Health Financing in Singapore - Example

Health Financing in Singapore Introduction Health plays a fundamental role in influencing economic progress of the society. For this reason, governments in both developed and developing economies have allocated substantial amount of resources from the national budgets to the healthcare sector. Among factors that hinder uptake of health care services and products are costs, poor accessibility, unavailability and provision of unacceptable health care services due to cultural factors (Marquis et al., 2006). As a solution to minimizing costs, enhancing affordability, preventing financial risks due to catastrophic illnesses or subsequent disabilities and financing expensive medical treatments , health insurance and pooling of risks have been implemented (Saver et al., 2003). Globally, healthcare services have been made accessible to people through state-associated insurance systems and private insurance systems as noted by Rosett, (1973). Across the globe, national governments have formulated and implemented government- initiated health insurance programs to facilitate healthcare for all (Feldman, et al., 1998). In Singapore, this has been in form of the 3M Framework as indicated by Joshi & Lim, (2010). This report seeks to evaluate the question, ‘does the 3M framework hinder the procurement of private health insurance in Singapore?’ The 3M Framework in Singapore Singapore is among the few Asian countries that have the unique distinction of offering its population with health care services and outcomes that are of high quality and at the same time low cost (Joshi & Lim, 2010). Health insurance in Singapore has played a significant role in helping majority of Singaporeans to finance substantial medical expenses due to catastrophic disease (Lim, 2005). According to Joshi & Lim, (2010), the financing system of healthcare in Singapore is characterized by three healthcare financing programs which include Medisave which was established in 1984, Medifund founded in 1993 and Medishield established in 1990. The main aim of this 3M Framework in financing health care in Singapore is to alleviate moral hazard and foster a feeling of mutual financial responsibility among the Singapore citizens and the state as supported by Manning, (1996). Other than the heavy state subsidies, there is the Medisave program which is meant to ascertain that every Singaporean who works is able to set aside a small portion of their monthly earning into their own medical savings, which can help them finance their medical bills, buy health insurance policies and in funding treatment of expensive treatments such as Chronic conditions as indicated by MoH, (2012). Savings under the Medisave programs can be drawn out to cover health expenses of the account holder’s immediate family members (Joshi & Lim, 2010). On the other hand, the Medishield program is an affordable catastrophic medical insurance plan based on co-payments and deductibles, which promotes personal responsibility of Singaporeans to healthcare (MoH, 2012). This is achieved by permitting Singaporeans to sufficiently risk pool the monetary risks linked with catastrophic illnesses. In the recent past, the state in Singapore has permitted the private insurance sector to provide extra coverage that extends beyond the primary Medishield, under a scheme referred to as the Medisave approved private integrated plan (Joshi & Lim, 2010). Does the 3M Framework hinder procurement of private health insurance in Singapore? The 3M Framework has been crucial in ensuring that the government effectively and efficiently provides healthcare services that are not only quality and accessible but also, acceptable and available to all Singaporeans fairly. In this report, private health insurance referred to in relation to Singapore is any health insurance that extends beyond Medishield. In regards to the research question, 3M framework does not hinder procurement of private health insurance in Singapore. What have lacked are sustainable initiatives and programs that sensitize and educate people in Singapore on the need for alternative forms of health care financing (Joshi & Lim, 2010). According to the Ministry of Health in Singapore, the 3M framework has helped improve the effective and efficient provision and delivery of healthcare services, which have influenced the generation of positive healthcare outcomes. This has seen the national healthcare expenditure drop to lows of less than 5% of the total Gross Domestic Product of Singapore, which is significantly low compared to other developed nations (MoH, 2012). Be it as it may, the rise in the rates to accessing health care and the information and knowledge about medical services and devices, coupled with the growth in economic affluence and the increase in consumer expectations have made patients more aware of their rights and they are expecting and demanding for better, cost effective and quality healthcare as supported by Joshi & Lim, (2010). According to findings from a country wide research known as the Customer Satisfaction Index of Singapore in 2007, majority of Singaporeans consider healthcare industry the lowest in the degree of satisfaction in all the sectors as highlighted by (ace, 2012). The survey outcomes can be perceived as a pointer for the desire for improved services in healthcare that are generally not available in public healthcare settings. The delivery of such healthcare services would necessitate extra finances, which can only be made available by insurance plans that extend beyond the Medishiled health insurance schemes (Joshi & Lim, 2010). Based on empirical studies done on the uptake of private health insurance in Singapore, it is evident that many Singaporeans are still reluctant to procure it. The reluctance to procure private health insurance has been closely linked with the attitudes of the majority of the people that the 3M framework is effective and sufficient to meet the healthcare needs of Singaporeans as evidenced by study carried out by Lim & Joshi, (2008). According to Joshi & Lim, (2010), Singaporeans with lower household income and lower level of education are in minimal likelihood to procure health insurance owing to their belief that healthcare in Singapore is affordable. The author further note that people who do not buy insurance particularly private insurance policies are not merely driven by their income as supported by Chernew, et al., (1997). Instead, their other motivation for failing to buy health insurance is their perception that state-initiated healthcare programs and coverage, which is the 3M framework, are adequate in meeting all their healthcare needs and expectations as echoed by Bundorf & Pauly, (2006). In Singapore, the demand for private health insurance particularly among those in lower household income brackets owing to physician induced demand (Hay & Leahy, 1982). From the empirical evidence, 3M framework has been crucial to facilitating quality healthcare to all Singaporeans and for the low numbers in the uptake of private health insurance, the stakeholders need to develop and implement strategies, policies and initiatives that persuade all Singaporeans to supplement their health accounts savings in Medishield (Joshi & Lim, 2010). In addition, the public need to be enlightened on the varied benefits of procuring both state funded and private health insurance (Flore, 2008). The benefits of private health insurance The benefits of private health insurance are; the increase of choice and options for consumers and low health insurance costs due to innovation caused by competition among industry players (OECD, 2004). Moreover, the ability to enable the demands of the high income households to be self –funded, which allow for the state to focus the inadequate public resources in provision of health care services to those within the low income households and the vulnerable groups in the society, who do not have access and cannot afford private insurance as indicated by Mossialos et al., (2002). The need for alternative forms of health care financing It is important for the government and the relevant stakeholders in the health sector in Singapore to realize the need to persuade people to buy health insurance over and beyond what is supplied by the 3M framework in order to enhance innovation and competition, which are crucial in affording Singaporeans quality, convenient and low cost healthcare services as argued by (Sørensen & Grytten, 1999). More often than not relying mainly on state- funded health care systems is not sufficient as majority of Singaporeans perceive it to be. This is because, state- funded health care systems have the potential to harm the medical progress in the long term and stifle innovation in various ways such as having profit caps, having tight budget ceilings that restrict the amount of resources the state allocates to the healthcare sector and direct price restrictions on new treatments (Feldman, 1994). Moreover, there are punitive measures for clinicians who surpass the specified level of expenditure, and replacement of one healthcare product or service for another due to dynamics of costs (Gauld, 2004). Even though the 3M framework applied in Singapore does not directly hinder the procurement of private health insurance as argued in this report, it is critical for the populations in Singapore to fully understand the benefits and limitations of over relying on Medishield and embrace the need to procure alternative form of health care financing (Lim, 2005). Singapore is currently grappling with the issue of aging population (Joshi & Lim, 2010). The author notes that the older generation constitutes a significant proportion of the population and as it stands presently, their uptake of private health insurance is relatively low. This can be associated with the fact that they are considered uninsurable owing to the large amount of premiums that private health insurance policies require and the lack of coverage due to their pre-existing illnesses as described by Joshi & Lim, (2010). If this group which forms a large portion of the population are not able to access private health insurance as a result of the aforementioned reasons, it would be safe to argue that the 3M framework does not necessarily prevent procurement of private health insurance but instead, it accesses and affords people with healthcare services, people who would otherwise be unable to access healthcare services if the 3M framework was nonexistent. Summary The report sought to analyze the question ‘Does the 3M Framework hinder procurement of private health insurance in Singapore?’ Based on the findings of the report based on findings from various empirical studies carried out on the procurement of private health insurance in Singapore, the 3M framework, which is the central health care financing system in Singapore DOES NOT hinder procurement of private health insurance. Singapore is among the few Asian countries that have been able to effectively and efficiently deliver quality, accessible, available and affordable health care services to its people. The government of Singapore has been able to accomplish this by developing and implementing the 3M framework which constitutes of three health financing programs. Other than the heavy state subsidies, there is the Medisave program which is meant to ascertain that every Singaporean who works is able to set aside a small portion of their monthly earning into their own medical savings, which can help them finance their medical bills, buy health insurance policies and in funding treatment of expensive treatments. The Medishield program is an affordable catastrophic medical insurance plan based on co-payments and deductibles, which promotes personal responsibility of Singaporeans to healthcare. The uptake of private health insurance in Singapore has been low not as a result of the implementation and uptake of the 3M framework but as a result of the level of income, the age factor and the perceptions of Singaporeans both the insured and the uninsured that the healthcare in the country is effective, affordable and the 3M framework is adequate in meeting all the healthcare needs. To facilitate uptake of private health insurance, the Singaporeans need to be educated and sensitized on the benefits of supplementing their current health care financing system which is 3M framework and the benefits of private health insurance. Among the benefits of supplementing the 3M framework offered to all Singaporeans with private health insurance schemes includes; the increase of choice and options for consumers, low health insurance costs due to innovation caused by competition among industry players and the ability to enable the demands of the high income households to be self –funded, which allow for the state to focus the inadequate public resources in provision of health care services to those within the low income households and the vulnerable groups in the society, who do not have access and cannot afford private insurance. In conclusion, the successful implementation of the 3M framework has not hindered the procurement of private health insurance as a form of health care financing in Singapore. What the 3M framework has done is accelerate accessibility and affordability of healthcare services across the age brackets, the income brackets and along cultural brackets. Primarily, the 3M framework accesses and affords people with healthcare services, people who would otherwise be unable to access healthcare services if the 3M framework was nonexistent. References Ace, 2012, Spirit of Enterprise. Acton community for entrepreneurship, Accessed on 29th August 2012 frrom http://www.ace.sg/site/Page.aspx?id=306AB8C4-49E0-4BA1-868E-42C64EA46ED5 MoH, 2012, Costs and Financing. Ministry of Health, Singapore. Accessed on 29th August 2012 frrom http://www.moh.gov.sg/content/moh_web/home/costs_and_financing.html Mossialos, E., Dixon, A., Figueras, J., & Kutzin, J, 2002, Funding health care: options for Europe. 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