Budget 2012 Speech (Part 6): Better Healthcare, from Hospital to Home

Yearly healthcare expenditure will be doubled from $4 billion to about $8 billion over the next five years. -AsiaOne
Fri, Feb 17, 2012

Better Healthcare, from Hospital to Home

I will now move on to the significant measures we are taking in healthcare.

We will double our yearly healthcare expenditure from $4 billion to about $8 billion over the next five years. It is about more and better infrastructure, from hospitals to home-based care. It is about engaging many more healthcare professionals, such as doctors, nurses and Allied Health Professionals, and paying them more competitively. And it is about making it more affordable, including for the middle class.

We will expand bed capacity in our acute hospitals, as well as our ability to provide longer-term care for the elderly both in institutional settings, and at home. But we must also shift from the current concentration on acute hospital care and move towards providing affordable, long term care. Most importantly, we must make it easier and more affordable for the elderly to stay at home, with access to quality care services when needed.

Expand Healthcare Capacity

First, we will expand public hospital capacity. We will increase the number of beds in acute hospitals by about 30%, or 1,900 beds by 2020. This is more than the capacity of the Singapore General Hospital (SGH) today.

Second, we will add another 1,800 Community Hospital beds by 2020, more than a 100% increase from today. Besides the new Community Hospitals that will be co-located with Khoo Teck Puat Hospital and the new Ng Teng Fong General Hospital, we will add two more Community Hospitals in Outram and Sengkang by 2020.

Third, we will more than double the capacity in long term care services by 2020. This includes nursing homes, home-based health and social care services, day care and rehabilitation facilities, and Senior Activity Centres. We will also improve access to polyclinics and introduce new models of care, such as Medical Centres that provide specialist outpatient services in the community.

The Minister for Health will elaborate on this major expansion and broadening of our healthcare landscape in the COS.

Enhance Affordability

Next, we will enhance affordability of long term care.

We will increase subsidies in our Community Hospitals such that all patients can receive help with their bills. Lower-income patients will receive a 75% government subsidy. Those above the median income, who previously did not receive any subsidy, will now receive a 20% to 50% subsidy. The Community Hospitals that previously had to use charity dollars to offset bills for middle-income patients can now use these resources in other ways – such as providing further help to those in need, or improving the quality of care.

We will also raise subsidies for nursing homes, day care and rehabilitation facilities and home-based care packages so that more in the middle-income group can benefit. Two-thirds of Singaporean households will now qualify for subsidies. As the elderly often do not themselves have income, what this effectively means is that about 80% of elderly will qualify.

Let me illustrate the impact. For a middle-income family with an elderly parent at a private nursing home, the new subsidies will bring down their costs from about $2,800 to $1,700 per month. However, if they opt for a home-based care package, our subsidies will bring the cost down from about $1,400 to $700 per month. Both will be significantly cheaper than before, and home-based care will be about 40% of the cost of nursing home care. This shift should hopefully allow about one out of two frail seniors to enjoy home-based care instead of moving to a nursing home.

Instead of getting external help, some families may prefer to hire a foreign domestic helper, especially when constant attention is required. This may also allow family members to continue working. We will give a $120 grant per month to families hiring a foreign domestic helper to help care for elderly family members who have severe dementia, or are immobile and unable to care for themselves[8]. This is on top of the $95 concession in the Foreign Domestic Worker Levy that all households with elderly persons will continue to enjoy.

[8]: Those unable to perform three or more Activities of Daily Living.

Families with elderly members also find it very helpful to have safety features in their flats. We will subsidise home modifications such as grab bars and anti-slip treatment for bathroom tiles through a new programme, the “EASE” (Enhancement for Active Seniors) Programme. Each citizen household with an elderly member can get home modifications worth around $2,000. They would pay no more than $250 themselves.

We expect this programme to benefit 130,000 households and cost around $260 million over the next 10 years. The Minister for National Development will elaborate on EASE in the COS.

Absorb GST for Long Term Care

GST is currently fully absorbed for Class B2 and C patients in our acute hospitals. I will extend the same benefit to subsidised patients in the long term care sector, extending from Community Hospitals to nursing homes and the range of home-care services. I spoke about this earlier, so that they do not have to pay GST. About 40,000 Singaporeans receiving long term care will benefit.

Medifund Top-up

The enhanced subsidies that we have introduced in this Budget will help many more Singaporeans with the cost of healthcare. However, there will be some who need extra assistance, including not only those with low incomes but also some middle-income Singaporeans faced with high medical expenses. Medifund will help them cope.

I will provide a $600 million top-up to Medifund this year. This will increase the payouts from Medifund by over 20%.

Enhance MediShield

The final plank in our plans to provide better healthcare support for older Singaporeans is to enhance MediShield, which covers them for their major hospital bills. For example, a basic MediShield plan can cover up to 70% of a large Class C hospital bill for a knee replacement. This would reduce the patient’s payment from $6,200 to $1,800, which can be paid for using Medisave.

We will extend MediShield coverage from age 85 to 90, as many more Singaporeans are now living till 90 and beyond. MOH also intends to engage the public on other changes to MediShield, including extending coverage to people who suffer from congenital conditions.

These are worthwhile shifts, and in particular will mean that most Singaporeans will be covered by MediShield for their whole life. But it will also require an increase in premiums across the board

I will therefore provide a one-off Medisave top-up to all Singaporeans currently on MediShield, to help them adjust to the premium increase. As older Singaporeans pay the highest premiums, they will receive a larger Medisave top-up (see Table 2).

[9]: Age at next birthday

The Minister for Health will elaborate on MediShield in the COS.

How Older Singaporeans will Benefit

As all this amounts to a significant package of support for the elderly, let me briefly summarise. Taken together, our strategy of helping the elderly by enabling them to stay at work, helping them unlock the savings in their homes and providing better and more affordable healthcare support will give them peace of mind and a greater sense of security.

a. Older workers will enjoy higher CPF contributions, and reduced income tax bills through a higher Earned Income Relief. Their employers will also receive a Special Employment Credit as an incentive to retain them and reward them adequately.

b. Elderly households who take up the Silver Housing Bonus or the Enhanced Lease Buyback Scheme can gain $20,000.

c. Lower-, and especially middle-income elderly will benefit from enhanced subsidies in Community Hospitals, nursing homes, day care and rehabilitation facilities and home-based care packages. They can gain $480 to $610[10] per month through subsidies for a range of home-based care services, and a further $1,800[11] to add safety features to their homes.

[10]: Based on a home-based care package for an elderly person in a median income household with moderate to severe disability.

[11]: For a household living in a 4- or 5-room flat

d. Older Singaporeans who use long term care services can benefit from GST absorption.

e. Those under MediShield will receive Medisave top-ups to help them pay for MediShield premiums as coverage extends to age 90.

This is therefore a package that will benefit virtually all Singaporean families, including the children who are or will in time be supporting their parents.

Supporting Singaporeans with Disabilities

Let me now move on to talk about what we will do for Singaporeans with disabilities. They are not a very large group in our society – about 3% of Singaporeans, or 100,000 in total. But their lives can be challenging. Parents of children with special needs try their best to cope and bring up their children with the care and love they need. They could do with extra support.

We will provide a stronger helping hand for Singaporeans with disabilities, at each stage of their lives.

Strengthening Early Intervention and Education

Let me start with their pre-school years. We will increase places in centres for children who need intensive early intervention. In addition, in mainstream pre-school classrooms, we will introduce a new programme to provide learning support and therapy interventions to children with mild speech, language and learning delays. Some 2,000 children will benefit from this new “Development Support Programme” when it is fully rolled out.

MCYS will elaborate on this in the COS. We will also make enhancements to our Special Education (SPED) schools, which MOE will speak about in the COS.

Supporting Employment

With better education and a supportive community, more young Singaporeans with disabilities will be able to enter the workforce and remain independent in their adult years.

Chen Min Li is an energetic 23-year-old who graduated from Towner Gardens School, one of our SPED schools. She then went on to complete four years of vocational skills training. She now works in the service crew at Carl’s Junior. Min Li is happy to be able to add to her family’s finances, and according to her supervisors, is one of the most enthusiastic workers at Carl’s Junior.

There are many others like Min Li who want the opportunity to do meaningful work. I will therefore extend the Special Employment Credit to employers who hire SPED graduates, regardless of age. They will get a credit of 16% of the employee’s wages, which is twice as large as the SEC that I spelt out earlier for older workers[12]. With these enhancements, the employer of a SPED graduate who earns $1,000 a month will receive $160 per month in the form of a Special Employment Credit.

[12]: For Singaporean SPED graduates earning up to $1,500 per month, the SEC will be 16% of wages. For monthly wages between $1,500 and $3,000, the SEC is $240 per worker. A lower SEC will also be provided for those with a monthly wage of between $3,000 and $4,000

To help the workers earn more income, I will also extend the Workfare Income Supplement scheme to all SPED graduates who work, even if they are below 35, and double the Handicapped Earned Income Relief for all persons with disabilities (refer to Annex A-4).

Our measures to support their employment will complement what we plan to do under the Enabling Masterplan, such as enhancing vocational training, job placement, and support for continuous improvement in their working years.

Better Adult Care

However, Singaporeans with more severe disabilities will need care throughout their adult lives. This is especially because more and more of them outlive their parents.

They will be eligible for the same enhanced care subsidies that older Singaporeans will receive. Additionally, we will expand places in Day Activity Centres by 25%[13], to allow their caregivers to work or have free time during the day. With our enhancements in adult care this year, a middle-income household can receive up to $5,700 in subsidies to offset 50% of the annual cost of attending a Day Activity Centre. Low-income households will get more.

[13]: 250 additional places

We will also embark on other measures including expanding places in residential homes and providing transport options. The Acting Minister for MCYS will elaborate on these and the other government responses to the Enabling Masterplan Committee’s recommendations in the COS.

Uplifting Lower-Income Families

We know that lower-income Singaporeans have real worries about their day-to-day expenses. And they are concerned about whether their children will do well in school and get a good job.

Our most important solution to help lower-income families is to give their children a high-quality education, and help them keep upgrading their skills as adults so they can take on better jobs. This is a major work-in-progress. We have also taken significant steps in recent years to support their incomes through Workfare, help them own their homes and build up their savings.

More Support for Children from Lower-Income Families

In this Budget, we will provide further financial support for children from less well-off families.

Pre-school Subsidies

We have enhanced our pre-school subsidies significantly in recent years. To provide further support for larger families, we will also introduce a new, per capita household income criterion (PCI) for subsidies.

Take for example a family of five (with three children), earning $2,500 in household income. They will now pay only $20 for each child in child care[14], compared to $110 previously. This is similar to what lower-income families with fewer children would pay.

[14]: Assuming they attend a HDB Childcare Centre costing $620 per month.

MOE Financial Assistance Scheme

We will help more students benefit from the MOE Financial Assistance Scheme by raising the household income ceiling from $1,500 to $2,500 per month. It will mean that 40,000 more students, or twice the original number, will be fully subsidised for their school fees, uniforms and textbooks, and receive a 75% subsidy on their exam fees.

Top-ups to Schools for Discretionary Financial Assistance

We will provide a further top-up to School Advisory and Management Committees of up to $15,000 per year for the next three years. This will give the committees greater certainty of government support and help them introduce new schemes in the school – such as transport assistance for students.

The two enhancements I have just mentioned will also be provided to our SPED schools.

Student Care Fee Assistance (SCFA) Scheme

We will enhance the Student Care Fee Assistance (SCFA) scheme to benefit more families. As student care costs much more than fees and expenses for regular school, we will extend subsidies to a larger group of families than those who qualify for the MOE Financial Assistance Scheme. Subsidies for student care will be extended to families with up to $3,500 in monthly household income. A family earning say $2,500 per month would typically see the amount they pay for student care reduced from $200 to $80 per month.

Top-ups for Education and Social Support

To support the Government’s and community’s efforts, I will also make several top-ups this year.

I will provide a $200 million top-up to the Edusave Endowment Fund to help all children enjoy meaningful enrichment programmes.

I will make a $200 million top-up to the ComCare Endowment Fund to support families in need.

As the community plays a crucial role in helping low-income families, I will also give a total of $10 million to our Self-Help Groups and the CCC ComCare Fund.

Broadening Opportunities for Every Child

The real story, however, is not just about helping families cover their fees and costs in school. What we are providing is a breadth of exposure to every child regardless of family background in a way that few school systems overseas do. We have been building this up across the school landscape, so as to allow every child to discover what they like, and what they are good at.

Muhammad Fairoz is now in Secondary 4 at Yusof Ishak Secondary School. His family has modest means – his father is a factory cleaner and his mother is a housewife. He is doing very well. He has obtained Edusave Merit Bursaries and Scholarships over the last few years, besides the MOE Financial Assistance Scheme. In fact, he has had near perfect scores of 6 academic distinctions every year. He also went to Xi’an on a 10-day cultural exchange programme that was fully funded by the Trips for International Experience Fund that every school gets, plus his Edusave Account.

Fairoz does a lot more in school. He is a tenor in the school choir, which is where his talent was also spotted for the school’s Performing Arts Programme. Last year, he played the role of Professor Higgins in the school’s production of “My Fair Lady”. Now, he wants to go on to do theatre studies so that he can become a stage actor. So that’s how we do it. Give every student the chance to go through varied experiences so that along the way they can discover something they like and that they are good at.

A Fair Tax System

Let me move on now to a broader theme, which involves how the GST affects the poor, and its role as part of a fair system of taxes and benefits.

Our fiscal system is a progressive one, which means that the poor get far more benefits compared to the taxes they pay, and the better-off pay more taxes.

The top 20% of households pay 80% of income taxes collected. We shifted to progressive property taxes last year, and they should become more so over time. Then, there is the GST, which is a flat tax and is therefore on its own, regressive, taking up more of the pay of those with low incomes.

But taken as a whole, our fiscal system has in fact become more progressive over the last decade despite our raising the GST from 5% to 7%. This is because we introduced programmes like Workfare and enhanced our subsidies to help lower-income families. These enhanced benefits are much larger than the increase in GST that they now pay.[15]

[15]: If we add it all up, the average lower-income (2nd decile) household has received $2.40 back in additional permanent transfers for every dollar of additional GST paid over the past five years

These permanent transfer schemes are how lower-income Singaporeans benefit from our fiscal system. Our GST, most of which comes from residents in the upper half of the population by incomes and foreigners, is an important source of revenue that enables us to fund this system of transfers.

In addition, we provided a substantial package of temporary offsets for individuals and households when we raised the GST in 2007. These temporary offsets lasted until last year.

To carry on with these offsets, I will now introduce a permanent GST Voucher to help lower-income Singaporeans. The GST Voucher will provide continuing assurance that our GST does not hurt the poor.

This Voucher will fully offset the 7% GST that the lower half of retiree households pay on their expenses. Many retirees in the upper half will also have their GST offset by a significant amount.

The GST Voucher for other lower-income families (who do not have elderly members) will also offset about half their total GST bills. Further, taking into account the other permanent benefits that they receive through Workfare, housing, education and healthcare, they will get back much more than the GST they pay.

There will be three components to the GST Voucher – cash, Medisave top-ups and U-Save. The amount each Singaporean will get will be based on both their income and the Annual Value (AV) of their homes. This is by no means a perfect system, but it is fair to have both criteria. For example, retirees and homemakers who have no incomes but live in higher-end homes, are generally better off than most lower-income Singaporeans.

GST Voucher – Cash

The cash component will be given to Singaporeans whose incomes fall within the bottom 40%, and who live in HDB flats or the bottom 15% of private properties (those with an Annual Value of up to $20,000).

Those who live in HDB flats will receive $250 in cash each year. Those living in lower-end private properties will receive $100, as long as their incomes are also low (below $24,000)[16]. $100 may not be a large sum, but taken together with the Medisave component of the GST Voucher, it will provide some help for our retirees who live in lower-end private properties. (See Table 3 for full schedule).

[16]: 40th percentile of annual incomes.

GST Voucher – Medisave

The second component of the Voucher will comprise an annual top-up to the Medisave Accounts of older Singaporeans. Those above 65 and living in HDB flats or lower-end private properties will receive this top-up (see Table 4). This would benefit 85% of all elderly Singaporeans.

A 75 year old Singaporean, for example, will receive $350 if he lives in an HDB flat, or $250 if he lives in a lower-end private property.

GST Voucher – U-Save

Finally, the GST Voucher will help lower- and middle-income households through permanent U-Save rebates, to offset part of their utilities bills.

Households living in smaller flats will benefit more. 1- and 2-room HDB households will receive $260 per year, which is equivalent to about three to four months of their utilities bills on average (see Table 5).[17]

[17]: Overall, the U-Save rebates will benefit about 800,000 households (or 75% of all households).

Let me illustrate how the GST Voucher adds up. A retiree couple living in a 3-room flat will receive enough to offset fully the GST they pay each year. They typically pay about $840[18] in GST a year, but will receive $1,240 worth in their GST Voucher. (This is without counting the one-off Medisave top-up they will receive this year, which is not part of the GST Voucher).

[18]: See Annex B-2.

Younger lower-income households (without elderly persons) in 3-room or 4-room flats will also receive a significant GST offset. It should cover about half of the total GST they pay each year.

In total, the GST Voucher will cost about $680 million this year. As I have explained, this will be a long-term feature of our fiscal system and not a scheme of temporary offsets. To ensure that we can provide this GST Voucher irrespective of economic circumstances over the next few years, I will set aside $3.6 billion this year to finance the scheme for the first five years. To do this I will set up a GST Voucher Fund from which payouts will be made in the coming years.


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