a community of singaporeans

Means testing or comprehensive medical insurance?

Posted by theonlinecitizen on January 30, 2008

By Gerald Giam

Health Minister Khaw Boon Wan has announced that means testing will likely be implemented in restructured hospitals by the end of this year.

Although the details of how it is going to be administered have not been confirmed, one fact seems clear: Many middle-income Singaporeans are going to have to foot larger medical bills in the near future.

Low income Singaporeans can probably breathe easy as means testing is unlikely to negatively affect them, since the Minister has said that only the top half of income earners who stay in Class B2 or C wards will undergo a means test.

Currently, patients admitted to Class C wards in restructured hospitals enjoy an 80 per cent subsidy on their hospital bill. With the introduction of means testing, many of them may no longer receive that subsidy, or may have to accept a lower subsidy.

The Government’s rationale for introducing means testing is to reduce overcrowding in Class C wards and ensure a sustainable healthcare financing system by providing heavy subsidies to only deserving low income patients.

Having heard the government’s arguments for means testing, many Singaporeans may be questioning whether it is really necessary, and if there are other better ways to contain rising healthcare costs.

Show us the numbers

The means testing concept makes sense in theory: Rich folks ought to be subsidised less than poor folks. Means testing could prevent “cheapo” rich people from consuming taxpayer-funded subsidies when they can well afford to pay for their own medical expenses.

However I wonder whether the rate of abuse of the system is really as high as the government makes it out to be. Singaporeans have been presented with the rationale for means testing, but not the numbers to back it up.

The Minister has said that means testing is likely to be administered only for patients in the upper 50th percentile income bracket. How many patients currently in Class C wards are in the upper income bracket?

The median monthly income for Singaporeans last year was $2,330. That is not very much. Is it fair to consider a sole breadwinner who earns $2,400 a high income earner not entitled to Class B2/C ward subsidies?

Will the cost of planning and administering means testing exceed any savings for the government? These costs could be significant. They could include extra medical social workers to conduct assessments and investigations, new computer systems to manage the data, and time and effort spent by officials to respond to questions and complaints.

Mr Khaw, in fact mentioned that he is considering a graduated reduced subsidy from 80 per cent, point by point down, to 60 per cent for the top 20th percentile income earners. So after all this debate, we may be looking at just a 20 per cent reduction in subsidies for top income earners.

At the end of the day, the savings from means testing may not even justify implementing the system. It may be more efficient to keep the current system of letting patients decide which ward they want to go to, based on their own assessment of what they can afford.

Medical insurance and Medisave

Since means testing will be targeted at middle income earners, it is important to look into why so many of them would rather stay in Class C wards rather than more comfortable and less crowded B1 or B2 wards. Why do they still have to depend on government subsidies and why can’t their health insurance adequately cover their costs?

Most Singaporeans are insured under MediShield, Singapore‘s national insurance scheme. MediShield helps cover the costs of catastrophic illnesses which require long hospital stays and result in crippling medical bills. The premiums for MediShield can be paid using Medisave, the national medical savings scheme. Typically, employees contribute 6.5 to 8.5 per cent of their wages to their Medisave accounts.

Unfortunately, MediShield’s coverage does not cover the entire hospital bill. For patients staying in Class B2 or C wards, an average of 40 per cent of their medical bill must be paid using cash or Medisave. Class A, B1 or private patients can expect to pay even more. Most of this payment is due to deductibles and co-payment. The deductible ranges from $1,000 to $3,000, depending on the ward chosen. Co-insurance will be 10 to 20 per cent of the claimable amount.

This means that for a claimable amount of $8,000, a Class A patient will have to pay a deductible of $3,000 and co-insurance of 10 per cent on the excess of $5,000. Hence, he will have to fork out $3,500 on top of the portion of the medical bill that wasn’t claimable under MediShield. Is it any wonder then that many relatively well-off people choose to be warded in Class C where the base charges are lower?

There are riders offered by private insurance companies to offset the co-payment and deductibles, but the premiums for these riders cannot be paid using Medisave. Consequently, most people do not take them up as it involves having to fork out additional cash.

This results in a vicious cycle of large hospital bills that MediShield doesn’t adequately cover, leading people to try to incur smaller bills by staying in Class C wards and costing taxpayers more.

Allow Medisave to pay for riders

To help to lessen this problem, the government should allow Medisave to be used to purchase not just MediShield, but also the riders to offset the deductible and perhaps even part of the co-payment. If CPF members are allowed to use Medisave to pay for these riders, surely many more will sign up for them. After all, many of them have more money stashed in their Medisave accounts than in their Ordinary accounts, as the latter is usually used to pay for their HDB mortgage.

This proposal was raised in Parliament by Nominated MP Cham Hui Fong during the budget debate in 2006. The Health Minister’s response then was, “This is not wise and we do not encourage this. That is why we do not allow Medisave to pay for the premiums of such riders, as proposed by NMP Cham Hui Fong. But if Singaporeans want to buy such riders out of their cash savings, I cannot stop them.”

I can imagine what the government’s concerns with this proposal might be: Excessive drawing down of one’s Medisave; over-consumption by patients and over-servicing by hospitals, leading to higher premiums across the board; and people buying unnecessary policies from aggressive insurance agents.

Fears that people will exhaust their Medisave by paying medical insurance premiums don’t make sense when Medisave can already be used to make direct payments for huge hospital bills, and even the bills of one’s family members (including parents). These direct payments surely amount to much more than insurance premiums.

The concern that patients will opt to stay in hospitals for longer than necessary won’t apply to the majority of patients. Who in the right mind would want to stay in hospital if they have recovered from their illness? There may be exceptional cases, but these can be dealt with by doctors who have the authority to send patents home after they have recovered, or to step down care in community hospitals. As for over-servicing, surely we should have a little more faith in the integrity and professionalism of our doctors!

Lastly, to lessen the confusion about which rider to purchase, the government could simplify things by opening a tender for private insurers to provide a single, low-cost MediShield rider that people can choose from — much like how MediShield Plus was transferred to a private insurer (NTUC Income) through a competitive tender in 2005.

If most Singaporeans and permanent residents sign up for this proposed MediShield rider, the insurance companies may be able lower their premiums. With a system like this in place, Singaporeans will benefit from low cost and more comprehensive coverage and the government too will spend less on subsidies. Even insurance companies will find something to cheer about.


Means testing is probably going to be one of the hot button political issues this year, as would any issue that involves the removal of key government subsidies. The Health Minister has got his work cut out for him convincing Singaporeans that it is the right way to go.

Less than two years ago, his first attempt to impose it got beaten back during the heat of elections. (“Means-testing not likely in the next two years: Health Minister“).

This time, he will need to present more convincing arguments to an increasingly sceptical populace, or better still, explore a win-win solution by allowing Medisave to be used to pay for more comprehensive health insurance.



15 Responses to “Means testing or comprehensive medical insurance?”

  1. Redbird said

    Once the Mean Testing floodgate is opened, I can assure you that our Government will extend the it to all kind of services.

    Look at the no. of MPs in a GRC. It started with 3-4 MPs in a GRC. Last general election we had 5-6 MPs in a GRC. Hence, a lot of Singaporeans did not have a chance to vote. A mockery of democracy in Singapore.

    A good example is the recent ERP charges. It seems to me that whenever Auntie Ho Ching go for shopping, some charges will go up to fund her spending spree.

    There is a great tendency for the governement to “abuse” or fine tune it so that the budget for Health can be reduced further. Where on earth do you think budget for Defence and Home Affair can increase every year??

    It is high time Singaporeans stand up and say “No” to all kind of Mean Testing.

  2. Robert HO said

    1. Thank you Mr Gerald GIAM for concisely explaining a subject I have no knowledge about due to non-interest and refusal to read PAP media’s versions of it.

    2. Your suggestions and analysis seem logical. Also excellent are your pointers that the PAP is continuing its cast iron refusal to spend money, to even reduce spending on the sick and dying, and to make us pay for everything they can get away with.

    3. No accountable govt can get away with such policies, only a dictatorship. 1 that a think tank recently describes as “unelected” because of its rigging of elections rules, procedures and even the ballots itself.

    4. There will be retribution. Like their eugenist policies backfiring into an albino and autist. God plays games, too.

  3. Daniel said

    Mean testing and ‘Mean Culture’ will be pervasive everywhere in Singapore. This will be our future.

    Mean ERP: 16 forthcoming gantries already set to run island wide to help more people own cars. Make sure this is one mandate for next election, and PAP better emphasize this wonderful solution to the public to buy supporter’s vote.

    Mean Education: Get out of the school’s elite uncaring face if you malu (embarrass) the school with poor and unsatisfactory result. Failure is not a option. Status and money are.

    Mean Price Hike: Hike until complain also no use.
    As long as people still survive, price will continue to hike until Minister gain moral authority. Ironically to them, $$$ = Moral Authority, so in order words, they will have infinite $$$ and no moral authority.

    Mean CPF: Majority can forget about it. I doubt you get to take out any money when your times come. Just look at billions of lost dollars in banking Corpse and the carrot to tell you that govt to expand MRT by 2020, but where’s the money to come from ? Don’t bother to ask the oldman as he is enjoying his immense wealth in hell then.

    Mean Excuses: Whatever we (govt) do, it is for your own good !

    Mean Government: Fill in yours.

  4. Who's money is it anyway? said

    Thank you so much.

    So it’s true. . .

    MEANS TESTING is a means to test the patience of Silliporeans in knowing how mean the govt can be and how far they can walk all over us!

    Thank Gerald for bringing this up and Daniel, you do good! Keep it up!

    My money? Your money? Sorry chum, it’s their money! The vampires are still squeezing for more.

  5. Shall we means test the government then?

  6. annoymous said

    what a load of crap.
    it is govt responsibility to provide healthcare whether you are rich or poor.
    in fact i feel the rich pay more tax so they should be entitled to even better healthcare.

    the govt just trying to shirk responsibility and increase the coffers by cutting funding to the already suffering middle class.

  7. Phatty said

    “No accountable govt can get away with such policies, only a dictatorship.”

    Huh? So who gave them the mandate in the first place? IMHO, Singaporeans have no rights to complaint. You guys voted them into power due to greed (e.g. lift upgrading etc…and ofi course ignorance). And now you wanna sing the blues? Get over it, be wiser at the next GE.

  8. mjuse said

    “opening up the floodgates for means-testing for every kind of govt service”

    the govt uses the slippery slope argument to justify keeping everything ranging from censorship, racial quotas in hdb estates, legislation against gay people, welfarism etc. just once, i wish someone would point out to them that you can use the slippery slope argument against this stupid means testing as well.

    as for not being able to use medisave to pay for insurance riders, i’ve never understood why we can’t do that. can someone enlighten me as to why that is the case?

  9. family man said

    that is the thing about means testing. If you are poor, you know you cannot afford a car and so you take public transport. No one bothers you to ask why you are taking a bus.
    But now, if you know you are not cash rich and want to stay in a C class ward, you have to show proof why you think you are poor. And the government has not shown an iota of fact or numbers to show how many C class patients are currently abusing the system. All they have are anecdotal evidence to prove there is an abuse of the system.
    Next up – means testing to MRT – Bus service. Show proof why you need subsidy on public transport.

  10. saintmoron said

    The Means Testing is going to be exercised across the board, so it is not just the poor that are affected.

    Now Singaporeans, rich and poor, no matter how much you have contributed to the National Coffer through your payments of taxes(Income/GST etc) will be treated fairly. What is not fair is a patient being a customer(consumer) is no more allowed to choose lower level medical services which cost less. Imagine that you want lower quality goods and services but is told: ‘please you can afford better ones, so, we cannot sell you what you want’. Is this reasonable, logical and acceptable?

    The Service/Good providers can lower the qualities of their services and goods to commensurates with the prices/payments as per market practices, right? Another area where I think is worth asking is; must a patient take all the recommendations and or treatments from his doctor? Does the patient have his rights to reject use of medicines/treatments and consultations, if he cannot afford them and is willing to deny him/herself the needs?

    No one knows if there have been demands by patients that hospitals and their equipments must be of the best in the World. And if our hospitals are so equiped, it is because patients have wanted and demanded for them. Otherwise, I am of the opinion that most patients want the most basic and effective means to have their medical problems solved. Most do need ‘hotel class’ accommodations, foods and services which are available at the many PRIVATE HOSPITALS in our MEDICAL HUB ISLAND, should the patient wants it.

    One of the most contentious issue now is that we have a huge sum of Reserve Funds that are invested to make profits that had snowballed for over a generation. The first generation had probably left the World without benefitted a cent from this State Fund, the next generation does not seem to have any hope too. So the Question will be; can a TINY SUM from the Fund be used for our healthcares and our(the people’s) ‘feel good’ cares? Why not?

    Let us just say that most of us if not all, are aware that the healthcares costs problem have never been as serious as our leaders made them out to be. The comments from the Blogosphere are proof that few believed what they have been told(by our leaders).

  11. saintmoron said

    My apology folks;
    ‘Most do need ‘hotel class’ accommodation, foods….’ should read as: Most do not need ‘hotel class…..

    Again sorry for the error!

  12. Gerald said

    Hi Saintmoron – thanks for your comment. Just to point out that even with means testing, patients will still be free to choose to stay in C class wards, which charge less. They just may not receive the full 80% govt subsidy.

  13. saintmoron said

    Gerald, thank You for your response.
    When I wrote that means testing is applied across the board, I meant that all patients, rich, poor and inbetween, who wish to be warded in ‘low classes wards’, especially C Class, will be affected.

    Ideally, I surmise that costs of goods and services be consistent and commensurate to their qualities constants. Consumers(customers,clients and patients) shall then pay according to the goods and services they choose. If my understanding is right, in the case of our(Singapore) Means Testing, it means that an affordable patient will be receiving less subsidy than patients who are poorer while the services(medical/hospitality) maybe or is the same. When such is the case, then a customer(patient in this case) is made to pay more for the same thing.

    Yes, there maybe citizens who feel that the Means Testing seems fair; I beg to differ simply because in the market place, there is no such practices that one pays more for an item(goods/services) simply because he is found to have better affordability. It is perverse, somewhat like charging a customer more because he/she is a foreigner and or wears branded goods and appears a good one to ‘ketok'(charge a higher price on). If this is the practise, then I think it is a very ungraceful!

  14. Gerald said

    Well I think means testing goes by the same principle as progressive taxation. If you are rich you pay more to subsidise the poor. Not that I’m defending it.

  15. Daniel said

    ““No accountable govt can get away with such policies, only a dictatorship.”

    Huh? So who gave them the mandate in the first place? IMHO, Singaporeans have no rights to complaint. You guys voted them into power due to greed (e.g. lift upgrading etc…and ofi course ignorance). And now you wanna sing the blues? Get over it, be wiser at the next GE.”

    Before you mention this, Phatty, please consider that while Singapore is definitely not a dictatorship, it is certainly not a democracy either. Instead, as has been determined by external examiners, Singapore is a pseudo-democracy. It would be interesting to count how many walkovers there were in different parts of Singapore. Exactly how much say do Singaporeans have in the first place?

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