Singapore's Medical Inflation Rate

16 Dr Lim Wee Kiak asked the Minister for Health (a) what is the rate of medical inflation in Singapore over the past five years versus the global rate; (b) what is the projected rate of medical inflation for the next three years based on an expected increase in the goods and services tax in the near term; and (c) what is the Ministry doing to help bring down the rate of medical inflation.

The Senior Minister of State for Health (Mr Chee Hong Tat) (for the Minister for Health): Healthcare inflation measures the growth rate of prices for healthcare related goods and services paid by patients after Government subsidies. Between 2011 and 2016, Singapore's average annual healthcare inflation rate was 2.4% compared to the Organisation for Economic Co-operation and Development (OECD) average of 1.6%. Recent policy measures, such as the Pioneer Generation Package, MediShield Life subsidies and the Community Health Assist Scheme (CHAS), have helped to bring it down to about 1.2% between 2013 and 2016.

While it is important to monitor healthcare inflation, it is just as important to look at overall healthcare spending. This is because subsidies are funded from Government revenue, which comes from the people through taxes and duties and the Net Investment Returns Contribution (NIRC) from our Reserves. Hence, overall healthcare spending is a more complete indicator than healthcare inflation alone.

In Singapore, our national healthcare spending has increased by more than 60% from $11.5 billion in 2011 to $18.8 billion in 2015, as we built more healthcare facilities and hired more healthcare workers to meet our growing healthcare needs. With an ageing population, it is inevitable that our total spending on healthcare will increase further. To keep our overall healthcare costs sustainable in the future, we have to focus on ways to transform our healthcare system and prevent healthcare costs from rising too quickly. This requires the collective effort of all stakeholders to work together in close partnership.

Mr Deputy Speaker, the Ministry of Health (MOH) had earlier announced three strategies to transform our healthcare system. Firstly, we are moving beyond healthcare to health by investing upstream in health promotion, disease prevention and health screening to help Singaporeans stay healthy. Secondly, we are shifting care beyond hospitals to the community to enable more patients to receive effective care closer to home. Thirdly, we are moving beyond quality to value for patients to deliver appropriate care to meet their needs. These include initiatives to improve productivity through innovation and process improvements and working in collaboration with private sector and community providers. The above shifts are important to keep our increases in healthcare spending at a more sustainable level as we consider different options to fund our future healthcare and long-term care needs.

Sir, the best approach to managing healthcare cost is for all of us to do our part by keeping ourselves in good health and adopting an active and healthy lifestyle. MOH will continue to invest in this area and work closely together with our industry and community partners.

Mr Deputy Speaker: Dr Chia Shi-Lu.

Dr Chia Shi-Lu (Tanjong Pagar): I would like to thank the Senior Minister of State for his very comprehensive response and I agree that Singapore's healthcare spending is probably the more critical part of this puzzle.

Just one clarification with regard to medical inflation. There are many figures that are bandied around and, sometimes, this does cause unnecessary concern to the public. It depends on where the source of the so-called medical inflation figures come from. But just in terms of clarification, what figures does MOH use when they are looking at medical inflation? Because a large part of expenditure is on private services, auxiliary or allied services, for example, even things like traditional Chinese medicine, which many members of our population actually make use of. For allied health, for example, for an ageing population, what are people spending on daycare, for instance, or other services of this sort? So, what methodology does MOH look at in order to follow medical inflation in Singapore?

Mr Chee Hong Tat: Mr Deputy Speaker, I thank Dr Chia for his supplementary questions. I explained in my main answer that healthcare inflation measures the growth of prices paid for a wide range of healthcare-related goods and services, and this is after we have considered Government subsidies. Dr Chia is right that it is important to not only focus on healthcare inflation but to look at the total healthcare spending. So, this is why when we look at it, how do we work on transforming the healthcare system to prevent healthcare costs from rising too quickly? We are not only focusing on healthcare inflation alone but we are taking a more complete view of how we look at ways to help individuals stay healthy and how we look for ways to help our providers and our institutions deliver their services in a more productive and more efficient manner.

There are also many other cost items that add up to the healthcare bill, for example, the cost of drugs and consumables. So, these are all different ways in which, I think, we will have to pay attention to.

Yesterday, in this House, we spoke about fee benchmarks. Both Dr Lim Wee Kiak and Assoc Prof Goh raised questions about how we can best implement fee benchmarks. These are all the different ways. In my answer, I explained that fee benchmarks and fee guidelines is part of a larger strategy. So, it would also include some of these other measures.

One last point I will make, Mr Deputy Speaker, is that, ultimately, whether we are able to effectively and successfully prevent healthcare costs from rising too quickly is not only what the Government can do alone, but what we can do together with our healthcare providers, our healthcare workers, our Labour Movement, our union leaders and also with patients and families. This requires a collective effort from all of us. It is something that is important as we face an ageing population.