Feature - Medical Inflation in Singapore
Rob Kellaghan of health insurance brokers Pacific Prime
Singapore investigates the reasons why health costs in Singapore are rising,
and examines the effect on expatriates.
In the latter part of 2012, a dialogue session hosted by the Organisation of Senior Volunteers (RSVP
Singapore) highlighted two of the most pressing concerns facing the elderly
today, namely rising medical costs and limited housing options. Although the
session was organized and attended by senior citizens, there is little doubt
that the issues raised are also of major concern to Singaporean society as a
whole. With regard to the area of medical inflation, these concerns are
entirely justified - in 2012 medical costs rose year-on-year by 5.5 percent,
while in 2011 the increase was 4.98 percent. This trend of increases shows no
sign of slowing down in the coming years.
Despite the government committing itself to increased
funding for healthcare, including a doubling of the health budget in 2012,
medical costs continue to rise in Singapore. Why? There are three primary
causes of medical inflation in Singapore: an ageing population coupled with
worsening health trends, the costs involved in researching and then adopting
new technologies and drugs, and the system currently being used to pay the
salaries of medical personnel such as doctors. Although Singapore has one of
the best healthcare systems in Asia, if not the world, these three factors have
been highlighted by many as requiring urgent attention if the government is to
effectively control spiralling medical costs.
Why are Health Costs Rising?
Let’s look more closely at these three issues. Singapore as
a society is both ageing rapidly and in declining health, with incidents of
disease and illness that are directly linked to worsening eating and lifestyle
habits on the increase. Chronic health conditions such as obesity, diabetes and
cardiovascular disease have quite quickly become major issues for the national
healthcare system, with diabetes in particular a big problem. An NUS (National
University Singapore) study on current and future health trends
predicts that by 2050 over one million Singaporeans will have diabetes. The
implications of such a large number of diabetic patients on healthcare funding,
expenditure and the health system itself is profound, and will further add to
the wider population being subject to increased treatment costs.
The emphasis the Ministry
of Health (MoH) places on developing cutting-edge technologies and
medicines is a major factor behind Singapore’s high standard of healthcare.
While attempts to make citizens safer and healthier are justifiably
commendable, the costs involved are also a major contributor to medical
inflation. One suggestion gaining traction among health professionals is that
the MoH could adopt better cost-effective analyses of medical technology and
drugs to see if they really are affordable for ordinary citizens. The reality
is that the high cost of new drugs and medicines only add to many people’s
already increasing out-of-pocket medical expenses.
Lastly, the “fee-for-service” payment structure for doctors
in Singapore has also been singled out as an area which is contributing to
rising medical costs. This system in its current form provides payment for
doctors based on the amount of tests, consultations, procedures and
prescriptions they issue each month. Without wanting to call the morals and
ethics of doctors into question, it is quite clear to see the system is open to
easy manipulation. The big question arising here is whether there is an
opportunity to reform the payment system to ensure medical costs for ordinary
citizens are kept at reasonable levels, without affecting the core pay and
morale of doctors.
What This Means for Expats
So what does all this mean for expats? The cost of a typical
outpatient consultation at the Singapore General Hospital has risen in recent
years to SG$105.93 for an appointment with a senior consultant. Repeat
consultations are then charged at SG$75.97 each. Accident and Emergency Services
are now a standard SG$99.00, while dental fees have also increased. MediSave
members will also have received notification earlier this year of increases to
their premiums, and while the withdrawal limit remains at SG$800 per annum (a
figure decried by many as far too low), a significant amount of medical
expenses may have to be covered out-of-pocket.
It is a situation that is similar in many respects to the
one faced by expats with private medical insurance. Many of these individuals,
particularly younger expats who are in good health, tend to opt out of
including an outpatient provision with their medical insurance plan and choose
to pay for minor treatments or consultations out of their own pocket. Such a
situation can quickly get complicated when a simple outpatient consultation
identifies a serious medical problem and additional medical treatment that may
be spread out over a number of appointments is required. Medical costs in these
instances can quickly increase, and the expatriate is once again obliged to
personally meet these costs with their own funds. Expats are encouraged to look
at comprehensive health insurance plans because even though a plan that
includes both inpatient and outpatient coverage may seem expensive at first, it
can offer first class coverage levels and protection against potentially high
medical costs.
Although some very public mutterings for the introduction of reforms that may help to control costs have been heard in recent months, the government has so far only agreed to explore ways it can potentially improve the efficiency of MediSave and MediFund. As no specific reforms or a timetable as to when they might be introduced have been given, it is anyone’s guess as to when (or if) they may be adopted. Until then, there appears to be little that can prevent medical costs and inflation from increasing further.
Pacific Prime Singapore Insurance Agency Pte Ltd
Tel: 6346 3781
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