February 4th, 2012
On 30 Aug 1983, the Minister of Defence and Second Minister
for Health, Goh Chok Tong, proposed to move the Motion in
parliament that the House approved in principle the Medisave Scheme
which would enable Singaporeans to set aside their own savings to
meet future hospitalisation expenses. Dr Toh Chin Chye totally
disagreed with the approach of Medisave and abstained from the
voting in the resolution:
Dr
Toh Chin Chye
(Rochore): Mr Speaker, Sir, I will not go over ground
which has been so admirably covered by the Member for Ayer Rajah. I
share with him on the desire to have to push or reinforce
preventive medicine. But I also would like to remind the Member for
Ayer Rajah that we are human beings made of flesh, and flesh has
its weaknesses.
The Member for Ayer Rajah is a professional. Therefore, I would
not argue with him over those professional points that he has
raised. Instead, I will cover the financial aspects of Medisave. I
feel that Medisave is being treated in isolation. Medisave is, as I
pointed out in the Budget debate, a part of the Government budget
and our budgets have been in surplus every year. It is misleading
of the Minister for Health to go around the country and create the
impression that we are encountering problems like the United States
which face running deficits because of expenditure on social
security programmes and defence. In fact, the only social security
programme we have in Singapore is health. It is wrong to forget
that even now patients make direct payments for medical treatment
and hospitalization. It is wrong to create the impression that we
are distributing health care for free. Payments made by patients
constituted 24% of the recurrent expenditure of the Ministry of
Health in 1981.
I know it is politically unpleasant to announce periodically
increases in hospital charges. It was my job at that time and I can
recollect the castigation that I received in the newspapers each
time I raised the rates. But this is unavoidable. Costs are bound
to go up with each year if for no other reason than because of
annual increases in wages. And this applies not just to the
Ministry of Health but equally to all other Government bodies and
departments.
The Ministry of Health cannot avoid revising medical and
hospital rates. The CPF account is a convenient means to collect
hospital charges. For that, the Minister for Health has to be
congratulated. I know there are bad debts incurred by the
hospitals. These bad debts will now disappear. But for that matter
if hospital cost will have to be paid from savings, why not allow
patients to pay the cost of hospitalization from their savings
accounts in the POSB? And there are over two million accounts.
The provision of health care facilities must be accepted as a
social responsibility. It is not that an individual who has the
misfortune to be inflicted with some particular disease is solely
responsible for searching the facilities to cure his illness. This
is a social responsibility which is accepted by governments all
over the world. This is part and parcel of the organization of
individuals into societies. It is a measure of the degree of
civilization.
The problem which we are faced with is the cost of financing.
Who is to pay? I believe it is wrong to say that the Government is
paying for the cost of medical care. The costs of government are
borne by taxpayers, us, either through direct taxation, like income
tax, or indirect taxation. So the problem really is reduced to
finding an equitable distribution of revenue in the Consolidated
Fund to meet different objectives and purposes of the
Government.
Medisave calls for direct payments by patients to the cost of
running ‘C’ class beds. The recurrent expenditure of the entire
Ministry of Health, i.e. the cost of administration, the cost of
outpatient departments, the cost of all first, second and third
class wards in all hospitals, was $257 million in 1981. Let us
assume that the operating cost of ‘C’ class beds is 70% of the
total expenditure, which is a generous assumption. This means that
‘C’ class wards cost $180 million. The revenue received by the
Ministry of Health in that year, 1981, was $62 million, leaving a
deficit of $118 million which was met out of the Consolidated Fund.
However, Payroll Tax collected was $106 million in 1981, a sum
sufficient to meet the deficit for operating ‘C’ class wards.
Let me take the House to 1982. The Ministry of Health
expenditure was $321 million. And again assuming that ‘C’ class
wards cost 60%, the sum would be $192 million. Payroll Tax
collection alone was $161 million, leaving a deficit of $31 million
which was more than covered from revenue collected by the
Ministry.
What we are faced with, therefore, is the problem of
apportioning of responsibility and cost. The propaganda put out by
the two Ministers for Health is that medicine is a commodity that
is consumed. I think it is a very dangerous assumption to believe
that persons love to fall ill, that they go around shopping for
sicknesses in the supermarkets, or that they like to spend their
weekend in a hospital as if the hospital is a hotel. Or that the
food served in the hospital is a la carte or buffet. That is
perverse propaganda. And, therefore, Medisave is now being treated
as a consumption tax. This makes it difficult for one to support
the arguments that have been put forward for Medisave. I do not
know why the Member for Ayer Rajah was sold over so easily that he
has already expressed his support without first listening to the
rest of us.
What percentage of the cost of running ‘C’ class wards can be
equitably borne by direct taxation such as Payroll Tax? What
percentage of payments is made directly by patients? The proposal
behind Medisave is that patients will now make their payments not
directly to the hospitals but through their CPF accounts. It is
like the check-off system that we have in the trade unions. Now we
are being checked-off out of the CPF account. The snag of this
scheme is that employers would be asked to contribute to Medisave
in spite of the fact that they already have their own private
health scheme for their employees. And, in effect, this would mean
increasing their Payroll Tax by 3%, even though this contribution
does not directly go to the Consolidated Fund but into the
employee’s CPF account.
I am concerned that in presenting Medisave, the Minister has
given no consideration to fundamental points. First, in what
direction can the Ministry of Health reduce costs? The Member for
Ayer Rajah has very eloquently explained that demand is not
generated by patients, and I believe him, particularly patients in
‘C’ class wards. It’s the doctors who create demand as he has
explained. Can the Minister, a political appointee, control his
doctors?
Point No. 2. What is the projection of future revenue that will
be collected by the Ministry of Health? In other words, in what
direction is he anticipating the rate of increase in the cost of
running the Ministry and therefore the increase in charges that he
must pronounce periodically, next year or the following year?
Point No. 3. Can shortfalls be made up from the Consolidated
Fund without calling for further contributions to the CPF which is
now at 46%?
Point No. 4. Can part of, the interest earned on CPF accounts be
credited to the cost of hospitalization? In 1982, the interest
credited to members’ accounts was $846 million which is $187
million more than in 1981. The more CPF you pay the more interest
you earn. And if, of course, a part of this CPF money is invested
overseas where interest is higher than the 6.5% we earn, perhaps
that additional interest will help to pay the cost of
hospitalization. But contributors earn only 6.5%.
No firm can afford to have two parallel medical welfare schemes.
The trade unions want Medisave and of course they want the existing
scheme under the general collective agreement they have made with
the employers. The Minister for Health, since he is not the
Minister for Labour, has of course ignored all this. The buck is
passed on to the employers. Believe me, I have not turned
capitalist. I am not speaking on behalf of employers. There are big
employers. There are small employers. There are small businesses
who hire two persons, maybe even three persons. They have to
contribute to all the taxes imposed by the Minister for Finance,
including CPF, the Skills Development Fund and Payroll Tax. And
these small businesses which pay Skills Development Fund do not see
anything coming out of the Skills Development Fund. A barber shop
applies for a Skills Development Fund. How can he develop the
skills of his barbers? It is the small businesses that are
subsidizing the big businesses.
So also is this Scheme. It is a taxation, and it is a recessive
tax for the simple reason that those who are at the lower income
level, because their CPF contributions are lower, will have to pay
the full amount, whereas those with higher incomes do not pay the
full percentage of their income towards the CPF because there is a
ceiling. It is recessive. I feel that all this is a very
short-sighted myopic view. As payroll costs rise, so also prices
must increase. And this will have an escalating effect on the cost
of living and demand for more wages, and more contribution to CPF.
I know for sure there was one businessman who preferred to leave
Italy to start a restaurant in Saudi Arabia, for the simple reason
that he just could not afford to pay the social security cost
imposed on him by the government.
I asked the Minister for Finance earlier this afternoon to find
out what revenue Government companies and statutory bodies were
contributing to his Consolidated Fund. The Minister was a bit quick
in the reply. I was not sure of the figures I jotted down but, if
my additions were correct, their contribution was more than the
recurrent expenditure of the Ministry of Health. So why have more
contributions to the CPF?
Has the Minister for Health, who was in the Ministry of Trade
and Industry, who was in cahoots with the Minister for Finance,
taken the trouble to investigate how he is going to get the money
to run his Ministry? The first responsibility of the Minister for
Health is to ensure the availability of health care services. That
is his first responsibility, that he must go round and nag at the
Minister for Finance for the money. But he is taking on the job of
the Minister for Finance. I totally disagree with the approach of
Medisave. However, as a former Minister for Health, I share with
these two Ministers for Health their concern for preserving the
existing standard of health care; preserving – I am not saying
improving, the emphasis is “preserving”.
I happened to visit a patient in a Class A Ward in Kandang
Kerbau Hospital, paying full charges. The patient asked for a
receptacle so that she could throw out her vomitus. She was given a
half-cut discarded plastic bottle which was so small that the
vomitus spilled all over the bedsheet; and that was a discarded
plastic bottle, in a first class ward. What are we doing with the
revenue collected? It will be profitable if the two Ministers were
to take time off and inspect the wards. But I question, and I do
not agree with the Minister for Health just now when he
extrapolated or tried to extrapolate European and American cost of
health care into the Singapore situation. I do not agree with him.
I have read all the literature. Behind the statistics that he
produced just now, there are many pressures, vested interests,
interest of pharmaceutical departments, manufacturers of hospital
equipment, which have pushed up health care costs in the West
completely out of proportion to the rate of inflation. And I worry
still that we will soon have an Audit department in the Ministry of
Health that may well do nothing but spend its time trying to do an
audit on the costs in our own hospitals. I would suggest to the
Minister for Health that it will be profitable for him and his
staff to study all these underlying causes in the West so that we
avoid them in Singapore.
The Blue Paper that has been presented to us this afternoon is
out of date. It is said in the Blue Paper down there that
contribution to the CPF is 45%. It is 46% now. If it is so out of
date so soon, I am alarmed whether in five years’ time the 50% rate
of contribution to CPF would not also be out of date. Together with
contributions to payroll tax, skills development fund, any
additional payments to the CPF, particularly from small businesses
and partnerships, the increases in payroll tax cost will be a real
deterrence. The Blue Paper is not binding on the Minister for
Labour, or even a future Minister for Health or a future Minister
for Labour. The Minister for Labour is responsible for the Central
Provident Fund, not the Minister for Health. The resolution that he
has set out before the House does not spell out limits. It is a
blank cheque. As far as the Minister is concerned, he gets his
6%.
My confidence, Mr Speaker, in resolutions has not been
strengthened, particularly when a resolution moved by the Minister
for Education in 1979 in this Chamber has not been honoured. I
shall abstain from the voting in the resolution.
.
* Dr Toh Chin Chye was the Minister for Health from 1975 to
1981 until he stepped down from the Cabinet in 1981 to make way for
younger ministers, as part of the political renewal process. He
remained as a backbencher MP till 1988 when he retired from
politics completely while LKY continued to remain in politics up
till even today.
* In 1983, Howe Yoon Chong was the Minister for Health and
Goh Chok Tong, the 2nd Minister for Health.
