PM Lee Hsien Loong at the Universal Health Coverage Ministerial Meeting

Dr Margaret Chan, Director-General of the World Health Organisation
Minister Gan Kim Yong, Minister for Health
Distinguished Guests, ladies and gentlemen

Very happy to welcome you all to this ministerial meeting in Singapore. Your participation reflects the importance placed by all your governments on universal healthcare. I would also like to acknowledge the important work done by the World Health Organisation (WHO) to promote good health and to help us reach our shared goal.

Good Health as the Foundation of Human Well-Being

Enabling citizens to live full and healthy lives is one of the most important responsibilities of the government. Firstly, because good health is fundamental to the happiness, fulfilment and dignity of every human being. Secondly, because good health is a public good. If a few a people in the society get ill, it is not just them who are affected but it affects the well-being of the whole society. The disease may be infectious or at any rate, the loss to the society is to the community as a whole. The current Ebola outbreak in Africa and our experience with SARS a decade ago reminds us how disruptive and terrifying public health crises and epidemics can be. But even short of an epidemic and a crisis, if some parts of society are sick or prone to disease, it affects everybody. Thirdly, good health is a basis for the nation’s prosperity and success. Healthy children learn better. They have a much better chance to improve their lives. Healthy adults contribute to the workforce better and are more able to take care of their family and loved ones.

So good health is therefore an intrinsically important goal, but good health for the whole population is very challenging to achieve, because in healthcare the usual economic models do not work well. There is information asymmetry between healthcare providers, insurers, and patients. In other words a doctor knows more than the patients, the doctor knows more than the insurance company and the insurance company knows more than the government. Patients rely on medical professionals not just to advise them but also to act in their best interests. Because there is not this check and balance where each side knows what it is doing and how to guard its own interests, the idea of willing buyer, willing seller, good outcome does not work.

Secondly if we try to protect patients from medical costs or from excessive medical costs when they fall ill, we create a moral hazard. Whether it is a generous insurance plans, whether it is a state-funded healthcare system, once you protect people from the financial consequences of medical treatments, drugs, protocols, patients will seek more treatment than they need. And not just patients, doctors too will be incentivised to over-treat because they will feel, perhaps out of goodness of heart, that it is their duty to do the best for the patient or they may feel for a pecuniary emotive, well if I do more, I will be paid commensurately. That is not the only problem with market failure, even expanding the healthcare system’s capacity to meet future needs may find ourselves chasing our tails, stimulating supply-induced demand and increasing the need and demand for healthcare. Once equipment and facilities are available, they will be fully used. It is very hard to run a hospital with beds kept empty. It is very hard to have a MRI and to say this patient does not need a scan. Patients get used to higher standards of healthcare and faster responses even when these are not medically essential and later on if you come back to more normal standards, there is a reaction. So slack capacity is quickly taken up, and we end up having to build more hospitals, more clinics, provide more services, need more doctors, spend more money.

Healthcare is a place where we see many market failures therefore, we cannot take a purist approach to design health care systems based either based purely on laissez faire markets or on the other extreme on a non-price dirigiste command economy model. We need to use a variety of instruments: pricing, regulation, incentives, system design, public and private engagement efforts, exhortation as well as sometimes compulsion. And all to shape behaviour – by doctors, patients, administrators, drug suppliers – in order to produce a good collective outcome. We also have to deal with healthcare in a narrow sense but widen our perspective and deal with other areas that affect individuals’ health. For example, public health, or getting individuals to take personal responsibility for their health through their habits, lifestyles and exercise patterns. 

Therefore the governments have to have this broader perspective. Design a whole system so the different parts complement one another and make wise trade-offs between outcome and costs, in order to make individual and collective choices which we cannot avoid making. Nothing is for free, there is always a limit to resources, choices have to be made, trade-offs have to accepted. Once you have a system, you cannot rely on it to be self-adjusting. You have to constantly adapt and adjust the system to keep it in balance and functional because needs will change, because the participants will learn about the system and start to optimise their behaviour and game the system and result in pushing things out of kilter – doctors do it, patients do it, all the participants responding to their individual incentives inevitably cause the system to be non-self-stabilising and the government has to try to keep a detached view and keep it on track. 

Comparison of Different Systems

One key element in any healthcare system is how it is funded. 

You can do it one way by a more privatised path, where you make individuals responsible for their own healthcare costs and run private healthcare institutions. But this way inevitably some segment of the population will be left out. Those who cannot afford medical treatment either cannot afford the treatment when they get ill or cannot afford treatment when it is particularly severe disease and needing extra expensive drugs or procedures or cannot afford the insurance which is needed to pay to the treatment. You can use insurance to mitigate this problem, but insurance inevitably results in higher total costs to the whole society because it encourages more use of healthcare services and insurers then pass on premiums to the companies or individuals who pay for the insurance and society as a whole bears a heavier burden and one extreme example is that in America where up to 18% of their GDP is spent on healthcare.

At the other end of the spectrum are single-payer systems funded by taxes, where the state runs the healthcare institutions and picks up the whole tab. The National Health Service (NHS) in Britain is an example. It spends much less than the US, maybe about less than half, but healthcare is rationed by queues, and sometimes explicitly by excluding certain drugs or treatments. For example in one instance for some rare eye diseases and expensive to treat eye diseases, it is reported that the NHS agrees to treat one eye ball per person. But these are choices which have to be made and the choice is made by the system and the individual has not so much choice. So whichever way you go there are trade-offs.  

In Singapore, we face the same challenges and difficulties as other societies in delivering good healthcare, because this trade-offs and problems are intrinsic to the healthcare delivery system. Given these difficulties, we have developed our own approach and it has worked reasonably well for us.

We have had some favourable factors which have helped our system to work. Firstly as a new nation, 50 years ago, we were able to learn from the experience of other more established countries which had built up their healthcare systems earlier than us. Secondly we had a young population so we were building up our healthcare system while the population was still young, active, and with a low disease burden. Thirdly, we enjoyed rapid economic growth and therefore were able to improve infrastructure and improve public health standards and at the same time educate our population to take better care of themselves, and also have more resources to invest in better healthcare for our people.

So with these favourable factors we developed our own approach. Let me share a little bit about it with you – three prongs particularly.

First, we focused on public health. We invested in basic sanitation. We did not start off with modern sanitation – up until 40 odd years ago, there were still night soil collectors in Singapore. There was a truck and every day the night soil collectors will come and collect the pail from the house and then put it into the truck and each truck has 36 doors – it was a traditional description – and then these will trundle along the road and you hope they do not leak. 40 years ago. But as we housed our population, as we sewer up the whole city, well that problem disappeared. We instituted compulsory vaccination and inoculation of children – smallpox, diphtheria, MMR and I think now a whole range of other things. We encourage further inoculation, often subsidised, Hepatitis B, meningitis, a whole range and therefore improve public health. We invested in education heavily and we had universal education including girls, which is critical because then each new could take better care of themselves and their family. We embarked on a major public housing programme. There is a big difference between sharing a bed space in a crowded slum in Chinatown and owning an HDB flat with running potable water and modern sanitation. So the first thing we did was not medical care in the hospitals but public health.

Secondly, we organised our healthcare system and developed it over the years to marry the best of a privatised healthcare system with that the best aspects of a single-payer models. We started off with the British-style model in the 1950s – healthcare fully provided by the state, except that there was payment for hospital charges, partial co-payment. Initially medication prescription was free, but one of the first things which the PAP government did when it took power in 1959, was to impose a charge on prescription, 50 cents, even whether it was an expensive drug or Panadol, 50 cents. Token to make sure that people valued the medicine that was prescribed and they will not just take the medicine home, take two pills, throw away the rest of the packet, and come back to ask for more. I think the principle that healthcare must not be free at point of use was established right from start. But over time the system grew and became unwieldy. Institutions had only the haziest idea of their costs and were not operating efficiently. It was not sufficiently responsive to demand and could not deliver the high quality care that was increasingly the population’s expectation. So we restructured the hospitals and made them autonomous, non-profit operating and accounting entities. We injected contestability as well as principles of financial accounting into the system so that hospitals could provide high quality services at affordable costs. And this caused hospitals and polyclinics to watch the costs and their bottom line carefully. But we did not make the hospitals private, for profit entities. The restructured hospitals continue to be owned by government. They are closely supervised by the Ministry of Health and we supervise them to ensure that they did not compromise on the quality of healthcare, or neither do they over service patients nor do they go overboard in pursuit of profits. So now we have a mature system with the government restructured hospitals making up the majority of hospital beds but complemented by some private hospitals.

Thirdly, we sought to achieve the right balance in healthcare financing between individuals and the government, between savings and insurance and government subsidies. It is a system which is dynamic and which has evolved over time. We have government subsidies. They are generous; they are tilted towards the lower-income patients. We make sure that everyone has access to good healthcare, including the poor and vulnerable. To some extent the subsidies are means tested, but mainly we rely on different ward classes to distinguish different subsidy levels. So if you are prepared to go to a C-class ward, the subsidy is 80 percent, if you want an A-class ward with a room to yourself, the subsidy is zero. The government subsidises a significant part of healthcare costs the rest is borne, for in-patient treatment, by what we call our 3M system – 3 M’s – Medisave, MediShield and Medifund.

Medisave is an individual savings account where every Singaporean sets aside a portion of their salaries for their own medical needs and for the medical needs of their families. There are contributions into the Medisave from the worker, the person himself as he works from his salary, from his employer and sometimes from the government as gesture. Here is a top-up to your Medisave, I help you, and you take care of the money.

The second M is for MediShield which is a catastrophic medical insurance scheme designed to cover large inpatient bills, and every Singaporean subscribes to Medishield unless he chooses to opt out from it. It is voluntary scheme but the coverage is good.

The third M is for Medifund, which is an endowment fund set up by the government which is a payer of last resort for people who cannot afford to pay their medical bills, even after using their Medisave and their MediShield.

So Medisave personal savings, MediShield is a catastrophic medical insurance and Medifund if you are really destitute and extremist, there is help from the state. But a medical social worker will talk to you, assess your needs and make a recommendation on what you deserve. One distinguishing feature of this 3M scheme is the reliance on compulsory individual savings, and with a restricted role for insurance, restricted only to large bills not from the first dollar, and not 100 percent coverage. So there is a deductible and beyond that there is co-payment on every dollar so that the patient always has some interest in watching what his bill. This scheme, based first on savings, complemented by catastrophic medical insurance has been crucial to prevent demand from spiralling out of control, to keep the healthcare system efficient, and hold expenditures down, while providing good outcomes. I think overall it has provided good outcomes - low infant mortality and high life expectancy. Good treatments, standards and good outcomes for specific diseases – whether it is stroke, diabetes, cancer and so on. 

So we think we have what we consider a reasonable working system but maintaining good healthcare is a continuing challenge. The challenge evolves and morphs over time, because medical science progresses year by year. More papers are published, more drugs are discovered, more treatment methods are developed and more equipment are invented, more genes are found to be related and maybe can be fixed. Our people are getting older and that means they get sick more often. Demand for healthcare has increased, partly because people are getting older, partly because patients are better informed. They read the internet, they see their doctor and they say ‘I want that treatment.’ So when the patient asks the doctor about something as I did recently, the doctor said ‘Let me look it up on the internet.’ But that changes medical practice and disease patterns are also changing. We now have diseases of affluence rather than poverty. Diabetes and obesity are more common, tuberculosis, which used to be a big problem for us especially when people lived in overcrowded slums and were malnourished, is now almost unknown, although the multi-drug resistant forms of tuberculosis may yet become a new severe threat to us. 

So we have made various shifts to our healthcare system, and let me just briefly tell you about four of them. First, we are providing more comprehensive support to outpatient treatment. Our 3M framework covers inpatient costs and is focused primarily on inpatient treatment. But many conditions, especially chronic ones such as diabetes and hypertension, are better treated as outpatient cases, and best treated early before complications set in. So, we implemented a means-tested subsidy scheme for outpatient treatment called CHAS to subsidise treatment for lower and middle-income Singaporeans at private General Practitioner Clinics. 
Secondly, we are replacing MediShield, which is a voluntary opt-out medical insurance scheme, with MediShield Life, which is a universal and compulsory medical insurance that covers everybody, regardless of age and whether or not he has pre-existing conditions. It is still a catastrophic insurance system, with deductibles and co-payment, but one which offers better protection and covers a wider range of conditions. It will give better protection from growing bill sizes. Insurance premiums will be higher because this is a more encompassing scheme, so the government is subsidising the premiums to keep them affordable, especially for the lower-income. But because the premiums are going to be higher than before, it is necessary to make MediShield Life compulsory, because with higher premiums there will be more temptation for people to opt out and come back into the healthcare system and the healthcare system cannot refuse to treat them.

Thirdly, we are right-siting our services, in other words, providing services so that patients can be treated at the right level of the healthcare system where they can be best treated and enable us to provide patients with better, more affordable care closer to their communities. We are improving primary health care with improved access to GPs and to polyclinics. We are building community hospitals, which provide therapy and treatment after a patient is discharged from an acute hospital, before he is sent home so that he can be discharged sooner from the acute hospital where it is very expensive to take up a bed and where after some time, the patient really does not need to be there, because he no longer requires 24 hour surveillance and acute treatment. We are building more nursing homes and are working with Voluntary Welfare Organisations (VWOs) to enable ageing-in-place.

We are also structuring our subsidies to encourage patients to go and be treated in the right place where they can receive the most suitable treatment, rather than turning to acute care by default. If you only subsidise acute care but not the community hospitals, it is cheaper for the patients to stay in the acute hospitals which is expensive to us instead of going to the community hospitals which is lower social cost. But sometimes it is even cheaper for the patient to be at home and so we are now experimenting with giving patients incentives to go home and an allowance so that they can help to provide for the care in the home which is really the most sensible place to be.

Fourthly, we are encouraging Singaporeans to take better care of their health. We are mounting public health campaigns to raise awareness of the risks of unhealthy lifestyles. For example promoting healthier choices for food, promoting regular exercise or tightening restrictions on unhealthy behaviour like smoking. We are building a clean and green Singapore, with access to healthy lifestyle activities – parks, exercise corners, cycling tracks even as our city becomes more densely built-up. We are encouraging an active lifestyle within the communities, especially among senior citizens. We have launched an Active Aging programme, run by our People’s Association, to bring in senior groups to socialise, to be active, to go for regular medical checks and to follow up and take care of their health. They do brisk walks, line dancing, some of them even do lion dancing and taiji. It is very popular; a quarter million people are participating and enjoying themselves. I think if you see them, I have not done a scientific study, but they look 10 years younger than those who did not join. 

With all this, today, nationally we are spending about 4.2% of our GDP on healthcare and of that the Government share is 1.6% of GDP. Less than half, more than a third. It is overall remarkably low. The results have been good but I do not think it is sustainable, it is bound to grow over the next 5 years and we are providing for it. We are providing for it in our budget, in building the infrastructure and hospitals and clinics and training the doctors and medical teams and professionals – which is the more difficult part of building up our system. And making sure that financially we can afford to pay for this. I believe this is necessary as our population is ageing. We need to ensure that Singaporeans get the healthcare they need, at a cost which is affordable to all. But we are very mindful of the risk of excessive healthcare spending because this has been the experience in many countries. Once schemes and subsidies are introduced, they are impossible to take away. And once you have vested interests entrenched, can be doctors, insurance companies or lawyers, it becomes impossible to unwind and reform the distortions and excesses which are very expensive to society. 

We are determined to keep our system sustainable. We know there will be political pressure to defer necessary fee increases and to manage the services and to ration them where it is essential, and it is easy for any Government to leave the bills to the next generation and to focus on the short-term political gain or at least avoid the short-term political loss. If we succumb to this temptation, we will end up with system which becomes non-viable which will hurt Singaporeans not just financially, but even purely in health terms because if your healthcare system is malfunctioning, I do not think you can deliver the level of service and outcomes which we are getting today. Therefore we are proceeding very carefully as we develop the healthcare system, and our Minister of Health who is here today has a very difficult job. 

To succeed in keeping our healthcare system working well, we need a supportive and positive political environment because these are political choices. As the people, we need to take personal responsibility for our own healthcare and that of our families. We need to be willing to save for our own healthcare needs and pay directly for our share of the cost. We must be willing to participate in a universal healthcare insurance scheme, because of a sense of solidarity with our fellow citizens. Healthcare providers have to ensure that the costs are manageable and deliver cost-effective healthcare and the government must ensure that by adopting a people-centred approach which makes sure that even the low-income and vulnerable have good access but at the same time the government has to stay hard-headed about the cost and keep a close eye on them to prevent extravagance or waste. We have to be a trustworthy steward, presenting the trade-offs as they are to the citizens and not sacrifice tomorrow for today’s political gain.

Healthcare is always an emotive and political issue anywhere. It is tempting always to make promises and say we will do more, we will do better and it will cost less, maybe even for free. So it is important for the government to present the full facts and the trade-offs because every dollar which is spent on healthcare is one dollar taken from taxpayers and one dollar less to be spent somewhere else, whether on education, housing, defence or personal needs of our people. It requires an honest conversation amongst ourselves, and hard choices to be made. Then only can we move ahead together, with clarity for what our society wants and stands for.

The task in achieving universal healthcare is a very challenging one. For all of us, it is always work-in-progress. There is no country in the world which considers itself to have reached nirvana, although every country always believe somebody else has a better system. Our model is ours. It is by no means the only way to do it, but I hope you have found what I have had to say about it interesting and if we continue to learn from each other and share experiences, we can continue to progress towards the ideal of Universal Health Coverage for all. I wish you all a very fruitful two days of deliberations.

Thank you very much.

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