dr toh also disagreed with gct
1983 Parliamentary debate revisited: Dr Toh blasted Goh Chok Tong on Medisave scheme
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.
