The Straits Times says

Avoid future shock of healthcare costs

Those who have ignored confronting predictable perils of the future that affect everyone without exception should take note of a recent healthcare report. It expects health costs of the elderly in Singapore to rise tenfold over the next 15 years to more than US$49 billion (S$66 billion) annually. That is too short a time span to provide the comfort of denial to most people as they will be around when costs rise that high. The elderly among them face the personal challenge of paying the price of staying alive: an average of US$37,427 that will be spent on healthcare for each elderly person by 2030. The US$49 billion figure includes public expenditure, private insurance and out-of-pocket spending. Yet, it is a conservative estimate because it excludes indirect costs, such as transport, and opportunity costs chalked up by caregivers devoting time to elders. Also, healthcare expenses will rise if the relatively cheap supply of foreign labour dries up.

Singaporeans are staring at a dramatically new world of ageing and healthcare just 15 years down the road. That should spur them to personal and collective action now. This should be a priority even in the midst of competing social priorities. It is tempting to imagine that there might be a transfer of healthcare to the state. However, the downside of that approach is apparent in welfarist societies, where costs have become unsustainable in the long term and queues have lengthened. Indeed, glaring problems exist even in countries where the burden is shared between the state and the citizen. The United States spends roughly US$3 trillion annually on medical care, but one feature of its changing healthcare system - patients shouldering a larger share of treatment costs - is driving up out-of-pocket expenses across the board. Noting this trend, a Morgan Stanley report produced earlier this year adds that the brunt falls often on the elderly because they require the most care. Minimising financial exposure to uncovered bouts of care, particularly in retirement, has become an urgent necessity.

In Singapore, reforming the ElderShield scheme would represent one way for the state to contribute to a firmer sense of financial security in an ageing population. However, this move will not suffice without individuals recognising the need for enough insurance to see them through old age. Reverse mortgage schemes, which allow people to monetise their housing assets to pay for healthcare when they are old, would buttress insurance schemes. Permitting the use of Medi- Shield and Medisave overseas, in places where the cost of care is lower, would enable Singaporeans to maximise returns on their health dollar. Most of all, awareness that their future health depends on their present lifestyle should make Singaporeans pay more attention to both. Health is too important to be left to chance.

A version of this article appeared in the print edition of The Straits Times on September 05, 2016, with the headline 'Avoid future shock of healthcare costs'. Subscribe