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Vol 20, No. 05, May 2016   |   Issue PDF view/purchase
Healthcare Cost Effectiveness in Singapore

Many countries in Asia are facing an ageing population and the growing demand for healthcare has never been more urgent. Good quality healthcare is expensive, and many of the most-developed nations of the world are finding that the ever-rising costs for quality care are unsustainable. Singapore, on the other hand, has dexterously managed to keep its costs low without sacrificing quality. In fact, it has achieved exceptionally high rating from the World Health Organisation while spending less per capita than any other high-income economy. Singapore continues to spend less than four percent of GDP for healthcare, by far the lowest figure among all other high-income countries in the world. United States, for example, spends almost 18 percent of GDP annually [1].

Although Singapore’s healthcare system is comparatively more efficient than many other countries, it still faces several difficulties. With its rapidly growing proportion of elderly Singaporeans, managing resources and public expectations in the country has become increasingly complex.

The philosophy of Singapore’s healthcare system consists of three pillars. Firstly, the country intended to build up a healthy population with preventive health cares and to encourage healthy lifestyles. Secondly, Singapore also emphasises personal responsibility towards healthy living through the “3M” (Medisave, Medishield and Medifund) system. Lastly, the government is responsible for keeping the healthcare costs down by controlling the supply side of the healthcare services and providing heavy subsidies at public healthcare institutions.[2]

Even with the 3M framework, the government was not able to foresee an ageing population and was tasked with a huge challenge to effectively manage the high healthcare cost of attending to the elderly. However, it does seem that the Singapore government is heading towards the future with a robust plan to battle ageing in Singapore.

MediShield Life Scheme

In the past, many critics have mentioned that Singapore under a scheme without risk pooling was dangerous as individuals have to be responsible for their own costs. However, this was tackled with the introduction of Medishield Life Scheme in 2015. MediShield Life is a basic health insurance plan which protects citizens and permanent residents from large hospital bills. When MediShield Life pays for their large hospital bills, they will pay less in Medisave. MediShield Life works by pooling and spreading the costs of large bills across all its members. This is called risk-pooling and is the basis of how MediShield Life works. [3]

Agency for Care Effectiveness (ACE)

The government of Singapore also recognised the need to take on a greater proportion of healthcare cost with the ageing population. The policy shifted and to look into investing in infrastructure that is sustainable for the future generations. The Health Minister of Singapore, Gan Kim Yong recently mentioned:

"The current challenging economic outlook is a timely reminder of the need to ensure sustainability. Not just for ourselves but for future generations," he said. "Therefore, we need to choose care that is appropriate to needs, so that we can make the best use of our limited resources." [4]

Gan introduced the basis of Agency for Care Effectiveness (ACE) in 2016 that will look into high cost treatments and technologies, systematically evaluate and develop guidance on the proper use of such treatments and technology, and encourage providers to manage costs while providing quality care.

To conclude, every country is dealing with their fair share of healthcare cost issues in this fast-changing world. With the increment of technology comes the price that the government has to manage to ensure sustainability. Healthcare cost effectiveness will be a persisting topic over the next decade or so with an ageing population all over the world – high quality healthcare would not do with a want – it has become a necessity.


1. https://www.brookings.edu/~/media/press/books/2013/affordableexcellence/affordableexcellencepdf.pdf

2. https://assets.ce.columbia.edu/pdf/actu/actu-singapore.pdf

3. https://www.moh.gov.sg/content/moh_web/medishield-life/resources---faqs/healthcare-financing-in-singapore.shtml

4. https://www.channelnewsasia.com/news/singapore/a-paradigm-shift-needed/2691326.shtml

Written by: Clarrie Si Qian Ng

Clarrie just graduated with a Master's in Asia Pacific Policy Studies from the University of British Columbia. She is interested in social media, political communication and education. You can follow her on Twitter @clarrieng.

Written by: Clarrie Si Qian Ng

Clarrie just graduated with a Master's in Asia Pacific Policy Studies from the University of British Columbia. She is interested in social media, political communication and education. You can follow her on Twitter @clarrieng.

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