The Buzz over Healthcare Costs: Got money to see doctor?

By Daryl Choo


Nobody wants to be down with the Covid-19 virus, but if you are, medical bills should be the least of your problems. The Government will pay the hospital bills in full for all suspected patients of the coronavirus admitted in public hospitals. Citizens and permanent residents with respiratory symptoms will pay a flat rate of $10 for consultation and treatment at some 900 general practitioner clinics. The Pioneer and Merdeka generation Singaporeans will pay $5.

A sum of $800 million will also be set aside to help those working in the frontlines to contain the outbreak, Deputy Prime Minister and Finance Minister Heng Swee Keat announced in his 2020 Budget speech this week. It’s not clear how the sum will be disbursed, but Mr Heng said a majority will go to the Health ministry.

That free hospital stay, unfortunately, only happens in times of public health crises like this. Other times, there’s a line that is bandied about in some circles: "You can afford to die but you can’t afford to get sick."

Maybe that is why Singaporeans are a healthy lot. Singapore has the highest life expectancy in the world of 84.8 years, according to a 2019 report by the Institute of Health Metrics and Evaluation in the United States and Singapore’s Ministry of Health (MOH). The nagging worry is what high hospital bills will do to your finances, or that of your dependents, despite the 3M network in place.

As a population, the silver tsunami of ageing residents is putting pressure on the State’s ability to give good healthcare at an affordable price. By 2050, almost half of Singapore’s population will be above 65 years old, according to projections from the United Nations.

Already, the country is transforming its healthcare services to better cater to this demographic ‘time bomb’, shifting its focus from acute care to geriatric and chronic care. This involves building infrastructure specifically for the elderly, such as community hospitals like the Sengkang General and Community Hospitals that opened in 2018. Over the next 10 years, the Government will build another five hospitals.

One common complaint through the years is the small amount of government spending on healthcare. That currently amounts to about 2.1 per cent of GDP annually — a mere fraction of what other developed countries spend. Japan’s government spent 9.2 per cent and the UK’s government spent 7.6 per cent on health in 2017, according to data from the World Health Organisation.

Even so, these complaints have been dampened over the years as the Government has almost tripled its health spending over the past few years, from $4 billion in 2010 to $12 billion in 2019. That’s a rate Health Minister Gan Kim Yong said was “unsustainable”.

The Government thinks it is more important to look at health outcomes, rather than financial input. In this instance, Singapore fares among the top. It ranked second in the world for healthcare outcomes by the Economist Intelligence Unit in 2014, as well as for healthcare efficiency by Bloomberg.

Singapore’s healthcare vision is built around personal responsibility and private spending. That has informed the way the Government has designed its healthcare systems, that is, to give the individual the capacity to pay for his own medical care.

Go to the Ministry of Health’s website today and you will see more than a dozen different healthcare programmes. It’s confusing. But a majority of them are subsidies that have been set aside for a specific community that might require more financial help. The main schemes to remember are the 3M’s of healthcare — Medisave, Medishield Life and Medifund:



It’s a forced medical savings plan which takes between 8 and 10.5 per cent of a working adult’s wages and deposits it in the individual’s CPF account. Money in this account can be used to pay for his or his family’s routine medical care and hospitalisation, so long as treatment falls within the Government’s approved list. Medisave is what distinguishes Singapore’s system from that of countries like the US or France, where insurers typically pay the bulk of routine care.

Medishield Life

Sometimes, the unfortunate happens and you are hit with a more serious illness and have to be hospitalised. This is where Medishield Life kicks in. It’s a mandatory basic health insurance for all Singaporeans which unlike its previous incarnation, Medishield, you cannot opt-out of. This insurance covers costlier treatments like dialysis and chemotherapy.

Premiums are set by your age and you can choose to pay them with your Medisave funds. These cost between $98 and $1,530 annually, depending on your income level.

Although the payouts are pegged at the lower cost B2 and C wards, the better-off can choose to go to A-class wards in public hospitals or to private hospitals. Medishield Life will still kick in, but at the subsidised levels. So there is a baseline of support, coupled with individual choice for the level of care and complemented with targeted subsidies.


For those who fall through the cracks of Medisave and Medishield Life, there’s a final safety net — Medifund. It’s based on an endowment fund, currently worth $4.7 billion, of which its investment returns are used to help pay medical bills of needy Singaporeans. Dipping into the endowment fund itself is forbidden, but the finance minister can make top-ups. In his 2020 Budget speech, Mr Heng said he would add $200 million to the Medifund.

Dispensing of the fund is administered by individual public healthcare institutions, which decide whether an individual is needy enough to qualify. MOH said for 2018, 99.9 per cent of applications received were approved.

Careshield Life

This is a second national insurance scheme that specifically provides payouts for old-age disability. It used to be called Eldershield, which covered those aged 40 and above, who would receive $300 or $400 in monthly payouts for a period of time if they became severely disabled.

Come mid-2020, all Singaporeans turning 30 will automatically join the new Careshield Life. Unlike Eldershield, there is no way to opt-out of this insurance scheme. Careshield Life can be seen as an upsized form of Eldershield, with higher monthly payouts (from $600 to $1,200) and with payouts lasting over a person’s lifetime — Eldershield payouts last just five or six years.

Naturally, Careshield Life premiums would also cost more. Based on MOH’s estimates, a 40-year-old male would pay about $300 a year compared to roughly $200 a year he would pay under Eldershield.

Other subsidies

There is a plethora of subsidies for the older generation (Pioneer and Merdeka) as well as new schemes like the Community Health Assistance Scheme (Chas) to grant lower-income patients access to private general practitioners. This means out-of-pocket payment can be quite small.

For example, a Pioneer generation cardholder pays only $3.40 for consultation at a polyclinic compared to $13.20 for a Singaporean adult (below 65) and $32.70 for a permanent resident. A Chas card, meanwhile, provides up to $18.50 in subsidies if you visit an approved private general practitioner clinic for a common illness, and up to $125 in subsidies per visit for a complex chronic illness.

And then there’s a slew of other miscellaneous financial assistance schemes targeted at specific groups of society, such as grants for caregivers for training and to hire foreign domestic workers to care for the elderly or persons with disabilities.


Early challenges in privatisation

Back in the mid-1980s, the Government undertook sweeping reforms to give public hospitals more autonomy to make management decisions and allowed them to compete for patients’ fees. The idea was that privatisation would lower costs, but it instead led to an increase in health spending.

“The ensuing increase in healthcare expenditures and political disquiet led the government to reverse course, and develop and refine a comprehensive set of tools to steer the sector,” wrote Dr M Ramesh, a professor at the Lee Kuan Yew School of Public Policy and UNESCO Chair of Social Policy Design in Asia, in an article on the school’s website. The Government subsequently began to intervene in significant aspects of hospitals’ operations, including the setting of treatment fees, physicians’ salaries and the number of hospital beds in different ward classes, he added.

Public hospitals are still owned by the Government through a holding company MOH Holdings Private Limited, formerly called the Health Corporation of Singapore and was set up in 1985.

“Public ownership of what are legally private firms allows hospitals the autonomy they need to operate in a competitive environment and yet be within the government’s direct reach,” Dr Ramesh wrote in a separate journal paper.

Hospital bed crunch

In 2014, Singapore faced its worst bed crunch at its public hospitals. Under pressure of overcrowding, Changi General Hospital (CGH) began housing patients in large air-conditioned tents while Tan Tock Seng Hospital was forced to set up dozens of beds along the corridors of its wards.

"Our bed occupancy rate has crossed 100 per cent for certain periods over the past month and some patients have waited more than 24 hours for an inpatient bed,” CGH’s chief executive told The Straits Times.

Data from the World Bank showed Singapore had 2.4 hospital beds per 1,000 people in 2015, which was below the 4.7 average for OECD member countries that same year.

The low number of doctors in Singapore per capita has also been a point of contention over the years. The number of doctors per 1,000 people was 2.4 in 2018, according to data from MOH. That’s below the average of 3.5 doctors per 1,000 inhabitants for OECD countries.

The worry is that Singaporeans will have to endure longer waiting times if the country does not add more beds and train more doctors, especially with the growing healthcare needs of an ageing population.

About 2,500 beds were added to public hospitals in the three years following, The Straits Times reported. Latest figures by MOH for the year 2018 put the number of beds in acute hospitals at about 10,800 and community hospitals at about 1,800. Another 2,850 beds will be added by 2022.

MOH has also been working with the Education Ministry to train more medical students to meet the rising demand. About 500 medical students were taken in in 2018 by schools in Singapore, up from 300 in 2010, according to MOH. It also provides grants for Singaporeans studying medicine overseas to return to practice locally.

When Medishield Life paid $4.50 of a senior’s $4,477 bill

When retiree Mr Seow Ban Yam, 82, underwent a cataract operation at the Singapore National Eye Centre (SNEC), he had expected Medishield Life to cover him a large part of the medical bill.

The full rate he was charged totalled more than $12,000, which came up to $4,447 after subsidy. After he paid the deductible of the first $3,000, he was shocked to find that Medishield Life covered only $4.50 of the remaining costs.

That story reported by The Straits Times caused a stir among the public and even within the Health ministry. Mr Seow’s plight underscored the complex nature of healthcare financing in Singapore and the high level of Government oversight required to ensure public healthcare in Singapore remains affordable for all. It also led to the discovery that many other patients were not getting full coverage from Medishield Life beyond the initial deductible and co-payment.

The low insurance payout was because Mr Seow’s cataract operation was more complex and costly than usual, which caused his subsided bill to be 50 per cent higher than the claim limit for that procedure. Still, the Government said it would shorten the claims review period of Medishield Life from once every five years to every three years. The SNEC offered Mr Seow a goodwill payment which was close to the amount Medishield Life would have covered if the entire bill had been within the claims limits set by the national insurance.

Women pay more for Careshield Life

Women live longer than men, and are more likely to be disabled for a longer period than men, therefore drawing on Careshield Life for a longer period.

This was the rationale given by Dr Amy Khor, senior minister of state for health, when questioned by several MPs in 2018 why women will be charged higher premiums than men for the new national disability insurance. Male policyholders aged 30 will pay $206 in annual premiums before subsidies, while the amount for female policyholders aged 30 will be $253, according to MOH calculations.

The MPs raised concerns that higher premiums could potentially “doubly penalise” women, who were already earning lower pay than men and would have lower savings in their Medisave accounts. The issue even drew about 1,500 signatures in a petition online against the gender-differentiated premiums.

While gender-differentiated premiums are common among private insurance policies, analysts noted that Singaporeans might not feel that the policy was fair considering the nature of the insurance policy as a national scheme. Dr Khor maintained that the scheme was “actuarially fair”, referring to an insurance term that means premiums paid are equal to the expected value of compensation received. The gender-differentiated premiums for Careshield Life remained.


It’s about who pays the bill in the end. How much should the State and the individual bear? The Government today is spending substantial amounts of money to ensure healthcare is affordable for the needy through various subsidies and generational healthcare packages, signalling a move from a hardline approach to one of healthcare as a “shared responsibility”.

Then there’s the perennial question about the adequacy of Singaporeans’ Medisave accounts, which besides paying for treatments also gets channelled to Medishield Life and Careshield Life premiums. Those who do not have sufficient funds in their Medisave account might draw on the funds of their dependents, who in turn, would find their account depleted sooner.

Since 2014, Medisave top-ups have been given every year as part of the Pioneer and Merdeka generation packages. In 2019, Workers’ Party chief Pritam Singh suggested that the ruling People’s Action Party (PAP) had timed the release of these packages with election cycles, giving the PAP an unfair advantage. He instead asked for a universal and permanent healthcare package for Singaporeans from age 60.

In reply, Senior Minister of State Chee Hong Tat rebutted that such schemes cannot be rolled out at the start of the Government’s five-year term as surpluses that fund these schemes have to be earned and accumulated. He added that the packages were on top of structural support already provided for lower- and middle-income Singaporeans to pay off their Medishield Life premiums.

For most people, the concern would be whether they can afford out-of-pocket payments. No matter whether the bills are applicable for Medisave or Medishield Life insurance, users must still pay part of the costs for treatment.

Even for the better off, costs have been rising for private healthcare insurance that is added on top of the national Medishield Life insurance. Premiums for these Integrated Shield Plans that cover admissions into private hospitals have risen from over the past five years by an average of 7 per cent a year, Health Minister Gan Kim Yong wrote in a reply to Parliament.

At the national level, the worry is how much the young and healthy should pay in taxes to make sure the elderly are looked after by the State. Two in five respondents to a 2018 survey by the Institute of Policy Studies said they would rather tap on national reserves than pay higher taxes to fund social spending on the elderly. Asked to rank whether family, community, employers or the Government should bear the responsibility of taking care of seniors, a majority ranked family first, followed by the Government.

Healthcare costs around the world are rising. Singapore’s ageing population exacerbates that problem because there are fewer young people to support the healthcare costs of the aged. Even though Singapore’s spending on healthcare is much lower than the average high-income country, the Government has said that increasing subsidies is not a sustainable option. This means that out-of-pocket payments will rise, and the Government will have to continue to calibrate its schemes to target groups of Singaporeans that need more assistance.

Over the years, it has poured significant resources into health promotion. In 2014, it gave each Singaporean $100 in ActiveSG credits to spend at public sports and exercise facilities across the island. The Health Promotion Board gives out free fitness trackers and pays its citizens in supermarket vouchers to walk a certain number of steps a day. The country even launched its own health lifestyle index to encourage individuals to improve their health and wellbeing.

So how should the Government meet the growing healthcare demands of an ageing population while ensuring its citizens can afford to see the doctor? It appears a big part of Singapore’s answer is to make sure its people don’t get sick at all.

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