All you need to know about Singapore's healthcare reforms

Fatter wallets for private healthcare firms.

According to Maybank Kim Eng, Prime Minister Lee’s healthcare measures in his recent National day rally speech are supportive of its positive view on the private healthcare sector.

While the primary aim is to tackle ongoing concerns of Singaporeans about the affordability of healthcare, the other underlying trend is that private healthcare sector will play an increasingly significant role.

Maybank noted that two of the key changes include Medisave extension and Community Healthcare Assist Scheme (CHAS).

Here's more:

What is Medisave? Medisave is a national medical saving scheme where Singaporeans/ PRs put aside 7% - 9.5% (depending on age group) of his monthly salary.

This personal Medisave account can be withdrawn to pay hospital bills up to a limited amount and number of outpatient treatments of the account holder and his immediate family members.

To extend Medisave usage for outpatient treatments. Limited treatments claimable under Medisave have caused a lot discontentment in the past. Importantly, outpatient hospital treatments, which are expanding at a faster pace compared to inpatient treatments, are not claimable.

In PM Lee’s speech, he highlighted that the government will extend the coverage of outpatient treatments for Medisave.

Positive for private hospitals. Private hospitals tend to have a higher emphasis on outpatient services compared to public hospitals.

Outpatient volume is also increasing at a faster rate compared to inpatient. We therefore believe the ability to use Medisave for outpatient services will drive higher demand as patients are now better able to afford and more willing to pay for better quality healthcare services.

What is CHAS? CHAS is one of the Ministry of Health’s programme to provide accessible and affordable medical care to lower income Singapore Citizens (below SGD1,500 for Blue Tier and SGD900 for Orange Tier).

Under this scheme, eligible beneficiaries can receive subsidies for outpatient medical treatments for acute/chronic conditions at participating CHAS General Practitioners (GP). CHAS beneficiaries will also enjoy subsidised referrals to specialist outpatient clinics when required.

Removal of minimum age limit of 40 years for CHAS. In the National Day Rally speech, PM Lee announced the removal of age restriction for this scheme.

Before the removal of 40-year old age restriction for CHAS, it is estimated that around 0.7 million Singaporeans are eligible for the scheme, with around 0.3m registered. With the removal of age restriction, we conservatively estimated that 1.5 million Singaporeans will entitle for CHAS.

Should drive traffic towards private clinics. The widening pool of eligible beneficiaries of CHAS will drive traffic towards private clinics, which typically are less crowded and have shorter queue times.

By our estimation, after the inclusion of CHAS subsidies, the price difference between private and public clinics is minimal. For chronic conditions where an annual cap has been set, we foresee that patients will only visit public clinics after fully utilising their available spending cap.

Overall this move is consistent with government’s long-stated aim to channel patient traffic away from the crowded public polyclinics.

Other key measures immaterial to private healthcare players
1. Increase subsidies for the lower- and middle-income patients who are visiting Specialist Outpatient Clinics (SOCs) and means-test these additional subsidies so that the right people are being targeted. These targeted patients mostly visit public SOCs.

2. Revamp MediShield to MediShield. LifeMedishield is a low cost basic national insurance scheme to help with basic hospitalization bills. Premiums can be paid by Medisave. This will cover Singaporean for life from up to 90-year old.

This will also allow opt-in for the elderly dropped out individuals and those with pre-existing illness into the Medishield scheme.

Additionally, there will be no more opting out from Medishield. MediShield Life will provide better protection for very large hospital bills. 

Medishield coverage is mainly intended for coverage ofpublic hospital fees in B2 and class C ward where 100% of the fees are allowed to be included in claims computation. For private hospital fees, Medishield only allows 35% of the fees to be included in claims computation.