Singapore spends a third of what the US does on health care (as a percentage of GDP) yet has better health indicators. The US spends nearly 17% of its gross domestic product on health care, while Singapore spends about 4% of its own GDP on health care. According to the World Health Organization, Singapore has one of the best health care systems. The country’s 4 million people are required to save a portion of each paycheck, which then goes into an interest-bearing savings account used to pay future medical bills.In the above video, World Focus special correspondent Daljit Dahliwal and producers Mary Lockhart and Ara Ayer report from Singapore’s hospitals.

In the video below, Khaw Boon Wan, the Minister for Health of the Republic of Singapore, explains the fundamentals of Singapore’s world-renowned health care system and compares it with health care in the U.S. and Britain.

Here are some more details on how Singapore’s system works:

* There are mandatory health savings accounts: “Individuals pre-save for medical expenses through mandatory deductions from their paychecks and employer contributions. Only approved categories of medical treatment can be paid for by deducting one’s Medisave account, for oneself, grandparents, parents, spouse or children: consultations with private practitioners for minor ailments must be paid from out-of-pocket cash.”

* “The private health care system competes with the public health care, which helps contain prices in both directions. Private medical insurance is also available.”

* Private health care providers are required to publish price lists to encourage comparison shopping.

* The government pays for “basic health care services… subject to tight expenditure control.” Bottom line: The government pays 80% of “basic public health care services.”

* Government plays a big role with contagious disease, and adds some paternalism on top: “Preventing diseases such as HIV/AIDS, malaria, and tobacco-related illnesses by ensuring good health conditions takes a high priority.”

* The government provides optional low-cost catastrophic health insurance, plus a safety net “subject to stringent means-testing.”

* Almost all care is subject to significant co-pays.

From Watson Wyatt:

Overview of the Singapore health system

The Singapore health system is based on a combination of government subsidies (through taxation) and individual responsibility. In order to assist individuals in meeting their component of personal medical expenses, the Government has established the ‘3M’ framework of Medisave, Medishield and Medifund that combine individual responsibility and is overlaid with government funding, particularly to provide a safety net to support the health needs of low income earners and poorer individuals.

Public financing of healthcare

Taxation subsidies
The Government subsidises healthcare through taxation revenue, providing funds for public hospitals and health promotion. As discussed earlier, this amounts to approximately one third of Singapore’s total annual health expenditure.

Medifund
Medifund is an endowment fund set up by the Singapore Government to assist those in financial hardship in funding their medical needs. The scheme is intended as a safety net for those who cannot afford the subsidised charges for hospital or specialist out-patient treatment, after allowing for any Medisave or Medishield funds. Qualification for Medifund provision is means tested, based on an individual’s financial circumstances at the time of application.
Private financing of health care

Medisave
Medisave is a compulsory medical savings scheme with funds available to meet a portion of future personal or immediate family’s hospitalisation, day surgery and certain outpatient expenses.

Medisave is a subset of the mandatory Government pension scheme (the Central Provident Fund or CPF) to which a total of 33 per cent of wages is contributed (comprising 13 per cent employer contributions and 20 per cent employee contributions) to individual accounts to fund retirement and health related expenditure. Of the 33 per cent contribution, around 6 per cent to 8 per cent (depending on age) is credited to the employee’s Medisave account. In practice, Medisave covers approximately 85 per cent of Singapore’s population.

Medishield
Medishield is effectively a national insurance scheme for catastrophic illness that is intended to cover a significant component of medical expenses from major or prolonged illnesses that are not covered by Medisave. Medishield operates under a scheduled reimbursement system based on days of hospitalisation and type of surgical treatment, offset by individuals sharing costs by way of co-payments and deductibles.

The Government has, in recent years, allowed the private insurance market to offer similar Medishield-type policies so individuals now have a choice of choosing between Medishield or a private alternative. Premiums for Medishield (or private insurance alternatives) can be paid from an individual’s Medisave account.

Eldershield
The Government has also recently introduced Eldershield, an extension to the ‘3M’ system. Eldershield is a private insurance scheme designed to help fund future medical expenses incurred in the event of severe disability, particularly at advanced ages.

Private health insurance
In addition to individuals self-financing through Medisave, Medishield and Eldershield, a significant portion of workers (and their dependents) are covered by private health insurance. Private health insurance, which is often funded by employers on behalf of employees, covers a diverse range of medical expenses that are not typically reimbursed under the 3M system.

Direct payments
Invariably, individuals will still need to pay for part of their medical expenses directly, even after receiving reimbursements from Medisave, Medishield or private health insurance. These amounts generally relate to deductibles, co-payments (under Medisave or Medishield) or for over the counter prescription drugs not covered by private health insurance.

What can be learned from the Singapore health care system?
The key to Singapore’s efficient health care system is in its emphasis on the individual to make a significant contribution towards their own healthcare costs. With this focus, the Government has been able to maintain a relatively low level of public expenditure on health for many years with the major burden put on individuals and/or their employers.

The use of compulsory savings (that is, the Medisave account) has been very successful as the main source of private funding for hospital expenses.

Another key focus of the Government has been to ensure that overall health expenditure does not fall victim to the significant inflationary pressures that have been evident throughout the world. This has been achieved by actively regulating the supply and prices of healthcare services in the country.

Although the Singapore health system has been very successful, it is a very difficult system to replicate in many other countries for several reasons:

* Singapore has developed its system concurrently with the development of the country over a number of years under the backdrop of political stability enabling successive governments to introduce consistent measures relating to individual responsibility, compulsory savings and regulatory control of healthcare services and costs

* with a relatively small population of four million people within a concentrated land mass of 660 square kilometres, the planning of a healthcare infrastructure has been somewhat easier than would be the case for larger countries.

Nonetheless, the Singapore health system is one that is certainly worth studying by those countries who continue to be challenged by common healthcare issues such as:

* rising healthcare costs due to advances in medical technology and knowledge

* rising expectations and demands from consumers

* a rapidly aging population which will pose greater demand on health resources in future.

Return to Main