From the stand of the government, the policies to provide healthcare to society are i) to encourage consumption of healthcare so that the socially optimal level of consumption can be achieved. ii) Overcome the information failures linked to merit goods like healthcare and iii) on grounds of equity as the government believe that consumption should not be based solely on the grounds of ability to pay for such a service.
Overview of measures provided by the S’pore Govt
The healthcare service provided by the government is heavily subsidised for certain category of patients. The intention is an attempt to enable this group of individuals to consume healthcare when needed. Introduction of mean testing means the poor received more assistance while the higher income received none. Even for the most basic of healthcare, there is a co-payment structure to prevent overconsumption. In extreme cases where they are unable to pay, the government use Medifund to assist those with large hospitalisation bills. Individuals are also given a certain quantum to be deposited into their Medisave from budget surpluses. The quantum is according to household type and those with smaller homes are given more for their use for healthcare. Permanent residence receive lower subsidy.
Subsidy
The government provides subsidies at polyclinics and government hospitals for medical services, which are cost-effective, of proven value and essential. For the case of hospital care, each class ward has a different level of subsidy. The government also provide limited subsidy for certain treatment outsourced to the private sector (to limit the strain on its limited resources) as well as allow treatment to be closer to the patient.
The size of the total subsidy given is an approximate value of the external marginal benefits (difference between the SMB and PMB) for the various level of consumption of the healthcare. This will shift SS to cut DD at socially optimum output, thereby achieving allocative efficiency.
However, the extent of the subsidy to fully internalize the different external benefits from different types of treatment for various illnesses can be difficult to measure and if done, is limited in accuracy. Under-subsidization would prevent consumption from rising to the social optimal level while over subsidy might cause healthcare to be over consumed causing a large strain on existing resources. We hear of even shortage of beds in some hospitals. However, although the government cannot have perfect knowledge and is not likely to subsidize an amount that is exactly equal to MEB, the new consumption level is not likely to deviate that much from the socially optimal level as the Singapore government does not subsidise to the point of zero price.
Government provision
20% of regular care is provided by the government via polyclinics whilst 80% of hospital care is provided by the government.
Economic rationale for government provision is that as government-owned non-profit organizations, government polyclinics and government hospitals will not exploit their market power. This enhances allocative efficiency. Their cheaper prices will enable the low income to afford the service.
One problem is usually the lack of profit motive usually results in productive inefficiency. However, the government has been able to incentivize hospitals to operate in the most efficient way and to provide good quality health care. Nevertheless, as health care is not a public good, the argument for government to be involved in providing health care is weak. The government could actually share the provision of health care with the private sector but provide funding to increase provision and consumption to the optimal level.
Although healthcare consumption exhibit positive externality and private and public hospitals work for different goals, the private and public healthcare service should be seen as one ecosystem that could provide as much service as possible to attain the social optimal level. Currently, hospitals and polyclinics are overstretched (as patients have to wait six to eight weeks for specialist treatment) by patients who want subsidised healthcare service while private GPs and specialists complain of falling patients. The government subsidy need not only be for public health care providers. In Australia, the healthcare subsidy is portable for use with private health care providers too and some private and public hospitals even share the same building resulting in cost savings, benefitting lower income patients.
Public Education
It is important to build a healthy population through preventive health care programmes and promote a healthy lifestyle for the population through the Health Promotion Board to raise health awareness among the population. They run programs at schools, community centres and at hospitals for people of all ages and promote healthy living from a young age and regular screening to raise the benefits
of information in allowing the individual to take ownership and seek preventive healthcare before it is too late.
The Heath Promotion Board greatest challenge is to educate through such information provision and for them to succeed, require a change of mind-set and habits of lifestyle which are not easy. There is also the fear of knowing the truth of one’s own ill health. Nevertheless, the govt ought to continue with this measure as it addresses 1 of the root cause of the market failure which is ignorance.
Legislation/Regulation
The government also set legislation for all citizens to have various immunisation jabs, dental care to overcome issues of ignorance and equity at various age. With new discovery of vaccines, World Health Organisation also require more treatment to be provided beyond those for infants and also during regional epidemic, like for SARS where households are all given medical kits to stay healthy and government paid for all essential staff to be immunised and stock sufficient vaccines for the whole population.
Though there is heavy administrative cost in childhood immunization and dental care plus the cost for stock piling other drugs when not used putting a heavy strain on the government budget, there is no alternative. The speed for an epidemic to spread with people staying in close proximity is unimaginable. There will be disruption to work and the tourism sector. It is a small price to pay.
Doctors in Singapore are put through stringent checks and balances available to overcome the market failure of asymmetric information. To limit the opportunity for doctors to generate their own demand as patients lack medical knowledge on the degree of treatment that is sufficient. The Singapore Medical Council monitors the ethics of healthcare professionals. They include suspension and fines in cases of overcharging and negligence in their duties. There were several high profile cases recently. Fear of overcharging and seeking early treatment may cause some to undervalue preventive care and cause spill over effects later on others.
Conclusion
Singaporeans are concerned over the rising cost of healthcare service. The current policies are meant to ensure that consumption level is closer to the socially optimal level and with affordability. Among the policies, the use of subsidy to ensure a high level of affordability regulated with means testing should be the most appropriate and to be given greater funding in future with the rise in ageing population.
The role of the HPB will need to relook the way they communicate with a better educated population. Holding campaigns mainly in community centers might not be the most effective as some do not visit the venues. They should look at using IT to enlarge their base in communicating healthcare awareness to the younger generation. In the long run, the government policies in healthcare should consider a partnership with private healthcare providers.
The public and private sectors should be partners in healthcare provision. Public and private hospitals, each have their own strengths to complement the other. With rising
wealth and a need for choice, the partnership should be the ideal package in provision of healthcare.