Some comments in reaction to
The SDP National Healthcare Plan were right on spot pointing out that any alternative healthcare plan must reduce costs.
However, because there are various types of costs when one talks about healthcare, it is important to sort them out.
First, there is the total healthcare expenditure (THE) which is the spending by government, service providers, patients, patients’ families, etc that is recorded within the healthcare system. This is relatively easy to compute.
Then there is the cost of ill health in the economy (CIHE), the spending due to health issues in the economy and not limited to that within the healthcare system.
The third is the cost of ill health in a society (CIHS) which reflects all the costs in a society that is due to the burden of diseases and injuries in the population.
While the THE is easier to compute than the latter two indicators, it is more important to focus on them than the THE for two reasons:
One, there are expenditure items in the THE of other countries which do not appear in Singapore’s. For instance, a good part of the expenditure on drug rehabilitation in Singapore appears outside the Ministry of Health’s (MOH) budget and probably put under the Ministry of Home Affairs’ (MHA) or the Ministry for Community, Youth and Sports’ (MCYS) budgets instead.
This is because drug abuse in Singapore is not classified as a health issue and a good part of drug abuse treatments provided by centres do not come under MOH. Such expenditure appears outside the THE even though it is a health or health-related issue and is incurred within the economy.
However in many Organisation for Economic Cooperation and Development (OECD) countries, drug addiction is classified as a healthcare issue and comes under the purview of their health ministries.
Such classification facilitates consistency in the gathering of data which are often used by international health experts and agencies such as World Health Organisation (WHO). Hence it is common to see expenditure on all drug addiction treatments in these countries come under their healthcare budgets.
Another reason to pay more attention to the CIHE is because expenditure incurred in the economy that are due to ill health within the population does not appear in the THE. For instance, Australia spends AUD$670 million on child protection cases which are related to alcohol misuse. Yet this amount does not appear in the spending on the healthcare system.
In Singapore, part of the MHA’s budget is put aside to tackle crimes arising from drug addiction and alcohol misuse which, as mentioned, are related to health issues. Likewise a component of the MCYS budget is reserved for expenditure on social issues that are related to health, for example, broken homes due to the father’s alcohol misuse or drug abuse.
You can find similar expenditure items in other ministries that are essentially a result of ill health in the population.
When the PAP underspends on the healthcare system it does not necessarily mean that it is spending less on healthcare issues. It can very well be spending significant amounts of money on health matters outside the healthcare system that are, nevertheless, still expenditures incurred within the economy.
Expenditure on health issues that incurs outside the healthcare system is not small. For example, studies conducted in Australia (absent in Singapore) show that the total hospital and health service costs from alcohol misuse is estimated to be around AUD$1.97 billion per year.
However, the annual cost of alcohol misuse outside the healthcare system (but still within the economy) is significant for both the government and public: the cost of handling alcohol-related crime for the police is AUD$747 million, criminal courts AUD$86 million, prisons AUD$142 million; alcohol related cases in child protection system cost $672 million; out-of-pocket expenditure from damage to property because of alcoholism is AUD$2.47 billion.
All these items cost money and it does not matter which part of the economy the state classifies them under – they are all related to health issues. Hence, when one talks about alcohol misuse as a disease and the healthcare system, for example, one cannot be myopic and insist that we should only pay attention to the costs within the healthcare system. This is the mistake people often make when they ask if the cost of healthcare is going to increase under the SDP’s plan.
Instead one should look at the wide ranging burden of alcohol misuse, drug addiction, gambling, smoking, etc which are all health issues in the economy and which the healthcare system should manage as part of its primary aim to reduce the burden of diseases.
In the case of chronic diseases, it is common in Singapore to see families hiring maids to provide home care for their loved ones. This is an example of an expenditure item that does not appear in the THE though it is a significant cost to a family and the economy.
Likewise it is also common to see parents hire special needs teachers or extra tuition teachers for their children with learning disabilities. This is another example of a health issue in which the cost is incurred outside the healthcare system.
Hence, how much patients spend within the healthcare system is only a portion of what they actually spend because of ill health. The THE can sometimes be even smaller than the expenditure on healthcare incurred within the economy but outside the healthcare system.
It is clear that in Singapore, the MOH’s budget does not give us the complete picture of the government’s overall expenditure because of ill health in the population.
Ill health imposes costs across the economy and is not limited to the healthcare system. Since the CIHE quantifies those costs in the economy instead of the THE, it is unhelpful to assess any healthcare strategy based on just the THE.
The third type of cost that one should pay attention to is the cost of ill health in society, or CIHS.
This is difficult to compute, often estimated by using proxy cost estimates by conditions such as social cost of injuries and other illnesses. Singapore has conducted extremely few studies to estimate these costs.
Yet both the THE and CIHE will not include the cost of loss of earnings due to illness or death which may amount to billions of dollars a year. This will only be captured in the CIHS. Again, take the example of the cost estimates for alcohol misuse in Australia. Even though those earlier estimates mentioned in this article that are part of the THE and CIHE are large, it provides only a partial picture of the true situation because the social cost of alcohol in Australia is estimated to be about $36 billion.
The CIHS essentially shows the impact of ill health in a population without limiting it to the economy.
Some critics argue that if the THE increases significantly over a prolonged period, state coffers will be depleted. These critics, however, don’t ask what will happen if something similar happens to the CIHE and/or CIHS. Reducing the THE will not contain healthcare costs in Singapore because ill health imposes a broader set of costs on the economy and society beyond the healthcare system.
The SDP’s plan may or may not increase the THE. But what Singaporeans should pay particular attention to is whether the plan tackles the CIHE and CIHS in Singapore. Being in the front line of healthcare provision, the medical doctors in the SDP Healthcare Advisory Panel see the social cost of ill health and the issues they have raised in the plan suggest that, to them, the two indicators matter.
Singaporeans understand very little about the various disease costs in the CIHE and CIHS as there is hardly any information on the subject. Instead discussions and debates tend to focus on how much the government spends within the healthcare system and to some limited extent how much patients and their families spend.
Reducing CIHS should, thus, be the ultimate aim of any government.
In the third and final instalment of my article, I will look at how the THE, CIHE and CIHS can be managed in a sustainable manner. I will discuss how the SDP healthcare plan takes into consideration these three types of costs in order to work towards a longer term vision of cutting costs in healthcare and reducing the burden of diseases in the population.
Ansari Abudeen is a Singaporean working as a health economist in the National Drug and Alcohol Research Centre, Faculty of Medicine, University of New South Wales. He is also a PhD candidate. In 2011, one of his research projects won a national award for research excellence. Ansari has also provided consultancy on evaluating cost effectiveness of communtiy pharmacy service provisions and economic value of asthma research. Currently, he is providing consultancy to a state ministry of health, Indigenous community organisations and service providers in Australia on implementing frameworks to monitor and evaluate health outcomes.