Focus on Healthcare: Who pays and whose responsibility?

In his National Day Rally speech, Prime Minister Lee Hsien Loong announced several changes to the Healthcare system in Singapore, particularly the Medisave and the Medishield (Life) schemes.

Among these, he said that “the MediShield Life’s premiums will have to be higher… because it has to break even.”

“Medisave rates have to go up,” he also said. “It has to be. We will increase these contribution rates over time as and when our economic conditions permit. How, how much, we will have to discuss carefully.”

In September, the Straits Times reported the Prime Minister as having urged Singaporeans to “pay their share and shame those guilty of free-riding.”

“Focus on Healthcare” is a five-part series by The Online Citizen that provides a critical analysis of Singapore’s healthcare system, popularly known as the 3M system (MediShield, Medisave, Medifund). Through it, we hope to provide an understanding of how healthcare financing is currently being funded and used in Singapore, and explore the ways in which this can be further enhanced to cater for the needs of Singaporeans.

We begin this focus by going back to 1983, when Parliament debated the Medisave scheme which the Government was introducing as part of its National Health Plan initiative.

Medisave was eventually implemented in April 1984.

In August 1983, former Deputy Prime Minister, Toh Chin Chye, clashed with former Prime Minister, Goh Chok Tong, in Parliament over the Medisave scheme.

Dr Toh, who was the Minister of Health from 1975-1981, launched a scathing attack on the scheme.

We present excerpts of the exchange here to generate a wider discussion on Singapore’s Healthcare system, following the recent changes announced by PM Lee.

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Dr Toh Chin Chye:

“What we are faced with… is the problem of apportioning of responsibility and cost. The propaganda put out by the two Ministers for Health is that medicine is a commodity that is consumed… That is perverse propaganda. And, therefore, Medisave is now being treated as a consumption tax. This makes it difficult for one to support the arguments that have been put forward for Medisave…”

Mr Goh, who was then Minister of Defence and Second Minister for Health, responded:

“His primary thrust is: health is a social responsibility of any government. I do not see how we can disagree with that…But it does not mean that you discharge your social responsibility by dispensing free medicine or heavily subsidized medicine… I believe he has left his telescope behind when he moved out of the Health Ministry, or maybe we are talking at different wave lengths or at cross purposes. I say that we are taking a long-distance view of the problem, and I believe he is bogged down by today’s situation.”

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Excerpts of exchange between the two gentlemen.

Dr Toh Chin Chye (Rochore): 

I feel that Medisave is being treated in isolation. Medisave is, as I pointed out in the Budget debate, a part of the Government budget and our budgets have been in surplus every year. It is misleading of the Minister for Health to go around the country and create the impression that we are encountering problems like the United States which face running deficits because of expenditure on social security programmes and defence. In fact, the only social security programme we have in Singapore is health. It is wrong to forget that even now patients make direct payments for medical treatment and hospitalization. It is wrong to create the impression that we are distributing health care for free. Payments made by patients constituted 24% of the recurrent expenditure of the Ministry of Health in 1981.

The provision of health care facilities must be accepted as a social responsibility. It is not that an individual who has the misfortune to be inflicted with some particular disease is solely responsible for searching the facilities to cure his illness. This is a social responsibility which is accepted by governments all over the world. This is part and parcel of the organization of individuals into societies. It is a measure of the degree of civilization.

The problem which we are faced with is the cost of financing. Who is to pay? I believe it is wrong to say that the Government is paying for the cost of medical care. The costs of government are borne by taxpayers, us, either through direct taxation, like income tax, or indirect taxation. So the problem really is reduced to finding an equitable distribution of revenue in the Consolidated Fund to meet different objectives and purposes of the Government. 

What we are faced with, therefore, is the problem of apportioning of responsibility and cost. The propaganda put out by the two Ministers for Health is that medicine is a commodity that is consumed… That is perverse propaganda. And, therefore, Medisave is now being treated as a consumption tax. This makes it difficult for one to support the arguments that have been put forward for Medisave.

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I am concerned that in presenting Medisave, the Minister has given no consideration to fundamental points. First, in what direction can the Ministry of Health reduce costs? The Member for Ayer Rajah [Tan Cheng Bock] has very eloquently explained that demand is not generated by patients, and I believe him, particularly patients in ‘C’ class wards. It’s the doctors who create demand as he has explained. Can the Minister, a political appointee, control his doctors?

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I totally disagree with the approach of Medisave. However, as a former Minister for Health, I share with these two Ministers for Health their concern for preserving the existing standard of health care; preserving – I am not saying improving, the emphasis is “preserving”. 

I do not agree with the Minister for Health just now when he extrapolated or tried to extrapolate European and American cost of health care into the Singapore situation. I do not agree with him. I have read all the literature. Behind the statistics that he produced just now, there are many pressures, vested interests, interest of pharmaceutical departments, manufacturers of hospital equipment, which have pushed up health care costs in the West completely out of proportion to the rate of inflation. And I worry still that we will soon have an Audit department in the Ministry of Health that may well do nothing but spend its time trying to do an audit on the costs in our own hospitals. I would suggest to the Minister for Health that it will be profitable for him and his staff to study all these underlying causes in the West so that we avoid them in Singapore. 

Mr Goh Chok Tong:

His primary thrust is: health is a social responsibility of any government. I do not see how we can disagree with that. Health care must be the social responsibility not solely, but primarily, of any government. But it does not mean that you discharge your social responsibility by dispensing free medicine or heavily subsidized medicine… I believe he has left his telescope behind when he moved out of the Health Ministry, or maybe we are talking at different wave lengths or at cross purposes. I say that we are taking a long-distance view of the problem, and I believe he is bogged down by today’s situation. He examined the financial status of Singapore and argued that we have enough funds to pay for the entire budget for the Ministry of Health. He suggested that there are enough funds in payroll taxes to cover the entire deficit or even the entire health budget. I think we have got to take a longer view than merely looking at the present. 

I do not think we should fall for the juggler’s trick, trying to move funds from one area to another… Somebody then has got to sit down and decide on priorities. If you sit down to decide on priorities, you have first to ask a question: where do the funds come from? How is wealth created? We are all in this together. We have a collective responsibility to make sure that one area of interest to Singaporeans is not at the expense of other areas of interest.

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Why do we need to revamp the system now? It is because we can see ominous signs of what will happen if we do not do something now. Even now, there are long queues at our outpatient dispensaries. Never have we had so many polyclinics and clinics and so many doctors in our employ and yet the queues have not disappeared. 

The Member is also worried about medical costs being raised as a result of our allowing too many private hospitals to be built in Singapore. He also cautioned that it could be a drain on talent as our doctors leave for greener pastures in the private sector. The question is: Can we contain our doctors and confine them in the public hospitals?
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We have no intention of letting the private sector influence our cost. We are going to be cost-efficient and we are going to be as cost-effective as we can. And they will serve as a drag on what you are charged. The private sector will not serve as a norm for us to raise our fees. 

We are looking towards a more equitable cost-sharing of future increases in cost. So it will take us a long, long time before we can ever attain this 50% subsidy figure.

In my own estimate, I do not think we will reach this level within 10 years. There is no time target. We are not saying that we must reach this figure within 10 years or 12 years. It depends on future cost increases. So we should not worry too much about the immediate impact and, of course, if you are looking into the future there should be enough funds provided in the Singaporeans’ Medisave account to pay for their hospitalization expenses.