirations of Singaporeans. Hopefully by the next elections, the message will have gotten across. In between, it is likely that large sections of this will be copied and adopted by the PAP. If it does, it should acknowledge the SDP.

We also want to show that healthcare policy is the people’s concern, not just the government’s. Singaporeans need to know that the current healthcare system does not benefit them and, more importantly, that there is now an alternative.

Before you can set up a health care system for any country, you have to know that country’s basic ethical values. The first question is: Do people in your country have a right to health care?

If the people believe that medical care is a basic right, you design a system that means anybody who is sick can see a doctor. If a society considers medical care to be an economic commodity, then you set up a system that distributes health care based on the ability to pay. And then the poor, pretty much, are left out.
                    – Professor William Hsiao
                       Harvard Healthcare Economist