Some practical ways to rein in rising healthcare costs, premiums

The key is to discourage patients from gunning for needlessly expensive treatment options.

- Claire Huang

Healthcare costs continue to rise, and Singaporeans are bound to be concerned when they see their hospital bills and medical insurance premiums go up year after year.

Some reasons for this are structural and there's little we can do about them. We are now merely a year away from super ageing status, as the proportion of the population aged 65 and above is estimated to hit 21 per cent in 2026. By 2030, one in four will be aged 65 and above.

The Singapore Actuarial Society has cautioned that hospital admissions could rise against such a backdrop, with longer stays and more medical attention required, which would mean higher costs and, in turn, higher medical insurance premiums.

But there are other reasons for the rising costs — including over-consumption of healthcare services, some hospitalisations that can be avoided and inefficiencies that can be addressed. It is possible to keep a lid on healthcare costs if we can tackle these issues sensibly.

HOW WE GOT HERE

Singapore's healthcare financing model, which comprises subsidies and the three Ms, has worked well so far.

Medisave is a mandatory national healthcare savings account, MediShield Life is the basic health insurance scheme, and MediFund is an endowment fund that helps needy Singapore citizens who cannot pay their medical bills.

The trio, together with government subsidies, are meant to keep medical bills affordable for everyone.

Geriatrician Carol Tan of The Good Life Medical Centre, who is familiar with healthcare financing, said that governments in developed economies typically spend about 10 per cent to 12 per cent of their gross domestic product (GDP) on healthcare. The US spends about 17 per cent of its GDP, but the results are suboptimal.

In comparison, Singapore spends under 5 per cent of its GDP on healthcare and achieves widely regarded good outcomes, she added.