Sunday, January 13, 2008

Testing times

Health Minister Khaw Boon Wan has been drawn out to comment on how he intends to charge people for Singapore's Health services this past week. Nothing is new. The richer will enjoy less subsidy, the poorer more subsidy. That's reasonable, fair and to be expected in a place with the governance principles like Singapore.

But the problem lies in how you judge whether a person is rich or poor or in-between? The most obvious way is to look at how much a person earns, whether from his or her salary, annual dividends, etc. But the whole means testing thingy has become complicated and controversial because it ropes in the family in the computation of wealth. How many mouths does a particular person's salary goes toward feeding? How many people share in this clothing and feeding responsibility in a household? Some even want to count the number of cars a person maintains to determine healthcare affordability - the more cars, the higher the wealth scale the person is on and thus the greater degree of affordability and consequently the less amount of subsidy deserved. What next? The family dog?

So that age-old issue of how to separate the haves and have-nots is raised. And without surprise, the type of house one stays in is proposed as an objective measure of wealth. That is, the smaller the size of the public housing apartment one owns and lives in, the more subsidy that family will be entitled to. So for example, a family that owns and lives in a 3-room apartment will be entitled to greater consideration for subsidy compared to one who stays in a 5-room apartment. Many people have weighed in on why this may be a flawed measure. This is the same measure that is used to allocate more or less subsidies on utility and conservancy charges whenever the government deigns to use tax-payers' money for its social programmes and policies during times of recessions or elections, as the case may be. So if you stay in private apartments or own private properties, you probably will pay the most and get the least subsidies.

I am not here to argue the merits or demerits of means testing and why it should even be used. It looks like a done deal, no point arguing about it. But a consequence of this policy will see smaller type public housing apartments rise in value over time. I wouldn't be surprised if 3-room apartments become more expensive than 5-roomers in time precisely because of greater demand. When I grow old and my children have formed their own families and bought their own subsidized housing, I plan to buy a 3-roomer, or even a 2-room HDB public housing apartment so that my trips to the hospital, which will increase in frequency in direct relation to my age, will be more bearable - cost wise. I just cannot bear to see all my life savings depleted pronto just because I own a private apartment (which has been made possible through years of hard work and thrift). This will decrease the probability that I die of a heart attack upon reading my hospital bills. I may have a million dollars in the bank, but 3-rooms are enough for my wife and myself. Anyway, we were brought up in our fathers' houses which had less rooms, so when we die in a house with more rooms than those that our fathers could afford, that's an improvement, isn't it?

What about my children? They will be left with the 3-roomer, which will probably fetch a tidy sum as it will be worth more compared to bigger apartments. This is what happens when you have more greying heads on the island. The point is, values 'go out of wack' when a flawed measure is used to determine wealth.

Hint: Its time to acquire small public housing properties, maybe even those overpriced ones sitting on the edge of the city. Remember, it must be public housing.


Anonymous said...

While it is cumbersome to implement means testing AND zero GST ratings for basic food like rice, wheat, cooking oil, (eg UK and Australia) our government has decided to plough on with one and not the other. Why? So that more citizens become poorer and we can all level downwards? I really do not get this at all. This is a real government incentive to 'dumb down' and keep our assets and declare as low an income as possible as we age.

Senior Citizen said...

Yeah, its as if they do not want its citizens to enjoy the fruits of their lifelong labours, but would sooner empty their bank accounts paying for healthcare with much of their money for the rest of their lives.

Any don't be fooled by those insurance packages that promises to pay your B2/B1/A1 ward fees above $x. The follow-up outpatient fees will give you sleepless nights as the charges are all pegged to the class of ward you took up in the first place. The more expensive the class of ward, the more expensive the outpatient treatment, particularly additional tests (e.g. blood tests) that are ordered for you by your doctor.

Singaporeans, why are we working so hard and so much? May as well take it slow and easy. We have less stress and hopefully remain more healthy and live longer without having to pay for 'life support'.