Compulsory Savings and the Singapore Health System

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Compulsory Savings and the Singapore Health System

  1. 1. Why Ireland Needs to Study the Singapore Health System A Case Study in Health Care Expenditure:
  2. 2. Outline <ul><li>Introduction – Health Care Financing </li></ul><ul><li>Comparison of Ireland and Singapore </li></ul><ul><li>The Singapore Health System </li></ul><ul><li>The Central Provident Fund </li></ul><ul><li>Health Care Financing – The 3Ms </li></ul><ul><li>The Public/Private Mix </li></ul><ul><li>A Worked Example </li></ul><ul><li>Survey of Singapore Opinion </li></ul><ul><li>Can it work in Ireland? </li></ul>
  3. 3. 1. Introduction <ul><li>Targets of Health Systems: </li></ul><ul><li>To improve health of the population. </li></ul><ul><li>To be responsive to the legitimate demands of the population. </li></ul><ul><li>To protect people from serious financial losses because of illness. </li></ul>
  4. 4. Major Issues Associated with Healthcare Financing Methods <ul><li>EQUITY Who pays? Who benefits? </li></ul><ul><ul><li>Distribution </li></ul></ul><ul><ul><li>Access (esp. financial barriers) </li></ul></ul><ul><li>EFFICIENCY Productivity & Output </li></ul><ul><ul><li>Allocation </li></ul></ul><ul><ul><li>Production </li></ul></ul><ul><li>EFFECTIVENESS Actual Outcomes </li></ul><ul><ul><li>Quality of care </li></ul></ul><ul><ul><li>Actual impact on health status of population </li></ul></ul><ul><li>SUSTAINABILITY Economic Viability </li></ul><ul><ul><li>Aging population </li></ul></ul>
  5. 5. Methods of Health Care Financing <ul><li>Direct payment by individuals (out-of-pocket) </li></ul><ul><li>Employment-related benefits </li></ul><ul><li>Government financing (general taxes) </li></ul><ul><li>Insurance </li></ul><ul><ul><li>Private health insurance </li></ul></ul><ul><ul><li>Social insurance </li></ul></ul><ul><li>Medical Savings Accounts </li></ul>
  6. 6. Six Models of Health Care <ul><li>National Health Services Model (United Kingdom) </li></ul><ul><li>National Health Insurance Model (Canada) </li></ul><ul><li>Social Insurance Model (Germany) </li></ul><ul><li>Social Insurance with Voluntary Private Insurance (Australia) </li></ul><ul><li>Voluntary Health Insurance (USA) </li></ul><ul><li>Medisave with Catastrophic Insurance (Singapore) </li></ul>
  7. 8. 2. General Comparison Ireland Singapore Gained independence 1922 1965 Population 4,422,100 4,657,000 Size 70280 km 2 710 km 2 Population density 60/km 2 6,814/km 2 GDP $191.9 Billion $241.1 Billion GDP per capita $46,200 $51,600 Human development index 0.962 0.918
  8. 9. Economic Indicators Ireland (2008) Singapore (2008) GDP growth -2.3% +1.2% Unemployment 8.1% +2.3% Inflation +4.1% +4.3% Trade Current account/GDP -4.5% +11.2% Exports $128 Billion $235.8 Billion Imports $91.3 Billion $219.5 Billion Public Finances Debt/GDP 31.5% 10.5% Revenue $62.0 Billion $28.6 Billion Expenditure $73.1 Billion $27.5 Billion
  9. 10. Labour Force and Population Ireland Singapore Labour force 2,200,000 2,960,000 Agriculture 6% 0% Industry 27% 23% Services 67% 77% Median age 35 39 0-14 years 20.9% 14.4% 15-64 years 67.1% 76.7% 65+ years 12.0% 8.9% Fertility rate 1.85 1.09 Birth rate (per 1,000) 14.3 9.0 Death rate (per 1,000) 7.8 4.5
  10. 11. Health Personnel Ireland (2006) Singapore (2003) Nursing and midwifery personnel 81,901 19,090 Nursing and midwifery personnel per 1,000 19.50 4.50 Number of physicians  12,394 6,380 Physicians density per 1,000 2.90 1.50 Number of dentistry personnel 2,414 1,190 Dentistry personnel density per 1,000  0.6 0.3 Number of pharmacy personnel 3,565 1,280 Pharmacy personnel density per 1,000 0.9 0.3
  11. 12. Health Indicators Ireland Singapore Life expectancy 78.2 82.0 Male 75.6 79.4 Female 81.1 84.9 Infant mortality/1000 live births 5.14 2.31 Mortality between 15 and 65 per 1,000 m/f 88/56  83/50 Health care expenditure per capita $3,125  $1,140 HCE as % of GDP 8.2 % 3.5% HCE as % of government expenditure 27.0% 7.0%
  12. 13. Comparative Health Expenditure in Singapore and Other Systems U.S. Germany Canada Australia U.K. Singapore Year
  13. 14. Health Systems Performance WHO Rankings, 2000 Ranking Country HCE/GDP (2005) HCE/Capita (2005) Public:Private 1 France 11.2% 10 th $4,056 8 th 80:20 2 Italy 8.9% 27 th $2,845 20 th 77:23 3 San Marino 7.3% 62 nd $3,591 15 th 84:16 4 Andorra 6.3% 84 th $2,815 21 st 70:30 5 Malta 8.4% 36 th $1,295 32 nd 78:22 6 Singapore 3.5% 173 rd $944 35 th 34:66 7 Spain 8.2% 40 th $2,263 26 th 72:82 8 Oman 2.5%% 184 th $325 73 rd 84:16 9 Austria 10.2% 15 th $3,864 12 th 77:23 10 Japan 8.2% 39 th $2,690 24 th 82:18
  14. 15. Ranking Country HCE/GDP (2005) HCE/Capita (2005) Public:Private 11 Norway 9.1% 26 th $6,267 4 th 84:16 12 Portugal 10.2% 16 th $1,830 27 th 72:28 13 Monaco 4.6% 141 st $6,343 3 rd 74:26 14 Greece 10.1% 17 th $2,733 23 rd 42:58 15 Iceland 9.4% 23 rd $4,962 6 th 83:17 16 Luxembourg 7.7% 54 th $6,610 2 nd 91:9 17 Netherlands 9.2% 24 th $3,784 13 th 62:38 18 United Kingdom 8.2% 41 st $3,065 17 th 88:12 19 Ireland 8.2% 38 th $3,888 10 th 78:22 20 Switzerland 11.4% 9 th $5,878 5 th 60:40 37 United States 15.2% 2 nd $6,714 1 st 46:54
  15. 16. Public/Government Sector Not-for-Profit/Voluntary Sector Private/Commercial Sector 3. The Singapore Health System Primary Care Health Centres/ Polyclinics Secondary Care General Hospitals/ Outpatient Clinics Tertiary Care Specialist Hospitals/ National Centres Public Health Services Legislation, Regulation and Enforcement/ Health Promotion/ Preventative Services Private Hospitals/Groups Private Practitioners Ministry of Health Department of Health
  16. 17. Strategies and Policies <ul><li>Creation of incentives for responsible behavior and efficient delivery of services. </li></ul><ul><li>Promotion of personal responsibility coupled by government targeted subsidies. </li></ul><ul><li>Discouragement of over-consumption through cost- sharing (differentiated pricing/co-payments). </li></ul><ul><li>Regulation of hospital beds, doctors and use of high- cost medical technology. </li></ul><ul><li>Competition by creating a mix of public and private sector providers and foreign participation. </li></ul>
  17. 18. Instill personal and family responsibility (Cost-sharing) + Ensure future sustainability with ageing and avoid inter-generational problems (Savings) + Achieve risk-pooling and social protection (Insurance) + Target subsidies and equitable distribution (Taxation) Healthcare Financing Strategies
  18. 19. Funding Mechanism <ul><ul><li>Ministry of Health subsidies. </li></ul></ul><ul><ul><li>Co-payment as a driver for patient-driven cost management. </li></ul></ul><ul><ul><li>Funding via the 3Ms and the 3Es </li></ul></ul><ul><ul><ul><li>Medisave (1984) Eldersave (2010) </li></ul></ul></ul><ul><ul><ul><li>Medishield (1990) Eldershield (2002) </li></ul></ul></ul><ul><ul><ul><li>Medifund (1992) Elderfund (2000) </li></ul></ul></ul><ul><ul><ul><li>“ The financing philosophy of Singapore’s health care system is based on shared responsibility, coupled with government subsidies to keep basic health care affordable.” </li></ul></ul></ul>
  19. 20. <ul><li>Medisave : compulsory savings scheme to help individuals save and pay for their health care expenses. </li></ul><ul><li>Medishield : catastrophic insurance scheme to help meet the cost of large medical bills. </li></ul><ul><li>Medifund : health endowment fund which provides a safety net for the poor and needy. </li></ul>Introducing the 3 Ms
  20. 21. Individuals Health Care Providers Health Care Services Government Medisave Insurer Medifund Medishield Tax Direct payment and co-payment Contribution through CPF Premium Injection Payment Public expenditure Payment Payment Claims Payment Premium
  21. 22. Sources of Healthcare Financing in Singapore Medisave 8% Medishield 2% Private Insurance 5% Out of pocket 25% Government subsidies 25% Employer Benefits 35%
  22. 23. 4. The Central Provident Fund Employers Employees Medisave Accounts Central Provident Fund Ordinary Accounts Special Accounts Medical Expenses, Health Insurance Premiums Retirement Savings Housing, Insurance, Third-Level Education, Approved Investments
  23. 24. CPF Contributions <ul><li>Contribution rates start at 0% for wages of S$500 per month and rise gradually to the full contribution rates for wages of S$1500 per month. </li></ul><ul><li>Maximum contribution for the private sector is calculated based on a salary ceiling of S$4,500 per month for both the employer and the employee. </li></ul><ul><li>Contributions are first allocated to the Medisave Account, followed by the Special Account. The balance is then allocated to the Ordinary Account. </li></ul>Employee Age Contribution by employer - % of wage Contribution by employee - % of wage Total Contribution - % of wage Ordinary Account Special Account Medisave Account Below 35 14.5 20 34.5 23 5 6.5 35 – 44 14.5 20 34.5 21 6 7.5 45 – 49 14.5 20 34.5 19 7 8.5 50 – 54 10.5 18 28.5 13 7 8.5 55 – 59 7.5 12.5 20 11.5 0 8.5 60 – 64 5 7.5 12.5 3.5 0 9 Above 65 5 5 10 1 0 9
  24. 25. 5. Healthcare Financing - The 3 Ms <ul><li>Medisave </li></ul><ul><ul><li>Compulsory savings </li></ul></ul><ul><li>Medishield </li></ul><ul><ul><li>Voluntary insurance </li></ul></ul><ul><li>Medifund </li></ul><ul><ul><li>Social safety net </li></ul></ul>
  25. 26. The First M - Medisave <ul><li>Medisave was introduced in 1984 as an extension of the Central Provident Fund (CPF). </li></ul><ul><li>Medisave represents 6–8% of wages (depending on age) allocated from the individual’s CPF account in anticipation of hospitalization and acute-care medical expenditures in later life. </li></ul><ul><li>There is an element of risk pooling among family members, as it can be used to pay for the hospitalization bills of one’s spouse, children, siblings or parents. </li></ul>
  26. 27. Medisave Contribution Limits <ul><li>One needs to contribute to Medisave Account up to the prevailing Medisave Contribution Ceiling (currently S$30,500; adjusted annually). </li></ul><ul><li>Any Medisave contribution in excess of the prevailing ceiling will be transferred to the Ordinary Account. </li></ul><ul><li>At retirement if a member has more than the Medisave Minimum Sum (S$25,500), he/she can withdraw the excess amount. </li></ul><ul><li>Any unspent balance in Medisave is passed on to the account holder’s beneficiaries upon his or her death. </li></ul>
  27. 28. Medisave Balances
  28. 29. Medisave Balances
  29. 30. Advantages of MSAs (according to advocates) <ul><li>Avoids inter-generational transfers due to population ageing. </li></ul><ul><li>Contributes to further growth and sustainability – represents investment instead of consumption. </li></ul><ul><li>Promotes personal accountability and family responsibility and individual choice. </li></ul><ul><li>Has built-in demand-side incentives to contain costs. </li></ul><ul><li>Mobilises additional extra-budgetary resources. </li></ul><ul><li>Enhances portability and employment mobility. </li></ul><ul><li>Supports appropriate pricing of fees and cost-recovery. </li></ul><ul><li>Allows for back-up insurance and enhanced protection. </li></ul><ul><li>Facilitates competition and choice in the public-private mix. </li></ul>
  30. 31. Disadvantages of MSAs <ul><li>Little or no risk pooling. </li></ul><ul><li>Persons with catastrophic illness will exhaust their account quickly. </li></ul><ul><li>Low income persons will have very little in their account. </li></ul><ul><li>May not be “equitable”. </li></ul><ul><li>Potential high administration costs in collection, record keeping, and disbursement. </li></ul>
  31. 32. The Second M – Medishield <ul><li>Premiums paid using Medisave funds. </li></ul><ul><li>Features to induce care with healthcare spending (deductibles, co-insurance, annual/lifetime limits). </li></ul><ul><li>60 % of population covered. </li></ul><ul><li>78 % in lowest plan (A), 22 % in two higher plans. </li></ul>
  32. 33. Medishield <ul><li>Deductible: </li></ul><ul><ul><li>Patient pays the first $1,500 / $1,000 from Medisave funds and/or cash. </li></ul></ul><ul><ul><li>Medishield coverage begins after the deductible. </li></ul></ul><ul><li>Co-Insurance: </li></ul><ul><ul><li>Medishield pays majority of claim (now up to 80%). </li></ul></ul><ul><ul><li>Patient pays small co-insurance amount (c.10%). </li></ul></ul>
  33. 34. The Third M - Medifund <ul><li>An endowment fund set up in 1993 with a fund size of $1.6 billion in 2008 </li></ul><ul><li>Interest income used to help needy Singaporeans pay for their medical expenses </li></ul><ul><li>Safety net for Singaporeans who cannot afford medical expenses, even after government subsidies, Medisave and Medishield </li></ul><ul><li>Ensures no Singaporean is denied access to basic medical care because of inability to pay </li></ul>
  34. 35. Medifund Payouts
  35. 36. 6. The Public/Private Mix <ul><li>For both primary and secondary care the public/ private mix in Singapore is 80/20. </li></ul><ul><li>Eight public hospitals and five speciality centres account for 80% of inpatient beds. </li></ul><ul><li>13 private hospitals account for the remaining 20%. </li></ul><ul><li>80% of primary healthcare is provided by private general practitioners. </li></ul><ul><li>Public outpatient polyclinics provide the other 20%. </li></ul>
  36. 37. Public Hospital Subsidies
  37. 38. Wards
  38. 39. Patient Bills <ul><li>72% of patients in public hospitals stay in Class B2 / C wards. </li></ul>Ward Subsidy Median S$ 70 th Percentile 90 th Percentile C 80% 580 950 2,270 B2 65% 740 1,180 2,710 B1 35% 1,870 3,170 6,910 A 0% 2,390 3,870 7,820
  39. 40. 7. A Worked Example <ul><li>A patient has gallstones and requires surgery to have them removed. </li></ul><ul><li>Step One: How much is in the Medisave Account? </li></ul><ul><li>Step Two: How much can be claimed from the account for the procedure? </li></ul><ul><li>Step Three: How much does the procedure cost? </li></ul><ul><li>Step Four: The patient’s decision </li></ul>
  40. 41. 8. Survey of Singapore Opinion <ul><li>The Singapore Ministry of Health commissioned a survey to determine public perceptions on healthcare in Singapore. </li></ul><ul><li>SingHealth Health Services Research Network undertook the survey design, questionnaire preparation and testing; approximately one-third of the questions were repeated from the 2003 Feedback Unit survey to assess changing public perceptions. </li></ul><ul><li>The survey was carried out by nurses from the SingHealth Silver Connections from 4-23 Aug 2006. </li></ul>
  41. 42. Strongly Agree Agree Neutral Disagree Strongly Disagree I should be personally responsible for my own health. 15.7 78.4 3.7 2.2 - It is my personal responsibility to build my own savings to help pay for my healthcare expenses. 4.2 68.6 15.1 11.1 1.0 It is my personal responsibility to buy medical insurance to help me pay for high medical bills. 3.6 54.3 26.2 15.2 0.7 The government should fix the price of medicines in Singapore. 14.4 52.1 21.2 11.4 0.9 Medisave should be used mainly for the person whose account it is 1.4 24.6 9.4 51.1 13.5 Medisave should be used at the discretion of the account holder 15.8 66.0 8.7 9.2 0.3 I am familiar with the way the healthcare system in Singapore works. 1.6 43.6 31.8 22.1 0.9 Healthcare in Singapore is generally affordable. 1.3 43.8 25.6 26.6 2.7 Singapore has a good healthcare system. 4.8 72.1 15.4 7.5 0.2
  42. 43. Is it successful? <ul><li>Are healthcare policies in Singapore successful? </li></ul><ul><ul><li>Yes </li></ul></ul><ul><ul><ul><li>High quality of healthcare services </li></ul></ul></ul><ul><ul><ul><li>Increased life expectancy </li></ul></ul></ul><ul><ul><ul><li>Low infant mortality </li></ul></ul></ul><ul><ul><ul><li>Uses less than 4% of GDP </li></ul></ul></ul><ul><ul><ul><li>People are more aware of the need to be responsible for their own healthcare </li></ul></ul></ul><ul><ul><ul><li>Community help / services for the needy </li></ul></ul></ul><ul><ul><li>No </li></ul></ul><ul><ul><ul><li>Old people without Medisave / insurance not able to afford healthcare services </li></ul></ul></ul><ul><ul><ul><li>Healthcare costs are continuing to rise </li></ul></ul></ul><ul><ul><ul><li>Still very much dependent on government subsidies </li></ul></ul></ul>
  43. 44. 9. What’s Needed? <ul><li>Implementing medical savings requires certain pre-requisites: </li></ul><ul><li>Willingness and ability to save </li></ul><ul><li>High labour force participation in formal employment </li></ul><ul><ul><li>Structural unemployment </li></ul></ul><ul><ul><li>Population aging </li></ul></ul><ul><li>Effective payroll collection with efficient fund management and claims processing </li></ul><ul><li>Well-developed information system with security and accounting controls </li></ul><ul><li>Public education for proper use of accounts </li></ul><ul><li>Prices! </li></ul><ul><li>Information on quality as well as prices </li></ul><ul><li>Is the positive experience of Singapore transferable to other economies? </li></ul>
  44. 45. Ireland and Singapore <ul><li>Similarities </li></ul><ul><ul><li>Small open economies </li></ul></ul><ul><ul><li>Ageing and relatively affluent populations </li></ul></ul><ul><ul><li>Predominant public sector health care provision </li></ul></ul><ul><ul><li>Prior dominant tax-based financing systems </li></ul></ul><ul><li>Differences </li></ul><ul><ul><li>Propensities to save and invest </li></ul></ul><ul><ul><li>Geography and population densities </li></ul></ul><ul><ul><li>Socialised model of social welfare in Ireland </li></ul></ul><ul><ul><li>Social and family support systems </li></ul></ul>

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