Affordable Excellence: The Singapore Healthcare Story

Financing

Financing  CHAPTER 5 Financing  The Government of Singapore contributes billions of dollars to building and maintaining the country’s healthcare system and subsidizing a major portion of the cost of patient care, based on the individual’s ability to pay. As discussed earlier, the country does all this and achieves world-class outcomes while spending far less than most developed nations. One of the many factors that contribute to Singapore’s healthcare budgets remaining within reasonable bounds is that consumers of care are asked to pay their share for services. Private expenditure on healthcare amounts to over 65 percent of the total national expense of healthcare. At the same time that the government asks its people to share in the expense of their care, it has also developed tools and programs for them to do so. Medisave, the mandatory medical savings program, MediShield, the optout catastrophic health insurance scheme, and Medifund, the government endowment fund to aid the indigent, are critical vehicles for helping the people of Singapore with their healthcare expenses. In this chapter, I will examine the structure of funding mechanisms and subsidies that ensures the affordability of care and at the same time maintains the high-quality, state-of-the-art delivery system. Government Subsidies I spoke with Mr. Anthony Tan, then Director of the Healthcare Finance and Corporate Services of the Ministry of Health, and asked him about the government’s approach to subsidies. He told me that “the healthcare financing philosophy aims to provide universal healthcare coverage. We have heavy subsidies for basic services in all sectors, but the individual has a responsibility.” Affordable Excellence combined t83 83 3/21/2013 7:13:06 PM  Affordable Excellence The delicate balance between universal coverage and individual responsibility is constantly monitored and adjusted to meet changing conditions. This is done through adjustments to subsidy levels, eligibility of institutions, treatments covered, and more. Here is a rundown on the current status of the Singapore healthcare subsidy program. The government pays direct subsidies to public hospitals, polyclinics, and other healthcare providers to reimburse a portion of their costs for treating their patients. The funding structure is a hybrid system of block grants and Casemix, a method for classifying and describing the “output” of the provider. About 70 medical conditions are financed through Casemix. According to the Ministry of Health, hybrid block grants are allocated to public hospitals: part of their annual budget is given in the form of a block, with the remainder on a piece-rate basis for 70 common conditions based on Diagnosis-Related Groups (DRG). DRG is a system used to classify inpatient and day surgery cases into one of over 600 approximate groupings according to the patients’ diagnosis and treatment. Year-on-year data for all DRGs are collected, along with data on accident and emergency care and specialist outpatient clinic care. The hybrid block budgets are reviewed every three to five years based on the actual workload of the institutions. Hospitals are allowed to keep their surpluses, which they can generate, for example, from the subsidized wards by lowering their costs. In addition to the block budget, other funds are available for manpower development and research. These subsidies become available to the public in a number of ways: for acute and inpatient care in specific ward classes in the public hospitals; for outpatient care in public hospitals and at polyclinics; emergency care at all public hospitals (subsidized at a flat rate for all patients irrespective of their immigration status); intermediate- and long-term care at facilities managed by Voluntary Welfare Organizations (on a case-by-case basis); means-tested patients at private nursing homes (under the Ministry of Health’s portable subsidy program). In addition, care by private sector primary care physicians is also subsidized for Health Assist cardholders under the Community Health Assist Scheme (CHAS). Hospitals As presented earlier, there are five ward classes in restructured hospitals: C, B2, B2+, B1, and A. Class C wards are highly subsidized to 80 percent. The subsidy decreases gradually for the different wards (see Table 5.1), with Class A wards offering no subsidies to patients. Means testing determines eligibility and amount of subsidy for each patient. Affordable Excellence combined t84 84 3/21/2013 7:13:06 PM Financing  Table 5.1 Affordable Excellence combined t85 85 3/21/2013 7:13:06 PM  Affordable Excellence Means testing does not prevent patients from...