Tagged: Singapore

National Day Rally 2013: Bolder Moves To Reform Our Healthcare Financing Needed

At Sunday’s National Day Rally 2013, Prime Minister Lee Hsien Loong announced a slew of tweaks to existing healthcare policies to benefit some groups of Singaporeans – older Singaporeans, low-income families and those who attend outpatient treatments.

The main announcement was that Medishield will be “revamped” as Medishield Life, where the age ceiling of 90 years old will be removed. Also, Medishield will also become compulsory and provide coverage for everyone, including those with pre-existing illnesses.

For older Singaporeans, which the government had termed as the “pioneer generation”, PM Lee also introduced the Pioneer Generation Package, which he had said will pay for their healthcare bills, under Medishield Life.

For low-income families, PM Lee announced that the age floor of 40 years old for the Community Health Assist Scheme (CHAS) for low-income families will be removed, so that children from these families can also be subsidised for outpatient medical treatments. Subsidies for lower and middle-income patients to specialist outpatient clinics will also be increased.

Finally, PM Lee said that the government will explore expanding the use of Medisave for outpatient treatments.

These tweaks are small steps in the right direction towards ensuring the the poor and elderly in Singapore are better protected in Singapore. However, the tweaks are what they are – small tweaks. Small tweaks were made to Medishield to remove the age ceiling and incorporate Singaporeans who had previously been missed out. Tweaks were made to CHAS to remove the age floor to benefit everyone in low-income families. Medisave might also be reconfigured to allow for usage for outpatient treatments.

Medishield Premiums and Medisave Contributions Will Go Up

The major component of the announcement, however, was that Medishield premiums and Medisave contribution rates will go up as well, but it does not seem that the government would be footing the majority of the increases. Rather, the burden will still predominantly rest on Singaporeans to bear the weight of the increasing healthcare costs.

This is a concern because the Singapore government currently spends the lowest proportionate expenditure of GDP on healthcare, which at around 4%, is the lowest among the developed countries. Also, the government’s expenditure of between 32% to 39% of total health spending, is also the lowest among developed countries. For countries with similar GDP per capita, such as Norway and Japan, their governments spends around 80% on total health spending for their citizens.

At the same time, Singapore is the richest country in the world by GDP per capita. We also have the highest reserves per capita in the world, and GIC and the Temasek Holdings, which our reserves are invested in, are the 8th and 10th largest and richest sovereign wealth funds in the world. Altogether, our reserves would currently stand at, at least $800 billion.

Which is why there is a very strong argument that the government should step in to shoulder the burden of increasing healthcare costs, before passing on the buck to Singaporeans to do so. Already, the median wages of Singaporeans have remained stagnant for the past decade and for the lowest-income Singaporeans, they have seen their real wages dropped. Also, Singaporeans are paid the lowest wages among the developed countries and have the lowest purchasing power, but are yet, spending the highest out-of-pocket expenditure on their health spending.

Against the huge disparity in the government’s financial strength and the people’s weak relative financial position, it only makes sense that the government should take on a larger responsibility by increasing it’s healthcare expenditure, as a proportion of GDP to around 8% (to the average of other developed countries) and increase its proportionate expenditure of health spending to around 50%.

Medishield Coverage Is Dismal

Furthermore, if we look specifically at the Medishield, in 2011, Medishield covers only 2% of the total health spending. In 2011, the total Medishield claims was only $282 million. The Medishield Claim Limit for one year is $70,000, and assuming that claims were made in full, only about 4,000 people would have been able to benefit from Medishield. On the other hand, if all the 3,257,000 Singaporeans had made claims to Medishield in 2011, each Singaporean would have been able to receive only $86.58.

As such, even though the lifetime claim for Medishield is $300,000, would we ever be able to claim anything near that amount, considering the limitations of the Medishield, and small amounts that can be claimed? The Medishield had made up only 2% of health spending. The other “M”s, Medisave and Medifund, and government subsidies, altogether made up only 39% of total health spending in 2011. For the rest of the 61%, Singaporeans would need to purchase insurance or make out-of-pocket payments for their health spending. But with their dwindling incomes, would the poor and elderly be able to do so?

Additionally, for older Singaporeans and future generations of older Singaporeans who do not belong to the “pioneer generation”, would their health spending also be subsidised by the Pioneer Generation Package?

The Government Needs To Do More To Finance Healthcare Spending In Singapore

In this light, it is thus imperative that the government shoulders a larger responsibility in Singapore’s healthcare financing because it is in a stronger financial shape than Singaporeans to do so, and it also has more resources to do so. More importantly, the poor and the elderly are not able to receive adequate coverage under the current healthcare schemes, as the government’s financial assistance would only cover up to 40% of their health spending.

It is welcomed that the government will be widening the scope of existing initiatives to cater more for the poor and the elderly, but in order to provide more protection for them, the government should increase the interest for Medisave from 4% to at least 5% and increase the payout for Medishield and Medifund to cover a higher proportion of the health spending, at least for the poor and the elderly. Whereas the upper middle- and high-income families would have the financial ability to buy insurance to finance the rest of the 60% of their health spending, the poor and the elderly are most likely unable to do so. As such bolder government intervention towards enhancing their health protection is necessary.

In Sweden, the Swedes would pay an average tax rate of 32% (which provides coverage for social security as well) to receive fully-paid healthcare coverage from the government. In Singapore, the highest tax rate that Singaporeans pay is 20% while Singaporeans contribute another 20% into their CPF (or social security). However, the government would only pay for between 32% to 39% of their health spending. With similar tax and social security rates that is paid in other countries as in Singapore, is there room for the government to increase its financial coverage for the people to attain the level of universal healthcare that the other countries are able to achieve? This is a high possibility.

It might be time for the conversation to be opened where Singaporeans have access to the government’s method of computation on how they had derived the coverage for our Medisave, Medishield and Medifund. With the money that Singaporeans are putting in, what is a reasonable payout that they should be able to receive, while ensuring the sustainability and longevity of the healthcare financing system? Perhaps when Singaporeans are shown the sums and are encouraged to also come out with their own calculations, we would be able to come to a better agreement as to the amount of contributions and premiums that Singaporeans should be setting aside, and the interest rates and payouts that Singaporeans should be receiving.

Only with greater access to information will Singaporeans have greater trust and belief in the system, and be more assured that their monies are invested wisely, and for the protection of themselves and that of other Singaporeans.

Roy Ngerng, of The Heart Truths

I had written this article for the We The Citizens Of Singapore citizenry journalism website. The article was initially published at this link here



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41% of Singaporeans Feel Job Prospects for Next Generation Will Be Worse

I had written this article for the We The Citizens Of Singapore citizenry journalism website. The article was initially published at this link here

The Straits Times had reported on 3 August 2013, in the article titled, “6 in 10 Singaporeans feel they have good jobs: Survey“, that, “six in 10 people (say that) their jobs are good” (Chart 1).

photo 1

Chart 1

According to The Straits Times, the respondents to the survey “associate a good job with (1) pay and benefits, (2) work-life balance, (3) good bosses and colleagues, and (4) career advancement.”

The Straits Times’ survey was conducted by Degree Census Consultancy from 20 June to 2 July. I was unable to locate more information about the survey or its methodology on their website.

However, if we were to look deeper into the definition of a good job, in terms of the first descriptor on the pay and benefits, I had written previously that a Singaporean who is single would need to earn a starting pay of at least $2,000 every month in order to have a basic standard of living in Singapore. For a family of four, each parent would need to earn a starting pay of at least $3,500 every month in order to do so. According to the CPF Board, 64% of Singaporeans earn less than $3,500 in Singapore (Chart 2). Thus looking at the statistics, would 64% of Singaporeans not have a good job, if we look at it in terms of pay and benefits?


Chart 2

Next, if we were to look at the second description of a good job – work-life balance, Singaporeans actually works the longest hours in the developed world (Chart 3), according to the International Labour Organisation. Thus in terms of work-life balance, it might seem that Singaporeans do not have a good job as well.

Singapore works longest hours

Chart 3

Finally, if we were to look at the last description of a good job of career advancement, according to the Ministry of Manpower, for middle-income earners, their wages will stagnate after they reach 40 years of age and for low-income earners, their wages will actually drop (Chart 4). So, for the 64% of Singaporeans who are earning less than $3,500, this would mean that they do not have a good job, by this definition.

Incomes Of Low Income Earners Drop Over Lifetime

Chart 4

The Straits Times had reported on the respondents’ self-reported perceptions of the goodness of their job. However, the actual measured reality of the survey descriptors of a “good job” might paint a less favourable picture.

Even though The Straits Times had reported that 63% of Singapore residents think that they have a good job, the statistics show that by the same definition, 64% would actually not be having a good job and only 36% of Singaporeans can be considered as having a good job – it is the other way round.

Perhaps a more reflective result would be the next question that The Straits Times had reported. When asked about “job prospects of the next generation”, 40% had believed that prospects would be better or much better whereas 41% believed that they would be worse or much worse (Chart 5).

photo 2

Chart 5

This brings to mind another set of statistics that I had come across. As mentioned, according to the CPF Board, 37% of Singaporeans earn less than $2,000 every month, while 36% of Singaporeans earn more than $3,500 every month. If we put this into a chart, Chart 6 would be what you would get.

60% Of You Think You Have A Good Job Really

Chart 6

The breakdown in Chart 6 actually looks very similar to Chart 5. Could it be that the perception of the job prospects of the next generation is also weighed in by the current wages that Singaporeans are receiving as well? Are future job prospects a reflection of the wage sufficiency that an individual would require in order to have a basic standard of living in Singapore? If so, do 41% of the respondents believe that they would not be able to have a basic standard of living in Singapore, and thus believe that job prospects would be worse or much worse?

The Straits Times had reported that “there are as many pessimists as there are optimists among the 501 surveyed”.

Again, this brings to mind another survey that was recently conducted the Gallup. On 18 July, Gallup reported that Singapore was the 10th most pessimistic country in the world, among 141 countries. 24% of Singaporeans were pessimistic about the “about the direction of their lives” (Chart 7). In the survey reported by The Straits Times, 41% were pessimistic about job prospects of the next generation. It seems that the survey conducted by The Straits Times does lend credence to the Gallup survey that Singaporeans are pessimistic about their “future lives”.

Most Pessimistic Countries in 2012

Chart 7

This also comes after surveys conducted by the Gallup which had also ranked Singaporeans as the most unhappy (Chart 8) and the most emotionless (Chart 9) people in the world.

Lowest Positive Emotions Worldwide

Chart 8

Most Emotionless Societies

Chart 9

These surveys of Singaporeans’ disfranchisement with the state of Singapore are a reflection of the unease that they feel in their livelihoods and their ability to live a good life.

If we are to look deeper into the statistics, it is clear that income inequality is on the rise and the self-sufficiency of Singaporeans to live even a basic standard of living is being called into question.

As such, it would be wise for our policymakers to look at reforming key policy areas so as to bring Singapore back into parity. One of the key policy areas to reform would be to uplift the wages of lower-income groups, by implementing a minimum wage law, or to increase significantly the income transfers to the lower-income groups. Another policy area to look at would be to reduce the number of work hours to allow Singaporeans to achieve better work-life balance.

The recent surveys which has illustrated Singaporeans’ disfranchisement and their consistency is a reflection of Singaporeans’ distrust and lack of confidence in the current direction of Singapore’s policies. It would be wise if our policymakers were to take these survey results seriously and act accordingly to respond to Singaporeans’ needs.

Singapore is clearly at a turning point in our country’s history. The income inequality and the rich-poor wage gap has increased so drastically that it has reached saturation point. If the disparities are allowed to continue, there can be serious consequences to the stability of our society.

It would be pertinent for our policymakers to relook their planning fundamentals, to shift into adopting principles of equality, so that Singapore can introduce policies which can stabilise our society that the societal rifts are threatening to destabilise due to the tensions that the financial disparities are creating.

Roy Ngerng, author of The Heart Truths



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