INFLATION IN HEALTHCARE COST

INFLATION IN HEALTHCARE COST: 6.

Mr Sam Tan Chin Siong asked the Minister for Health: (a) what has been the inflation in healthcare cost over the past one year; (b) what are the main factors driving this increase; and (c) what plans does the Ministry have to help the lower income Singaporeans deal with these increases.

The Minister for Health (Mr Khaw Boon Wan): Mr Speaker, Sir, healthcare inflation rate was 6.2% over the past one year. This is higher than normal, as it has averaged 2.4% per annum during the preceding five-year period.

The main factors driving the recent increase were: (a) the large increase in oil prices resulting in higher import prices for many medical supplies, (b) the increase in wages of healthcare workers, and (c) the GST increase in July 2007.

Healthcare inflation covers the price changes of a wide range of healthcare components. Not all increased at similar rates. The components which went up

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significantly last year were: (a) the fees in public and private hospitals, (b) the specialist outpatient fees at public institutions, and (c) Chinese herbs and Chinese physicians' treatment fees.

The prices of these components have actually been fairly stable over the last five years. The only exception was the Traditional Chinese Medicine components which started moving since the second half of 2005 and have moved up by 33% over the last two years.

Some healthcare inflation is inevitable as we import most medical consumables and the wages of healthcare workers form a big part of healthcare cost. For basic healthcare services in public institutions, we will ensure that they remain affordable to all Singaporeans.

First, we have fully absorbed the impact of GST increase for subsidised patients.

Second, we subsidise patients heavily, at 80% for Class C and 65% for Class B2.

Third, we are reviewing MediShield to increase its payout for large hospital bills but Singaporeans should do their part by subscribing to an appropriate medical insurance plan.

Fourth, the Government will provide Medisave Top-ups whenever the Budget allows, particularly to the elderly and those with low income. In addition, the recent payment of the Workfare Income Supplement scheme will directly increase the Medisave Accounts of many low-income workers.

Fifth, we push our hospitals to reduce cost and cut out wastages wherever possible, and publish their bill sizes so that patients can make appropriate

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choices of which hospital or clinic to seek services from.

Finally, the best approach to cope with rising healthcare cost is ultimately for all to stay healthy. We will get more Singaporeans to adopt a healthy lifestyle and help those with chronic diseases to manage them well so as to avoid future complications of their conditions.

Mr Sam Tan Chin Siong (Tanjong Pagar): Sir, I would like to thank the Minister for giving comprehensive answers to the questions. I would like to ask the Minister: given the inflation rate of 6.2%, will his Ministry be prepared to consider increasing the percentage of subsidy? I would also like to ask the Minister whether there is any room to consider asking the Singapore Medical Association (SMA) to reinstate the guidelines on medical fees, so that consumers will have a wider choice to consider. If there is indeed room for SMA to reinstate the guidelines, will the Minister support the SMA's initiative in this reinstatement?

Mr Khaw Boon Wan: Our healthcare subsidy for Class C, Class B2 and, in fact, also Class B1 is something that has evolved over many years, and is quite appropriate for the income level that the subsidy was targeting at. Members know that I am making some refinements to this scheme by introducing means testing, so that we can further target it.

As to the headline subsidy levels, I think it is unwise to vary them. In practice, for those who are really in need of help despite the heavy 80% subsidy, there are other ways of assisting these patients, and Medifund is one of those schemes. In fact, for those who apply to Medifund, because they are distressed by the 80% subsidy, often the bills are just written off, in which case the subsidy is actually 100%.

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As for SMA, the fee guidelines have been around for a long time. After the Competition Act was enacted, SMA sought legal advice. The legal advice, I understand, that was given to SMA was that the SMA directed fee schedule may be construed as anti-competitive. That was the reason which led to SMA withdrawing the fee schedule.

Let me use this opportunity to explain that the SMA's schedule was just a guideline. It was not enforceable. It did not mean that everybody would follow the fees prescribed. In fact, for a long time, many doctors and specialists, if their patients are willing to pay, go beyond the fee schedule. So the fee schedule was more a reference. Whether it is reintroduced or if it is kept, really makes very little difference. It does serve a certain purpose. It does provide the public to have some sense that the likelihood of a clinic consultation would follow this range of prices.

To me, a more important point is not the fee schedule. And that is why when I published the hospital bill sizes, I actually wanted to educate the people to move away from the fee schedule.

If I may give an example, it is like going to a restaurant. We can look at the menu and see different items with different prices. But what finally counts to a diner or to a patient is what is the final bill. That final bill depends on what we order. If we order very expensive abalone, the bill is likely to be high.

Likewise, in the case of hospitals, what finally counts is the total bill which the patient has to pay, and that will determine whether it is affordable or not. And that is the reason why I collected all those data, averaged out the statistics and published them by treatment and disease conditions, whether it is delivery, lasik, by-pass or something else. That allows for a better and more meaningful

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comparison of charges between hospitals and clinics. I hope that will help guide our patients. If a doctor says that you need a by-pass, and you can check into our website and you can see a wide range of by-pass bill sizes.

I know that, in practice, it is more likely than not that the patient will not check, but the general practitioners (GPs) may check. You may go to a GP with some problems. The GP will be better able to interpret this data. I hope that they will be able to better advise their patients which clinic to consult and which doctor to go to.

I think this will be particularly useful especially when we improve this publication to also include qualitative data like complication rate, mortality rate, morbidity rate, and so on.

Mdm Halimah Yacob: Sir, transparency in billing is obviously a progressive move. I would like to ask the Minister whether there is any mechanism within the Ministry of Health to monitor whether there are excessive charges being imposed, particularly among the private doctors, especially specialists, now that we do have shortages in specialists in certain areas. Is there any mechanism to monitor that, because I think we all agree that ---

Mr Speaker: Mdm Halimah, no speeches, ask your question, please.

Mdm Halimah Yacob: We agree that there is a difference in healthcare services and dining in restaurants. So some amount of supervision or monitoring is necessary.

Mr Khaw Boon Wan: Sir, I certainly agree with Mdm Halimah that a certain amount of supervision and watching over is necessary, and we do. We spend a lot of time monitoring clinical standards and less on charges in the private sector,

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which is based on willing-buyer-willing-seller. As it is the private sector, we also do not want to interfere too much in the market. But where I felt I should intervene is that patients may not be as well informed. So my job is to collect as much information as is practical and put them into statistical tables which can be interpreted more easily, and push it out to the market place. Then it is really up to the patients to decide. If despite knowing that this particular doctor for a particular type of treatment is always on the high side, patients still flock to the clinic, then I think it is not for me to say, "Why are you not going to other places?" There must be some reason why the clinic remains crowded. I see that as a more important role that I can play.