Social compact on shared health costs

Recently released recommendations on MediShield Life flesh out the scheme's goal of providing universal coverage through an insurance scheme that is financially sustainable in the long run. This is the key issue because it addresses Singaporeans' craving for peace of mind over health matters over their lifetimes. Those with pre-existing conditions, along with the sick and elderly, were fearful of a severe illness wiping out their Medisave balances and eating into precious savings. The details announced last week show that the vast majority of subsidised patients will pay less than $3,000 a year for their big hospital bills out of their Medisave account or in cash. The poor will be assisted.

Details of actual premium amounts that are awaited might well shape opinion significantly. In the meantime, there is a need to build consensus on the trade-offs between coverage and viability that inevitably will have to be made. Here, the record of other countries provides salutary lessons. "Free" medical care spreads the costs of provision over society through taxes; even where charges are based on the patient's ability to pay, the difference has to be met through taxes. In prin-ciple, such care might seem equitable, but in practice, the system comes under the pressure of consumption and higher tax rates that can burden the economy.

Private insurance schemes are unsatisfactory because they do not differentiate between the rich and the poor even in an area as crucial as health. MediShield Life avoids both extremes by adding a national element to health insurance without socialising health care entirely. The balance it seeks is that between collective and individual responsibility. The state has intervened directly by helping those who are unable to pay, but the citizen is not absolved of his duty to bear his share of the cost. This division of labour is necessary for the Government to continue providing adequate funding for education, housing, defence and other public goods.

In spite of its attempt to strike a balance, MediShield will impose new costs on society. The one percentage point increase in employers' contribution to Medisave, for example, will raise business costs, which will be translated eventually into higher prices since firms would not want to reduce profit margins.

The fundamental point that should not be lost in discussions is that every time a cost is incurred, someone has to pay it - either directly or in a circular manner. That cost may be borne squarely by the user or shared equitably among all. The extent and the depth of the public agreement that are generated about health financing will help shape one of the most important social exercises ever undertaken in Singapore.