Healthcare Costs is Rising in Singapore Faster Than GDP Growth: How Will This Affect You?

Last month, the PM sounded an alarm that is not entirely unexpected – that as Singapore ages, healthcare cost is bound to increase and hit levels of spending that will continue to break historical records. The Singapore government’s healthcare expenditure has skyrocketed from $3.9 billion in 2011 to an estimated $10.2 billion in 2018 — this means that in 2019, Singapore’s healthcare expenditure would be triple the amount spent in 2011! The PM made it loud and clear that this is not sustainable and Singapore needs to look for new ways to manage and fund the rising healthcare costs – which is only going to get worse at an even faster rate by 2030, where 1-in-4 will be over 65!

A prudent government will need to balance its spending with revenue – and also balance the need between spending on an ageing population and investing in the next generation. Those are hard choices. So, what does this mean and what can we expect in the medium term?

(NST JAN 28, 2018)
  • After the official opening of the latest general hospital in Sengkang,
    we will build five more general and community hospitals, four new polyclinics — not including the many nursing homes and eldercare centres — in the next 5 years. Such forward planning will improve access to healthcare and reduce the current stress to the system. However, the PM has also announce that there will be a pause after 2020 in planning for future healthcare need.
  • Within the next decade, healthcare expenditure will overtake education, rising from 2.2% of GDP to 3.0%. To pay for the ongoing increases in spending, the government has been signalling that it will raise GST by two percentage points, from 7% to 9% between 2021 and 2015. My bet is that the government needs to do it sooner than later because there is clearly a need to increase revenue to pay for the increased spending in healthcare.
  • While not drawing down our reserves, about 18% of the government’s budget will be coming from investment returns of our reserves to supplement the annual Budget estimated to be S$15.9 billion in Financial Year (FY) 2018. While we are counting on the returns today, we must keep in mind that future returns are not guaranteed and is highly dependent on global economic conditions. Buckle up!
  • We will see a greater emphasis on primary care because the best way to contain healthcare spending is to maintain a healthy population. We can expect more programs to make it easier for the elderly to access primary care facilities that will help them effectively manage their chronic conditions – and hopefully stay out of the more costly acute care hospitals!
  • Technological innovation will play a major role in making our healthcare system more efficient. Over the next decade or so, we can expect tele-medicine to play a bigger role in connecting patients and doctors. Whether consumers are ready for it or not, advancement in artificial intelligence (AI) will also become increasingly important in our healthcare delivery. Expect the government to experiment with new and creative solutions that will help slow down the rising costs of healthcare (and hopefully achieve better outcomes as well).
Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.