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Leong Yan Hoi, Tan Lip Hong and Toh Beng Chye
Singapore’s health care system and the financial system that underpins it are coming under increasing strain with Singaporeans finding it harder and harder to afford health care especially when they require prolonged hospitalisation.
There must be a rethink of our healthcare system if we are going to provide the people with affordable and efficient medical care.
First, universal health care must be the raison d’etre of a First World health care system. That is, legislation must be enacted to ensure that every single citizen is covered by a basic health care policy regardless of age, employment status or gender.
Second, the health tax (or premium) that each citizen contributes to the national health care plan as well as out-of-pocket expenses must always remain affordable.
Everything we discuss about health care reform must spring from and be underpinned by this fundamental principle of universal, affordable coverage.
Affordability vs choice
The main bugbear of many universal health care systems is that citizens are presented with Hobson’s choice: Affordable but low-quality health care in run-down state institutions or high-quality care in unaffordable private institutions.
This need not be the case. We can, and should, introduce a health care model with universal health care coverage that allows the patient to choose his health care provider — public institutions, partially subsidized private facilities, private institutions — but the plan will only pay up to the official tariff.
Additional flexibility is ensured by allowing private insurers to sell supplementary insurance to those who want a higher level of service.
Taiwan, the Anglo-Saxon countries of Britain, Canada, Australia, and the Nordic countries have a single-payer system, whereby health care for the entire population is financed from a single pool to which several parties — the state, employers, employees — have contributed.
Contributions from citizens and residents to this pool are collected by way of a flat tax or premium paid to the state. The government administers and disburses funds from this pool to finance health care services for the population.
An alternative model is the multi-payer model used in Switzerland, Holland and Germany, where health care is financed both from a public pool — run by the government — and private insurance. Under this system, everyone is mandated by law to buy basic health insurance from any of a group of nationally appointed private insurers. These insurance plans are provided on a not-for-profit basis.
The premium is standardised for a particular policy regardless of age and is paid out-of-pocket up to a fixed percentage of income; the government tops up the rest. For the unemployed, infirm, aged and handicapped, the government pays the entire premium. A deductible as well as a co-payment fee is charged per treatment.
The single-payer model is easy to implement and administer, but it may involve more government bureaucracy in the long term at taxpayers’ expense.
The multi-payer model has the advantages of requiring less government with a correspondingly lower burden on income taxation, and providing a choice of plans for the people. Providing the government audits and regulates the insurers strictly, private insurers may provide sounder actuarial risk management than the state and at the same time act as a check on health care providers to minimise unnecessary treatments and prescriptions of expensive drugs.
However, the downside is that premiums tend to rise over the years as insurers struggle to cope with burgeoning health care costs.
Healthcare Contingency Fund
Despite active cost containment measures, health care spending in practically every developed nation has continued to rise unabated owing to inflation, ageing population, and increasing pharmaceutical costs.
We expect Singapore to follow this trend, and we therefore propose that the government set aside a Healthcare Contingency Fund of $20 bil, to be financed from our national reserves, to deal with future increases in the health care budget. This fund will be professionally managed and invested conservatively for an average return of 6% per annum.
The projected returns on the Healthcare Contingency Fund should be able to finance future annual increases in health care expenditure of up to 10% without dipping into the principal sum.
Part 2 of this article will make more suggestions on how we can reform healthcare financing in Singapore.
Drs Leong Yan Hoi, Tan Lip Hong and Toh Beng Chye are medical doctors. They are also members of the SDP’s Healthcare Advisory Panel.
$4 Billion handout to buy votes but nothing for Pu