Saturday, September 21, 2013

Jeremy Sammut: Affordable health and ageing policy in Singapore

The Abbott government's decision to trim minister's titles has been criticised by commentators concerned that important issues, like population ageing, are no longer clearly tagged as portfolio responsibilities.

There is no doubting the policy challenges posed by the unprecedented ageing of the population in areas such as health and aged care. However, critics of the decision not to a have a designated 'Minister for Ageing' ignore the much bigger issue. The ability of governments to address ageing depends on the fiscal capacity to undertake ageing-related initiatives. Some countries are better equipped financially to do so than others.

Since 2007, the Singapore Government has introduced a comprehensive range of measures to help the elderly remain in the workforce, access affordable healthcare, stay physically and mentally well, and continue to live in their own homes.

As detailed in William A. Hasetline's new book, the 'whole of government' approach has been coordinated by a Ministerial Committee of the heads of government agencies, and has encompassed major investments in health and aged care services.

What is remarkable about Singapore compared to Australia and especially Europe is that these ageing-specific policies (which include a doubling of the health budget over the next five years and increased subsidies for aged care and rehabilitation services) are affordable and have not resulted in budget deficits.

A major reason for this is the limited role government plays in the Singaporean health system.

Due to the Medisave health savings account system established in the 1980s, the majority of health care (around two-thirds) is funded by private expenditure. Personal self-funding of health services has not only led to Singapore spending the least on health of all high-income nations in the world (while still achieving excellent health outcomes), but has also led historically to government funding accounting for only one-quarter of the 4% of GDP spent on health.

In recent years, additional spending on ageing-related health spending has pushed total government health spending up to 1.5% of GDP, which is still far lower than in Australia (6.4% of GDP).

In Australia, it is generally recognised (as detailed in the Intergenerational Reports) that health is an area of government that will involve the most difficult and costly ageing-driven challenges. What isn't sufficiently recognised is the fact that because 70% of national health expenditure is funded by taxpayers, primarily via Medicare, it is much more difficult for Australian governments to deal with the impact of ageing in health and other ageing-sensitive policy areas in a fiscally responsible way.

As Singapore shows, when individuals take personal responsibility for their own health care, governments have much greater financial discretion to systematically tackle the ageing challenge.

This is another reason why health reform - including the use of health savings accounts in Australia - needs to be on the national agenda. 

Dr Jeremy Sammut is a Research Fellow at the Australian Centre for IndependentStudies

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