HEALTHCARE REFORMS IN SINGAPORE

Copyright © 2013 Insights Health Associates Not to be reproduced or transmitted without permission

Jeremy Lim MBBS, MPH, MRCS (Edin), MMed (Surg), FAMS Principal Consultant, Insights Health Associates www.insightshealthassociates.com 25 Oct 2013

“Myth or Magic” is a wonderful account of how Singapore’s health system has evolved, and provides important insights about where the future is likely to take it. There are valuable lessons in the evolving Singapore story for all of us. Alfred Sommer, MD, MHS. Dean Emeritus, Johns Hopkins Bloomberg School of Public Health, Professor of Ophthalmology, Epidemiology, & International Health, The Wilmer Eye Institute, The Johns Hopkins School of Medicine

OVERVIEW

• Re-visiting the Fundamentals

• Singapore Healthcare Reform

– User Fees or Co-Payments

– Health Insurance

– Health Technology Assessment

• What Next for Singapore Healthcare?

• Conclusion

Re-visiting the Fundamentals

FUNCTIONS AND OBJECTIVES OF HEALTH SYSTEMS

Health System Functions Health System Objectives

Stewardship (Oversight)

Financing (collecting, pooling, purchasing)

Creating Resources (Investment and training)

Delivering Services (Provision)

Health

Fair (financial) Contribution

Responsiveness (to peoples non-medical expectations)

From Siddiqi 2008

7

8

GDP per capita and Health Spending Globally

From Kaiser Family Foundation

Healthcare Spending over time

From Kaiser Family Foundation

Williams, A. (1987), "Health economics: the cheerful face of a dismal science", in Williams, A., Health and Economics, London: Macmillan

MYTH OR MAGIC?

SINGAPORE HEALTHCARE SYSTEM

A Fair and Just Society: What Stays, What Changes?

• Target subsidies at those who need them the most • Paradox of active government support for self-

reliance • Catalyze and support community initiative • Fair and inclusive society beyond wage or income

terms, or in terms of redistribution

“In Singapore, we have tried to think about these issues (policy choices) systematically and consistently, explicitly considering the economic principles and logic involved. The costs and benefits of a particular course of action, the incentives and disincentives created by a policy measure, the consequences of government action or inaction, the externalities that need to be considered- these are all key inputs into government decision-making.”

Prime Minister Lee Hsien Loong,

Foreward to Economics in Public Policies The Singapore Story, 2009

“In Singapore, we have no illusions as to where Health stands as regards its priority for public funds. In my view, Health would rank at most fifth in order of priority/ My order of priorities for public funds would be as follows: 1. Security and Defence 2. Creation of job opportunities 3. Housing 4. Education 5. Health”

Mr. Yong Nyuk Lin, Minister for Health (Nov 1967)

At most 5th…

Opium or Heroin…

Subsidies on consumption are wrong and ruinous ... for however wealthy a nation, it cannot carry health, unemployment and pension benefits without massive taxation and overloading the system, reducing the incentives to work and to save and care for one’s family – when all can look to the state for welfare.

Social and health benefits are like opium or heroin. People get addicted and the withdrawal of welfare benefits is very painful.

Lee Kuan Yew, 1981

COST-CONTAINMENT: WHITE PAPER ON AFFORDABLE HEALTHCARE 1993

I. User Fees/ Co-Payments… and the need for Means Testing

We owe it to ourselves individually to keep fit and healthy. The healthcare system needs to be structured to strengthen this sense of personal responsibility. It must give the individual maximum incentive to stay healthy, save for his medical expenses and avoid using more medical services than he absolutely needs.

“Thou shall co-pay…”

MK Lim, 1998

Pauly MV. The Economics of Moral Hazard: Comment. The American Economic Review, Vol. 58, No. 3, Part 1 (Jun., 1968), pp. 531-537

Co-payments in Health Screening

• “Patients are charged for screening under the ISP as the health of an individual is a shared responsibility. We have also targeted government subsidies at those who need help most.

• To make screening even more affordable and accessible, the Community Health Assist Scheme (CHAS) has been enhanced to increase the coverage of subsidies for screening tests under the ISP. From 1 January 2014, the recommended tests will be fully subsidised by the government for CHAS patients at accredited GP clinics. They will also enjoy subsidies for GP consultation charges of up to $18.50 per visit, for their screening and subsequent follow-up consultations, up to two times a year.”

Gan Kim Yong, 21 Oct 2013

II. Health Insurance

Why Health Insurance

• Protect financial assets in the event of illness

• Improve access to care • Protect health

Nyman JA. The value of health insurance: the access motive. J Health Econ 1999;18:141-52

Health Insurance

III. Health Technology Assessment

Today 22 May 2013

“There is no such thing as a free lunch. The choice isn’t between rationing and not rationing. It’s between rationing well and rationing badly.”

D Leonhardt. Health Care Rationing Rhetoric Overlooks Reality. New York Times

June 17, 2009

36

More Expensive,

Less Effective

More

Expensive,

More Effective

Less Expensive,

Less Effective

Less Expensive,

More Effective

COST-EFFECTIVENESS MATRIX

Effectiveness

Co

st

Is it good

enough?

Is it worth the

extra cost?

What is HTA? • Multidisciplinary activity that systematically examines the safety,

clinical efficacy and effectiveness, cost, cost-effectiveness, organizational implications, social consequences, legal and ethical considerations of the application of a health technology – usually a drug, medical device or clinical/surgical procedure. – Clinical effectiveness – how do the health outcomes of the technology

compare with available treatment alternatives?

– Cost-effectiveness – are these improvements in health outcomes commensurate with the additional costs of the technology?

• ‘A bridge’ between evidence and policy-making to provide health policy-makers with accessible, useable and evidence-based information to guide their decisions about the appropriate use of technology and the efficient allocation of resources.

IV. What Next for Singapore Healthcare?

In May 2011, Singapore’s ruling party, the People’s Action Party saw an unprecedented vote swing, leading Prime Minister Lee HL to apologize to Singaporeans and pledge to do better.

“The opposition tapped a vein of resentment towards the PAP. Despite its success in making Singapore a rich, clean, law-abiding and pleasant city, the PAP has alienated many voters.

A common perception is that it has lost touch with the concerns of the less well-off—about rising prices, especially of housing, and about the rapid

influx of immigrants, notably from China. Of the population of just over 5m about a quarter are immigrants.” ~The Economist, 8 May 2011

COMPARATIVE SPENDING

Public Spending as

% GDP

National

Healthcare

Expenditure as %

GDP

Government

Spending on

Healthcare as % of

Total Healthcare

Spending

Australia 27 9 68

Finland 40 9 75

Singapore 13 4 36

Sweden 33 10 81

United Kingdom 46 10 84

United States of America 27 18 53

High-income OECD

Countries (Aggregated)

30 13 65

Data source: World Bank (2010 statistics)

深渊何所惧，英雄敢渡津 “The deep pool is nothing to be afraid of, Heroes dare to cross.”

Conclusion • Singapore has done well in transitioning in one generation

from a Third World health system to a First World one • However, the ‘old model’ is showing signs of strain

– Excessive ‘Individual responsibility’, use of market mechanisms etc. may be less impactful in an era of aging and chronic diseases

• Singapore transforms from a position of financial strength – Need to transform healthcare delivery – Need to transform healthcare financing to support desired delivery

model

• Continuing tension between ‘individual responsibility’, ‘system financial sustainability’ AND ‘peace of mind’, ‘political necessity’

• Central role for economists to partner health policy makers and clinicians to contribute to the reforms

DISCUSSION