Revisiting co-payments

Published: 3:59 AM, January 28, 2013
Updated: 3:50 AM, January 29, 2013
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Co-payments are sacrosanct in Singapore healthcare. Since the debut of co-payments in government polyclinics in 1960, the application of co-payment has been extended to virtually all healthcare services.

Why co-payments? The economic literature is rich with insights on the utility of co-payments and there are very good reasons for co-payments, but not in every healthcare setting and definitely not as an unthinking blanket policy.

In the Singapore setting, the most important objectives are probably mitigating moral hazard and optimising limited government monies. Let us examine them and explore whether and how co-payments can be re-looked.


Moral hazard is the phenomenon where patients consume more than they should because someone else is paying. The 1993 White Paper on Affordable Health Care states emphatically: “To avoid the pitfall of ‘free’ medical services stimulating insatiable demand, patients pay directly for part of the cost of medical services which they use.”

As for targeting scarce subsidies, even the richest governments have finite resources, and Singapore is no different. Imposing co-payments enables some degree of cost recovery.

In Singapore, cost recovery has been substantial with government spending on healthcare today making up roughly a third of total system spending, and private monies comprising the other two-thirds.

This is the reverse of many developed countries, which, while critics decry as economically regressive, likely in no small measure contributes to the Singapore Government’s healthy finances — especially when contrasted with many European countries struggling to meet pension and other public service obligations.

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