Healthcare Financing Philosophy
Singapore offers universal healthcare coverage to our citizens, with a financing system anchored on the twin philosophies of individual responsibility and affordable healthcare for all. Through a mixed financing system, use of market-based mechanisms to promote competition and transparency and the adoption of technology to improve the delivery of healthcare services, we have secured good healthcare outcomes for our population. We have done so with a national healthcare expenditure of about 4% of our GDP, which is low among developed countries (although this is expected to grow with an ageing population).
These features of the Singapore system have been recognised in various international assessments. We intend to continually evolve and improve our policies over time.
Universal coverage, multiple layers of protection
We have evolved a mixed financing system, with multiple tiers of protection to ensure that no Singaporean is denied access to basic healthcare because of affordability issues.
The first tier of protection is provided by heavy Government subsidies of up to 80% of the total bill in acute public hospital wards, which all Singaporeans can access. The second tier of protection is provided by Medisave, a compulsory individual medical savings account scheme which allows practically all Singaporeans to pay for their share of medical treatment without financial difficulty. Working Singaporeans and their employers contribute a part of the monthly wages into the account to save up for their future medical needs and this is portable across jobs and after retirement. As at 31 Dec 2010, the average Medisave balance is S$16,9001. This is sufficient to pay for about 9 to 10 subsidised acute hospitalisation episodes. Click here for more information on bill sizes for patients in public hospitals)
The third level of protection is provided by MediShield, a low cost catastrophic medical insurance scheme. This allows Singaporeans to effectively risk-pool the financial risks of major illnesses. Individual responsibility for one’s healthcare needs is promoted through the features of deductibles and co-payment in MediShield. ElderShield, a severe disability insurance, is also available for subscription by Singaporeans to risk-pool against the financial risks of suffering a severe disability. Many middle and higher income Singaporeans have also supplemented their basic coverage with integrated private insurance policies (“Integrated Shield plans”) for treatment in the private sector. Singaporeans must subscribe to the basic MediShield product before they can purchase the add-on private Integrated Shield Plans. This industry structure preserves the national risk pool and guards against ‘cherry picking’ of healthy lives by private insurers. Similarly, “ElderShield Supplements” allow policyholders to enhance the disability benefits coverage offered by the basic ElderShield product.
Finally, Medifund is a medical endowment fund set up by the Government to act as the ultimate safety net for needy Singaporean patients who cannot afford to pay their medical bills despite heavy subsidies, Medisave and MediShield.
Organisation of service delivery
Singapore today has a mixed delivery model. The public sector dominates the acute care sector, delivering 80% of the care in this sector. The primary care sector is dominated by private sector providers, which account for about 80% of the market. In the step-down care sector (e.g. nursing homes, community hospitals and hospices), service provision is mainly provided by voluntary welfare organisations, most of which are funded by the Government for their services rendered to patients.
(Click here for more info)
Promoting competition and transparency
In 2004, the Ministry of Health began to publish hospital bill sizes to show the variation in costs among our hospitals, with a view to push our hospitals on this effort to “do more with less”. There have been some successes since then in spurring improvements, e.g. LASIK prices dropped by more than S$1,000 per eye and the competitive price wars continue to this day, at great benefit to consumers. The Ministry has also progressively published health outcomes on the website to encourage further improvements and help patients make more informed choices.
1 Includes all CPF members (Singaporeans and PRs) with positive balances in their Medisave Account as at 31 December of the year.
