February 2017

A recent report expects health costs of elderly in Singapore to rise tenfold over the next 15 years to more than $6 billion annually. With an ageing population, do you think healthcare should be a privilege or public good?

1st Place - Calvin Lee

The Universal Declaration of Human Rights enshrines the right to access to healthcare, but the problematic issue has always been with regards to how such access should be protected. This essay argues that, as with most social ails plaguing first-world societies, the complexity of this issue demands that the solution cannot be presented in a binary ‘public good or privilege’ dichotomy, but instead requires the incorporation of both elements.


Singapore’s aging population

The number of people aged 65 years and older in Singapore is projected to more than double from 430,000 in 2016 to more than 900,000 in 2030. One illustration of the scale of the demand for healthcare in Singapore is how the recent opening of Khoo Teck Puat hospital did nothing to alleviate the hospital bed crunch, but instead immediately filled to capacity as well.

The healthcare implications of an aging population stem from the fact that the elderly are more susceptible to chronic conditions that require more elaborate and longer-term care. This prevents hospitals from effectively addressing urgent cases, as bed capacity is filled by more long-term hospital stays. Financially, the government’s health expenditure has increased from 6.7% of the Total Government Expenditure to 11.9% in 2015, representing an increase of $6.7bn in operating expenditure; this cost will only increase from avenues such as supporting MediShield Life accounts and providing subsidies to lower-income groups.

Hence, the specter of an aging population looms large over Singapore’s policymaking in relation to healthcare. Any measure proposed will have extensive financial implications, while there is also the time pressure of ensuring that measures are implemented expeditiously to effectively address the crunch projected ahead.


Healthcare as a ‘privilege’

The implication of healthcare being a ‘privilege’ is that government funds are not employed to subsidize individual healthcare needs. Instead, the emphasis is on self-reliance, with the main provider for healthcare coverage being insurers. The government only ensures that there is access to healthcare provided one has sufficient means, while disowning any responsibility for ensuring that individuals actually receive such healthcare as required.

The clearest advantage of this approach is that the government will be spared the substantial financial burden of subsidizing the population. For example, Singapore spent $162.6m in 2015 on Medifund grants, which are subsidies for needy Singaporeans who face difficulties settling remaining medical bills after drawing on other means of payments and subsidies. Hospitals and clinics will be privately run, and the government should instead work on lowering barriers to entry to achieve a perfect-competition market, relying on market forces to keep costs and quality optimal.

However, the disadvantages of this approach are numerous. First, this system is likely to result in a lack of access for lower-income groups, if there are no government-imposed price ceilings. Lower-income households are also particularly more susceptible to health problems by virtue of their more onerous labor or limited access to healthier food options. Second, such a privatized system does not ensure non-discrimination in terms of race, sex, disability, religion etc. Third, an entirely privatized system lacks accountability in terms of upholding quality standards; it would be prudent to instead enforce particularly stringent standards in the field of healthcare where human lives are literally at stake.


Healthcare as a ‘public good’

The defining characteristic of healthcare as a ‘public good’ is that public funds will be employed to address society’s healthcare needs. Taken to its extreme, the government simply nationalizes the healthcare industry, transforming into a welfare state to bear the responsibility of providing healthcare for its citizens. For example, the UK’s National Health Service was established after WW2 on the founding principles of being comprehensive, universal and free at the point of delivery.

While this may sound utopian, the old adage that ‘things that sound too good to be true often are’ applies here. The increase in government expenditure demands one of two solutions: either an increase in taxes at political and economic cost, or the diverting of government funds to incur an opportunity cost of whatever else the funds could have been used for. Furthermore, nationalization also removes competitive pressures, likely leading to decreasing standards, such as how the NHS has been lambasted for lacking quality and patient access. Singapore’s long-held disdain for a universal welfare state, out of the belief that this would create a ‘handicap’ mentality, may also hold water in this scenario; universal healthcare benefits may encourage frivolous claims, thus preventing the system from quickly addressing genuine cases.


Proposed solution

Fundamentally, encouraging self-reliance is a crucial component of any sustainable social policy, especially in an aging society where the working-class tax base will proportionately decreases. However, government spending is required in two major aspects. First, to ensure equal access by subsidizing lower-income groups. Second, by investing heavily in related infrastructure, such as hospitals/polyclinics, transport, and exercise facilities. This will not only reduce the costs of self-reliance, but also boosts the healthcare industry, which provides a major source of employment and tourist income for Singapore, given Singapore’s status as the leading medical tourism hub in SEA. Healthcare should be recast as a source of growth, instead of a burden on society.

2nd Place - Joshua Goh

In 2016, Minister of Health Gan Kim Yong told Singapore’s Parliament that Singapore's Healthcare Masterplan 2020 is on track, and Singaporeans rank behind only Japan and Andorra in terms of leading the longest healthy lives in the world. However this honour appears to come at increasing cost with a 2016 report forecasting increased healthcare costs against the backdrop of an ageing population. Our current healthcare system is a shared contribution system where citizens take care of their own healthcare via their compulsory savings in their CPF while the government provides subsidies and regulated pricing. However with the rising costs of healthcare, the question is now whether the current system can weather the coming storm.


All healthcare systems have costs that are required to sustain it. In various developed nations, the taxpayer foots the bill and the state distributes healthcare, often equally among people. The issue here is that it is difficult to distinguish between the taxpayer that will actually use the healthcare in the short term and the taxpayer who is merely footing the bill for others.


Perhaps it is telling that for those of us who went through the Singapore secondary school education system within the last decade, we had to look at the case-study of the old British National Healthcare System (“NHS”) during our Social Studies subject. The failings of the system are made out quite clear and the lesson I took from the end is that having a state-paid universal healthcare system has many issues despite its rosy appeal. Perhaps this is part of Singaporean’s acclimatisation to the reality of Singapore’s healthcare that is not and cannot ever be free or equal.


Thus in Singapore the notion of healthcare as a privilege or a public good should be taken to mean the debate between how far should the individual and the government be responsible for healthcare. This can be summarised as a debate to ensure how the healthcare system in Singapore can be sustainable.


The problem with state-paid universal healthcare systems is that there is an inequality of use at any point in time and a tendency of that system to be overwhelmed by patients giving a lack of competition. Such a system does not distinguish between the financial position of its patients, therefore while everyone is provided with equal levels of healthcare, the system then becomes open to abuse, with individuals using the system regardless of their financial levels. Though this might be equalised in taxes, having to provide the same level of healthcare to all will drive up costs rather quickly.


However, having private insurance is also problematic, this was one of the issue with Obamacare, that with more sick people being supported under the scheme, people’s premiums rose and created dissatisfaction among younger and healthier users. Singapore is not new to this, here health insurance is popular. In 2016, the Life Insurance Association Singapore revealed that around 2.89 million people, about half of Singapore’s citizens were covered by private health plans and riders, with total premiums of $1.42 billion. People are taking ownership of their healthcare needs especially those with an eye on future conditions and illnesses as they advance into their later years. However, the question now is whether those who might not be able to afford such insurance can still be protected. The government has various schemes such as Medishield and Medishield Life which act as insurance schemes but draw from one’s CPF.


In his speech to parliament 2016, Minster Gan spoke of some concerns on the sustainability of healthcare in Singapore. He first spoken on financially stability given the increased costs due to an ageing population, increased infrastructure and the Government’s policy shift to take on a greater proportion of healthcare costs through greater subsidies most obviously via the Pioneer Generation Package. The focus now was on choosing “care that is appropriate to needs, so that we can make the best use of our limited resources”. His concern was that private insurance might result in the over-consumption or over-provision of services with the mentality that all costs would be paid for by a third party and raise premiums. This is also a problem associated with state-paid universal healthcare. He also spoke on the need to focus on “appropriate care” to make sure that technological developments are not adopted wholesale and that the value of such developments should be assessed on the basis that they provide appropriate care and do not simply result in higher costs.


Therefore the future healthcare model in Singapore cannot be easily labelled but what is certain is that it must be sustainable. Singapore’s system of using contributions of both citizens and government to deal with rising costs of healthcare has resulted in a system where the standard of healthcare available differs according to means as seen by the various classes of wards in hospitals, but also ensures that medical treatment is available to everyone. The concern now is whether the standard of healthcare can be maintained so that all in society are able to receive good healthcare regardless of income level.

3rd Place - Ng Chee Siang

Although ethically, quality healthcare should be a public good, and this is also the case for many Norwegian countries and the United Kingdom (UK) which practices National Health Service (NHS). This simply does not work in Singapore’s context, which focuses heavily on individual’s responsibility to ensure they are adequately insured and have enough savings to tide over the rainy days. 

Countries with high healthcare subsidies tend to be countries that also have very high-income taxes (Sweden income tax rate average 56.3%, Singapore’s highest tax rate is 22%). It is in the Swedes’ culture to pay high taxes and also to receive huge welfare benefits from the state in the form paid parental leave and huge healthcare subsidies. 

Singapore’s approach to healthcare is opposite, we charge very low-income taxes, provide the basic public healthcare services, and anything else above is paid for by the individual. Because the individual pays very low taxes, the idea is that he/she should have a higher proportion of savings or able to purchase a health insurance to cover his/her medical needs. 

While the idea of heavily-subsidised or free healthcare is tempting to the public at large, what is a cause for concern is who pays for the subsidies? The public tends to have the view that the Government is rich and is able to spend freely at will at anything it wishes to – except it actually does not. Many countries rake up huge debts and go into bankruptcy when they are unable to pay their debts (think Greece!). 

The Singapore Government has introduced several measures to help elderly in Singapore cope with rising cost of living – particularly with healthcare. The new Medishield Life, Community Health Assist Scheme (CHAS) and Silver Support are just some examples of help given by the Government to elderly citizens in Singapore. But these subsidies are given out needs to be paid for through either budget cuts in other areas of the Budget (Defence, Housing, et cetera) or by raising revenues through taxes. There is only so much we can reduce in Budget to other areas, hence the more prudent approach would be to increase Government Revenues. 

In Budget 2016, it was announced that in order to pay for the public good (subsidies for elderly and lower income groups), there was a need to reduce the income-tax relief claimable per person. This caused quite a commotion because it was deemed as an increase in tax burden for working moms who were actually making more than $150,000 a year (or $12,500 per month). The Straits Times did a review of the tax changes and found that for a single mother of two earning $250,000 per year, taxes went up by $5,000; but the tax rate on her income went from 4.1% to 6.2%, a far cry from rates that are being paid by the Norwegian countries. The tax levied was also in line with the concept of progressive income taxation. Imagine if Government were to raise the Goods and Service Tax (GST) to 10% so as to provide more for the elderly and lower-income group, would you be willing to pay or would you lament that you are poor enough to be part of the lower-income group (even though you are probably not).

At the end of the day, the quality of public healthcare services the Government can provide depends heavily on the amount of money it decides to spend on it, among the many things vying for funding. Unless we grow the size of the revenue pool, funding for healthcare would be limited. Singaporeans does not have the culture of paying higher taxes so that the general public can enjoy public benefits like better healthcare services. Although more money has been allocated to helping the elderly in coping with rising healthcare costs every year, this portion is set to increase further as more Singaporeans age. Unless the Government raises revenue dramatically, the amount of benefit each elderly can expect to receive is bound to drop. It is not that the Government is heartless, it is just that the Government does not have the resources to pay for everyone’s healthcare bill. Therefore, if you do not wish to pay higher taxes, it is better that you set aside money to buy medical insurance so that it can cover your medical bills during your emergency times. As long as we do not get into the notion of being willing to pay higher taxes so that others can benefit, healthcare in Singapore for elderly will remain a privilege instead of public good.