The Good Life Co-operation held a conference last Friday, bringing together all the relevant stakeholders of healthcare today. Among those present were many qualified medical practitioners, insurers, and members of the Ministry of Health (MOH). This conference highlighted the issue of rising healthcare costs in Singapore, and sought to find ways to keeping costs affordable.
In 2012, $4.7 billion was spent on healthcare. Fast-forward to 2016, our spending on healthcare is budgeted at $11 billion. Singapore’s medical spending growth rate is five times more than our general inflation rate. This is a worrying statistic as we question the sustainability of this increasing rate.
|General Inflation Rate||4%||2.6%|
|Medical Inflation Rate||10%||15%|
Reasons For The High Medical Inflation Rate
#1 Inefficiency of medical procedures and services
Inefficiency refers to the inappropriate and ineffective use of medicines and healthcare services. The potential range of efficiency savings from Human Resources, Medicines, Hospitals etc. can reach 20% – 40% of Total Health Spending.
Inefficiency also exists in the medical sector due to the many administrative procedures for each patient.
#2 Administrative costs
About 20% of total healthcare expenditures are attributed to administrative functions. Increasing our efficiency and administrative systems is one way to reduce this cost.
Platforms such as Tencent and Ali Health (under Alibaba Group) in China have entered the healthcare services provision industry. They aim to increase the efficiency of in-between processes. For example, Tencent provides doctor appointment systems and payment services for users.
#3 Advancements in medicine and technology
Medical innovations open new (though often expensive) treatment options. It also allows early diagnosis, and reduces medical errors. The medical costs of new medicine and improved technology have added to the overall rise in healthcare expenditure.
#4 Ageing Population
An ageing population means higher medical costs. It represents a shrinking labour force for the government, resulting in less tax revenue to finance Singapore’s healthcare.
How Does This Fare For Singaporeans
Singapore’s healthcare system has been relatively outstanding, being accredited with the Most Efficient Health Care 2014. However, the high medical inflation rate does not bode well for Singaporeans. As our expenditure on healthcare continues to increase, our rates for illnesses such as diabetes and cancer continue to rise as well.
The Singapore healthcare provision model is multi-layered. We are provided with subsidies before we have to reach into our Medisave followed by MediShield Life, and lastly Medifund to pay for our healthcare costs.
Medisave can primarily be used for hospitalization bills for yourself or your dependents. It can also be used for specific screenings, procedures such as chemotherapy and treatment for some diseases. Medisave can also be used to purchase medical insurance.
MediShield Life is a basic health insurance plan administered by the CPF, which helps to pay for larger hospital and healthcare bills. It offers better protection and payouts so that patients pay less Medisave or cash for large hospital bills.
If Medisave and MediShield Life are still insufficient, MediFund will then provide the protection of last resort.
Read Also: No Medisave Minimum Sum From 1 Jan 2016
The importance of medical insurance should be highlighted especially as medical inflation is on the rise. It is always better to have yourself protected and covered as illnesses can come unexpectedly.
However, even with these tiers of support provided by the government, Singapore’s out-of-pocket expense for healthcare is astounding, at more than 50%. Our healthcare system is highly income dependent and Singaporeans shoulder most of the financial burden themselves when it comes to healthcare costs.
As the medical costs continue to rise, lower and middle-income groups will find it increasingly difficult to afford good healthcare.
The financial burden on both the individual and family will be immense. There is a need for respective stakeholders in the public and private sectors to come together to contain the rising medical costs, while providing the same standard of quality healthcare for Singaporeans.
“DollarsAndSense.sg is a website that aims to provide interesting, bite-sized financial articles which are relevant to the average Singaporean. Subscribe to our free e-newsletter to receive exclusive content not available on our website. Follow us as well on Instagram @DNSsingapore to get your daily dose of finance knowledge through photos.”
Top Image Credit: DollarsAndSense.sg
The post Singapore’s Medical Inflation Rate Is At 15%: Why That Spells Disaster For Us appeared first on DollarsAndSense.sg.