FEB 26 — A key element in the recently-announced Budget is the beefing up of Medisave accounts of Singaporeans for the implementation of the universal MediShield Life programme next year.
The aim is to make medical insurance premiums affordable for the average elderly person, who is actuarially risk-rated to pay more than S$1,000 annually. There is currently a large group of more than 100,000 senior citizens who should be included as a priority as they do not have the basic Central Provident Fund and Medisave accounts. There is also a growing group of retirees who do not have enough savings to pay for medical expenses or insurance premiums.
How sustainable is the pioneer generation package?
A key question that arises is whether the generous package for the pioneer generation will set a dangerous precedent for Singaporeans to expect continuing hand-outs, which could negate all the effects of past policies that emphasised prudent savings and investments. There are concerns that a superfluous package may not be politically sustainable if future generations go on the slippery slope of relying on state welfare.
A huge S$8 billion fund has been earmarked to launch and maintain the entire package for this special generation for the rest of their lives.
But strong financial prudence is necessary so that it develops as a fully-funded scheme, rather than a pay-as-you-go one, which may not be sustainable in the long term.
This fund is also “ring-fenced” to protect it from other budgetary competition. While half of the amount will be spent over the first 10 years, this is estimated to average only S$500 million each year, or 10 per cent of Singapore’s annual health expenditure.
As this is a once-off budget for a dwindling population over the next 20 to 30 years, it should certainly be sustainable, provided that the social protection fund is itself protected from the pressures of greater consumption.
It is expected that future generations of younger Singaporeans will continue to grow the nest-eggs of savings and endowments built up by the pioneers. Thus, in the social compact between generations, the principle of “shared responsibility” should prevail for inter-generational equity.
More comprehensive and targeted programmes must be implemented to identify the truly needy and to provide social protection beyond just the age criterion.
Means-testing may help, although it imposes administrative and other costs, but it is necessary to design public subsidy programmes with built-in incentives or disincentives so as to prevent wasteful spending.
Towards universal health coverage, but what else?
It appears that the Budget is well-formulated to contribute towards universal health coverage for the entire population. There are subsidies and incentives to use outpatient services, plus Medisave top-ups to pay for hospital expenses and premiums for compulsory health insurance.
For the pioneer generation, the Pioneer Generation Package recognises their right to universal coverage for basic health services. It is expected that MediShield Life will be a valued social insurance programme, providing peace of mind by underwriting lifelong coverage for catastrophic illness.
However, like any kind of financing, the money to be made available can only buy more healthcare, but not necessarily better health.
It is intended that the current 3M healthcare financing system, based on a combination of Medisave (compulsory savings), MediShield (catastrophic illness insurance) and Medifund (subsidy for the indigent), will be strengthened further by the measures.
But we should also not neglect the rest of the healthcare system, where the other health needs of the population should be addressed.
What other innovative funding or incentives should be provided to further develop health promotion, disease prevention and cost-effective, community-based and long-term social care as substitutes and alternatives, rather than more institutional medical care for the population?
How to share the growing healthcare cake?
Another concern is whether the doubling of the health budget will lead to a race to offer the best and the latest medical care for our elderly population, even when it is not needed.
Will the generous package be used effectively to promote better health for senior citizens and not only more expensive medical care? Will more money for medical insurance generate even greater demand that could be induced by the supply side? All these issues will obviously depend on how the allocated budget will eventually be spent. Right now, it is very encouraging to be given an enlarged budgetary pie that balances economic growth with social spending.
The test of the cake will not only be in its eating. There will always be requests for more ingredients such as icing on the cake — and why not, if they are affordable and healthy? We must ensure that we will continue to grow and share the healthcare cake together in a fair and responsible manner, enjoying not only the short-term benefits but also watching out for the effects of inequitable or unnecessary consumption on our collective health. — Today
* Dr Phua Kai Hong is a health economist who teaches health and social policy at the Lee Kuan Yew School of Public Policy, National University of Singapore. He has consulted for numerous governments and international organisations, including the World Bank and the World Health Organisation.
** This is the personal opinion of the writer or publication and does not necessarily represent the views of The Malay Mail Online.
