SDP healthcare plan: Scrap Medisave and increase govt spending

Singapore Democrats
17 March 2012

Do away with the ‘3M’ system (Medisave, Medifund and Medishield) and pay all our healthcare expenditure through a single pool of funds in which the Government contributes 84 percent.

This is proposal of The SDP National Healthcare Plan launched today. Associate Professor Paul Ananth Tambyah presented the SDP’s case, calling for a complete overhaul of the current system.

Together with him on the SDP’s Healthcare Advisory Panel are Drs Ang Yong Guan, Patrick Kee, Neo Eak Chan, Leong Yan Hoi, Tan Lip Hong, Tong Beng Chye, Wong Wee Nam and Ms Eveline How.

Under the SDP’s Plan, Medisave will be scrapped and the money returned to one’s CPF Ordinary Account. Singaporeans who are employed and earning $1,500 or more will contribute $600 per year into the National Health Investment Fund (NHIF). This will be deducted from their CPF savings.

Those earning between $800 and $1,500 will pay $300 per year. Individuals who earn less than $800, are unemployed or on social welfare will not be required to contribute.

Upon payment into the NHIF, each user will be issued a Healthcare Benefits Smart Card which will entitle the holder to pay only 10 percent of the total hospital bill and capped at $2,000. So if one’s hospital bill is $5,000, he/she need only pay $500. If the bill is $30,000, the patient pays $2,000.

And if one visits the GP at a family clinic to get treatment for coughs and colds, the Government pays $10 of the bill and the patient foots the remainder. This will ensure that while the government subsidises the bill, everyone will co-pay the bill to prevent abuse.

Those who do not contribute to the NHIF (unemployed or welfare recipents) will receive full subsidy if they fall ill and need to see the GP or have to be hospitalised. In other words, they will not have to make payment.

The Healthcare Card also stores medical information, utilisation history and payment records which is easy for hospitals, clinics and patients to use, and therefore reduces administrative costs.

All public hospitals will have only one-class system comprising of 2-bed wards instead of the present Classes A, B1, B2 and C. Such an arrangement ensures that those who need urgent treatment get it first, regardless of one’s ability to pay.

For example, patients who need to undergo surgery will have their waiting times based on clinical indications and not on the basis of ward class.

It is more equitable than the present system which gives priority to those in the higher-class wards.

Healthcare is a human need, the Panel said, not a commodity where the rich can buy immediate and better treatment, and the poor have to wait months on end to receive medical care.

Financing for the SDP Plan

Total healthcare spending in Singapore in 2010 was about $12 billion. This is made up of the Government’s portion, payments from the 3Ms, out-of-pocket payments and payouts by insurance companies. We project this to increase to about $14.7 billion by the time our Healthcare Plan is implemented.

Of this amount, the NHIF will shoulder up to $11.8 billion. The Government will contribute $10.5 billion to this Fund and the remaining $1.3 billion will come from our CPF deductions as described above. Co-payment (out-of-pocket payments when one visits the GP, for example) will add up to $0.6 billion. The remaining amount will be due to private spending (paying for treatment at private hospitals, for example).

The present Government budget is $4 billion. The SDP Plan proposes that the Government increases this amount to $10.5 billion. The difference of $6.5 billion is more than made up by:

  1. Reducing defence spending  Collection: $5.75 billion
  2. Introducing luxury tax  Collection: $1.85 billion
  3. Introducing property taxon foreign property buyers  Collection: $0.2 billion
  4. Increasing corporate tax 1.0 Collection: $1 billion
  5. Abolishing GST for healthcare 0.35 Collection: $0.35 billion
  6. Collecting from Tote Board 1.5 Collection: $1.5 billion

         Total $10.65 billion

We have striven to make this a caring and financially sound healthcare plan. We want to make it an even better plan by consulting the public and inviting you to give us your views and suggestions. We will include them where appropriate and incorporate them into the publication.

You can contribute your views by posting on the comments section below, email us at [email protected] or go to our Public Consultation page on our Facebook. You can read the 13-page Executive Summary of the report here or the full 87-page report here. We look forward to hearing from you.

  1. Well planned and explained.Our goverment should seriously consider all the above points.These plan really for the people by the people.They only apply for singaporean.If our goverment can implement such scheme which can benefit our people,then this is a 1st world country.At least for the start, we can hope to see “swiss standard of living” if not better.Having said that,it looks likely our present goverment will not agree to it.Just wait for their thousand and one reasons.
    If our goverment is willing to listern, this is a good opportunity.