This document discusses health care financing trends in Asia. It notes that most countries in the region rely heavily on out-of-pocket spending for health care. Some countries like Korea, China, and Vietnam have expanded social insurance programs. High costs for drugs and diagnostics account for 50-60% of health budgets in countries like China. The document then compares health expenditures and systems across several Asian nations. It analyzes factors influencing Singapore's high health system performance rankings despite relatively low expenditures. The hybrid public-private model in Singapore relies on personal savings, insurance, and subsidies to finance its universal health care system in a sustainable manner.

1. Health Systems Financing in Asia
Dr Phua Kai Hong, AB cum laude SM (Harvard), PhD (LSE)
Lee Kuan Yew School of Public Policy
National University of Singapore

2. Current Trends and Issues in
Health Care Financing in Asia
• Predominantly out-of-pocket expenditure in
WHO SEARO and WPRO (Asia-Pacific)
• Growth in social insurance and less taxation in
WPRO region (eg Korea, China, Vietnam)
• Increasing catastrophic expenditure and
impoverishment due to healthcare spending
(China and transitional economies)
• High expenditures for drugs and diagnostics
(50-60 % of total health budget in China)
• Strong fundamentals and driving forces for
increasing demand and consumption

3. Comparative Health and Expenditure
in Selected Asian Countries (WHO Report 2000)
$/capita (Int $) Public/Total %GNP %Pop>60 DALE
Japan 2373 (1759) 80.2 7.1 22.6 74.5
Korea 700 (862) 37.8 6.7 10.2 65.0
China 20 (74) 24.9 2.7 10.0 62.3
India 23 (84) 13.0 5.2 7.5 53.2
Singapore 843 (750) 35.8 3.1 10.3 69.3
Brunei - (857) 40.6 5.4 5.0 64.4
Malaysia 110 (202) 57.6 2.4 6.5 61.4
Thailand 133 (327) 33.0 5.7 8.5 60.2
Philippines 40 (100) 48.5 3.4 5.6 58.9
Indonesia 18 (56) 36.8 1.7 7.3 59.7
Vietnam 17 (65) 20.0 4.8 7.5 58.2
Myanmar 100 (78) 12.6 2.6 7.4 51.6
Cambodia 21 (73) 9.4 7.2 4.8 45.7
Laos 13 (53) 62.7 3.6 5.2 46.1

4. Health Systems Performance
WHO Rankings 2000
Health Expenditure
% GDP Per capita
1. France 9.8% $2,369
2. Italy 9.3% $1,855
3. San Marino 7.5% $2,257
4. Andorra 7.5% $1,368
5. Malta 6.3% $551
6. Singapore 3.1% $876
7. Spain 8.0% $1,071
8. Oman 3.9% $370
9. Austria 9.0% $2,277
10. Japan 7.1% $2,373

5. WHO Health Systems
Performance Assessment
• Health Attainment (Effectiveness)
• Responsiveness (Efficiency)
- basic amenities, social support, respect,
confidentiality, autonomy, choice,
communications
• Fairness in Financing (Equity)
- distribution of risks, social protection

6. Effects of Health Care Financing
and Payment Systems
• EQUITY Who pays? Who benefits?
- Distribution
- Access
• EFFICIENCY Supply & Demand
- Allocation
- Production
• EFFECTIVENESS Outcomes
- Quality of Care
- Health Status

7. Comparative Health Expenditure in
Selected Developed Countries
U.S.
Germany
Canada
Japan
U.K.
Singapore
Year

8. Some Reasons for Singapore’s
High Ranking and Low Expenditure
• Relatively high GNP growth in denominator
• Lower consumption due to age structure
(age-adjusted projection up to 6-8% of GNP)
• Strong budgetary controls on public spending
• Absence of comprehensive health insurance
• Government subsidies for public health and
differential pricing for personal consumption
• ? Cost-sharing and co-payment system

9. Health Expenditures as % of GDP
in East Asian Economies (2000)
• National Health Insurance Systems
Japan 7.1
Korea 6.7
Taiwan 5.0
• National Health Service Systems
Hong Kong 4.7
Malaysia 2.4
Singapore 3.1

10. Healthcare Expenditure in East Asia
% GNP Public:Private
Japan 7.1 80 : 20
Taiwan 5.0 66 : 34
Malaysia 2.4 58 : 43
Hong Kong 4.7 54 : 46
Korea 6.7 38 : 62
Singapore 3.1 36 : 64

12. Asian Health Care Financing Systems
With Universal Coverage
• Social Health Insurance
- Japan, Republic of Korea, Taiwan, Thailand
• National Health Service
- Singapore, Hong Kong, Malaysia, Sri Lanka
Without Universal Coverage
• Social Health Insurance
- China, Vietnam and transitional economies
• National Health Service
- India, Indonesia and other developing countries

13. Selected Health Care Financing -
Social Health Insurance Models
• JAPAN
Universal health insurance (1922/1939)
NHI Law amended (1984/1990)
Trial DRG/PPS in 10 Hospitals (1/11/1998)
Long term care insurance (1997/2000)
• KOREA
Universal health insurance (1976/1989)
Health Care Reform Committee (1994/1997)
K-RDRG Pilot Program (1997-1998)
• TAIWAN
Universal health insurance (1995)
Partial DRG system (from 1998)
Cost-containment measures (from 2000)

14. Selected Health Care Financing –
National Health Service Models
• SINGAPORE
National Health Plan (1983)
Medisave/Medishield/Medifund (1984/1990/1993)
Review Committee on National Health Policies (1992)
White Paper on Affordable Health Care (1993)
Casemix Funding (1999)
Eldercare Fund/Eldershield (2000/2002)
Enhanced Medishield/Private Insurance (2005)
• HONG KONG
Scott Report (1985)
Consultation Paper - Towards Better Health (1993)
Harvard Consultant’s Report (1999)
Consultative Paper - Lifelong Investments in Health Care(2000)
Proposal for Supplementary Private Insurance (2010)

15. Changing Features of the Singapore
Health Care System
Mixed Public-Private Health Care Market
• Choice of private and public systems
• Competition and integration between public,
private and voluntary sectors
• Appropriate mix of financing methods
• Co-payment at the point of consumption
• Selective insurance to avoid moral hazard
• Targeted public subsidies to address inequity
• Government benchmarks for prices & quality

16. Public-Private Health Expenditure
in Singapore (1965-2000)

17. Singapore Health Statistics
– Past and Present
1980 2005
• Life expectancy 70 years 80 years
• Infant mortality 12/’000 2.5/’000
• Aged/total population 5% 9%
• Public hospital mix 85 % 80 %
• Health expenditure/GDP 3% 4%
• Health expenditure/ 6% 7%
government budget
• User fees recovered / 3% 60%
public expenditure

18. Singapore’s Hybrid
Health Care Financing
Seeks to avoid either extremes -
Welfare State Free Market
Tax-funded/ Fee for service
Social insurance Private insurance
- ‘Free’ services - Moral hazard
- Low quality - Adverse selection
- Inefficiency - Inequity

19. Healthcare Financing Strategies
Instill personal and family responsibility
(Cost-sharing)
+
Ensure future sustainability with ageing
and avoid inter-generational problems
(Savings)
+
Enhance risk-pooling and social protection
(Insurance)
+
Target subsidy and equitable distribution
(Taxation)

20. Health Care Financing in Singapore
Financing
Method
Taxes PUBLIC HEALTH SERVICES
Private PRIMARY
Payment CARE
Medisave
Compulsory ACUTE
Savings CARE
Medishield
Social/Private CATASTROPHIC (Eldershield)
Insurance (LONG TERM CARE)
Medifund
(Eldercare fund)
PUBLIC SUBSIDIES
Source: Dr. Phua Kai Hong

21. Public Hospitals: Bed Distribution

22. Health Care Financing Reforms -
The Unfinished Agenda
1983 Blue Paper – National Health Plan
1984 Medisave
1990 Medishield
1993 Medifund
1993 White Paper - Affordable Health Care
2000 Eldercare Fund
2008 Eldershield
2005 Enhanced Medishield/Private Insurance
2017 Means Test (Targeted Public Subsidies)
2018 ?

23. The Singapore Health Care Model
• Singapore’s health system ranked extremely high
• Reputation for high quality, choice and efficiency
• Equity risks covered by subsidies and safety nets
• Fully funded medical savings with social insurance
to finance increasing needs of ageing population
• Balance between health care supply and demand
with pricing and subsidy, while containing costs
• Goals of efficiency, equity, quality and sustainability
to be maintained by appropriate public-private mix
in provision, financing, regulation and education

24. Similar Approaches to Old Age Security
and Health Care Financing
World Bank’s 3 Pillars for Old Age Security
• Redistribution (Taxation)
• Savings
• Insurance
Singapore’s 3M for Health Care Financing
• Medisave (avoids inter-generational transfers)
• Medishield (pools risks for catastrophic care)
• Medifund (subsidizes the poor and indigent)

25. Health Expenditures and Ageing
14 United States
Health Expenditure as % of GDP
12
Canada
France
10
Finland Switzerland
Australia Russia Sweden
Germany Norway
Italy
8 New Zealand Belgium
Spain Japan
Ireland Portugal United Kingdom
Korea
Taiwan Denmark
6 Greece
Hong Kong
4
Malaysia Singapore
2
0
4 8 12 16 20 24 28
Aged Dependency Ratio (>65/Aged 15-64)

26. Population Ageing:
Impact on Health Expenditure
• Health expenditure will increase with
growing proportion of the aged
• Health expenditure will increase with
longer survival of the aged population
• Health expenditure will increase with
widening periods of morbidity and
disability before death

27. Population Ageing Trends by 2030

28. Health and Long Term Care Financing
in Japan
• Universal health insurance 1922-1939
• National Health Insurance (1961)
• Health Service Law for the Aged (1982/1986)
• National Health Insurance amendments 1984-1990
• The Golden Plan / New Golden Plan (1990) -
10 -Year Gold Plan for the Development of Health
and Welfare Services for the Elderly
• Public Long Term Care Insurance Act (1997) -
implemented in 2000
- 50% insurance (40 years and above)
- 50% general taxation

29. Health and Long Term Care
Financing in Singapore
FINANCING METHOD 3-M SYSTEM + 2E
• Personal savings
• Compulsory savings • MEDISAVE (1984)
• Catastrophic • MEDISHIELD (1990)
insurance • + ELDERSHIELD(2002)
• Disability insurance • MEDIFUND (1992)
• Endowment • + ELDERCARE FUND
• Taxation (2000)

30. Special Conditions in Asia
• Fastest pace of economic transition
• Highest rates of population ageing and
population growth
• Great propensity for savings
• Strong traditional family support systems
Old age security and health care financing
must contend with such considerations