MEANS TESTING

EZRA

EUGENE

ZHENNAN

WHAT IS MEANS TESTING?

• From January 1 2009, when a patient is hospitalised in Class C and B2 wards, his income levels will be checked upon his consent, using a computer system linked to his Central Provident Fund records. 

• Subsidy given according to monthly income.– If the patient earns more than $3,200 a month, he will get

less subsidies as his income increases. – Patients with a monthly income of $5,201 and above will

receive subsidies of 65 per cent for Class C wards, and 50 per cent for B2 wards. 

• If a patient do not give his consent for his income levels to be checked, the subsidy numbers will also apply to him. 

WHAT IS MEANS TESTING

The Health Ministry has said that a patient retrenched at the time of hospitalisation will enjoy full subsidy. 

If his income has shrunk, means testing will be based on his latest income. 

As for other forms of financial hardships, for example huge losses in property and stock markets, a medical social worker will assess his situation on a case-by-case basis. But they have been told by the Health Ministry to err on the side of compassion. 

MOH’s statement

The purpose of means-testing in public hospitals is to enable lower income patients to enjoy more subsidies than higher-income patients.  It is a fair scheme and its implementation has been uneventful.  With computerization, the process is hassle-free and no patients have been inconvenienced.  

MOH’s statement

• More than 90% of the patients are unaffected by means-testing and they continue to get the full Government subsidy. 

• The average hospital bill sizes for Class B2 and C have remained relatively stable at about $1,500, well within the Medisave withdrawal limits.

CRITICISMS

• Stigma– A program benefiting only the poor may carry a

stigma on its use, and be demeaning

• Political support– A program benefiting only the poor may lack broad-

based political support, in contrast to programs that all share in.

• Redistribution– Poverty programs transfer money from the rich to the

poor, as they benefit the poor only but are paid for by all.

CRITICISMS

• Poverty trap– Means tests, particularly sharp cut-offs, create high effective

marginal tax rates and can serve to keep people in poverty, both by removing social support as the person tries to escape poverty, and by discouraging such attempts by high costs. For example, asset-based limits, such as requiring an individual to have little or no savings to qualify, not only discourage saving (because of the cost of being disqualified from such savings) but require a person to become completely destitute to qualify, thus meaning that they do not have any much-needed savings when attempting to escape poverty.

• Administrative costs– Means tests increase administrative costs (overhead), due to the

work of verifying that the tests are satisfied. Some argue that these costs can offset or more than offset the savings by reduced payouts under means-testing.

CRITICISMS

• Access– Means tests, particularly complicated ones and ones that differ

between programs and between different levels of government, complicate access to programs – individuals cannot easily know if they qualify, and may qualify for some programs but not others. In the absence of centralized outreach, the added complication of means tests means that some, perhaps many people who qualify for programs do not benefit from them.

• Entitlement/promises– If means-testing is implemented in an existing program,

particularly for which people have paid taxes but not benefited, as in pensions or medical insurance, the reduction in benefits can be seen as a breach of promise and entitlement of the program.