A historic milestone was reached when the Prime Minister first introduced the Pioneer Generation Package. This Package was also accorded much prominence in Deputy Prime Minister and Finance Minister Tharman Shanmugaratnam’s Budget Statement 2014. This is most significant, coming at the start of the SG50 celebrations for the 50th Anniversary of the founding of modern Singapore.
Prior to the introduction of this Package, surveys and feedback have singled out the key concerns of our ageing population: income security and health problems. The elderly are worried about healthcare affordability and desire greater social assurance to achieve peace of mind. But this is often misunderstood as calling for increased welfare handouts and healthcare spending that may be unsustainable. Singapore government policies in the past have been more cautious and less generous in providing social services and public assistance.
The Pioneer Generation Package, to many, represents a shift from the past. It is a necessary means to support the model of healthcare financing in Singapore (predicated on the 3Ms – Medisave, Medishield and Medifund), as it will buttress further the tax-based government health services, with targeted subsidies through a network of public hospitals, polyclinics and public health services. This is unlike the American situation where the shortcomings of market-based private voluntary health insurance have had to be complemented by a public program to support the elderly retiring without employment-based coverage.
The bulk of the package is aimed at supporting the introduction of the new Medishield Life scheme in 2015. This will be a compulsory and universal social insurance plan to cover catastrophic or high-cost illnesses for the entire population from birth to death, including those with pre-existing diseases. The premiums will have to be affordable to the elderly and the low-income, and the Pioneer Generation Package will provide insurance premium subsidies for this group, as well as subsidies for outpatient care. Fuller details of these subsidies and the benefits of Medishield Life will be released through this, and next year.
The Pioneer Generation Package is targeted at the 450,000 or so Singaporeans born before 1950. They began working before the founding of modern Singapore in 1965 and the majority of them are unlikely to have built up enough, or any, savings. The implementation of compulsory savings through the Central Provident Fund and introduction of Medisave came in 1984, late in their working lives, and hence these pioneers would not have enough monies in their CPF or Medisave accounts to pay for the rising costs of medical care without family support or public assistance. A significant number among this group are elderly women who may not have worked in their younger days, and in their later years, are widowed or single, and hence reliant on the state for healthcare support.
The pioneer generation – like all ageing populations worldwide – is exerting greater pressure on government health services and public finances, but also demanding more and higher quality public services, including healthcare for chronic disease conditions. A minority of them will incur huge medical expenses. Stronger risk-pooling mechanisms like catastrophic insurance could provide financial protection. But the majority would require regular outpatient visits to family doctors and occasional specialist referrals. Other than topping up Medisave balances to pay for their Medishield Life premiums, they will also need funds for other recurrent healthcare expenses like consultation and medication, including cost-effective preventive care such as selected screenings and immunisation.
As Singapore moves to develop the essential healthcare package for its pioneers, several questions need to be answered. What conditions will be covered and what range of coverage will be extended for each condition? How much of the healthcare cost will be covered – and will there be means-testing by defined limits of subsidy and cost sharing?
The first question will continue to be asked as greater demands are made to extend the scope to cover more conditions, and long term and social care. The latter spans a range of services, from day rehabilitation to dementia day care to hospice care. Coverage of more long term and social care services will stimulate greater demand to promote home-based and community care, instead of giving perverse incentives for hospitalisation. But these services must be proven to be cost-effective as alternatives to institutionalisation. The second question is probably the most difficult to address as it is loaded with uncertainty and risks, including longer term financial implications for sustainability and cost-sharing between stakeholders. How much will be subsidised or charged, and what is the balance of the healthcare costs to be shared?
These are especially relevant in the finer points of implementing the package, together with the Medishield Life scheme in 2015. Like all well-intentioned public programmes, we hope that this package will not deteriorate into the usual abuses in entitlement, not so much by the target group as by providers on the supply side. In the course of its implementation, we must ensure that there is no inducement for greater consumption and use of services that are neither cost-effective nor appropriate for the elderly patient, just because the money is available.
The Pioneer Generation Package is limited to a special cohort with a defined life span, who has contributed in the past. Fully funded from the current Budget, we will not witness the carrying over of any burdens to future generations. However there are a number of younger retirees who are already asking if they too will benefit from such a package in future. Who will pay for the medical bills of the future ageing population whose savings now are being eroded by inflation? How do governments implement future transfers without imposing more taxes and user fees? It is all very well to be generous and filial when we are currently accumulating wealth and savings while we are younger, but what about the future when healthcare costs and other risks hit us more and more? Can we afford to have more such top-ups and transfers or subsidies then?
Different groups including the PAP Senior Generation and the Women’s Wing have come up with more recommendations for extended benefits and coverage. In the days ahead we can expect more suggestions – and lobbying – during the coming Budget and Committee of Supply debates. How much to give will depend on how much society as a whole is willing to help its ageing citizens and whether we can afford it. But what we give our pioneer generation will also set the stage for future generations to come. It is critical that we get it right from the start!
Dr Phua Kai Hong is a health economist who teaches health and social policy at the Lee Kuan Yew School of Public Policy, National University of Singapore. This piece is a modified version of the article “Pioneer package – why the basics matter”, which was published in the TODAY newspaper on 23 February 2014.
Photo Credit: Photos by Terence Tan (PM Lee Hsien Loong Facebook)