Singapore Budget 2018 addresses healthcare needs but costs remain a challenge

THE challenge of funding Singapore's escalating healthcare needs is among the key planks of the Budget this year, and it has come none too soon.

Given the ageing demographic and the secular trend towards smaller nuclear families - which suggests a weakening of the traditional extended family support for the aged - it is not inconceivable that in the near future, even with the risk-pooling mechanism provided by insurance, the extent of healthcare subsidies may have to rise, particularly as more of the elderly suffer chronic disabilities.

As Finance Minister Heng Swee Keat has pointed out, the number of elderly here is set to increase by about 450,000 to 900,000 by 2030. The average subsidy received by an elderly person is six times that of a younger person. Over the past few years, Singapore's spending on healthcare has more than doubled from S$3.9 billion to around S$10.2 billion in FY2018. Healthcare expenditure currently comprises 2.2 per cent of GDP, and this is set to rise to almost 3 per cent over the next decade.

This, however, does not even approach the level of spending among developed countries. As at 2014 based on World Bank numbers, world healthcare expenditure as a proportion of GDP was 9.9 per cent, and among OECD members, 12.3 per cent.

Still, the plan to build six more general and community hospitals, four new polyclinics and more nursing homes and eldercare centres will go a long way to enhance the healthcare infrastructure, alleviate bottlenecks and make care even more accessible. Mr Heng's Budget speech indicates broad and deep thinking, extending to even the soft services that are as essential as the nuts and bolts of healthcare delivery. These include the intention to expand the community network for seniors, for instance, and more funding for volunteer welfare organisations that provide long-term care services.

Medical inflation, however, remains one of the most intractable challenges, even as great strides in detection and treatment have raised life expectancy. AON found in its 2017 survey of global medical trend rates that Singapore's rate of healthcare inflation, net of its annual general inflation rate, was 8.7 per cent in 2017 compared to the global average rate of 5.4 per cent. In 2016, Singapore's rate was even higher at 13.3 per cent. In this respect, the recommendation of the Health Insurance Task Force in 2016 to publish medical fee guidelines or benchmarks is pivotal if the various parties - government, insurers, healthcare providers and consumers - are to take meaningful steps to rein in costs. Fee guidelines, which are expected to be published this year, will significantly raise price transparency and help patients make more informed choices.

To be sure, Singapore's framework for healthcare financing, comprising subsidies, Medisave, MediShield and the Integrated Shield plans and Medifund, works - and works well. Ageing, however, places an ever-greater burden on many fronts including health infrastructure, insurance premiums, caregiving professionals and private finances. Insurance, for instance, is not a panacea as unrestrained costs and claims threaten its sustainability. Hence, even as the government takes steps to further enhance healthcare, consumers should also take responsibility to keep themselves healthy and avoid over-consumption of healthcare services. Ultimately all parties must play their part to keep healthcare accessible and affordable.

For more Budget 2018 stories visit bt.sg/budget18