HIGH-PERFORMING economies like Singapore have experienced some of the fastest rates of improvement in their health indicators.

Singapore currently ranks No. 1 globally for having the lowest infant mortality rate and No. 4 for life expectancy.

This is attributable not only to general socio-economic development but also to the quality of their basic health services - and an organised health-care system.

Primary health care is provided through easily accessible community health programmes that address the basic needs of the population.

Singapore has a strong public health tradition which emphasises prevention and the primary care approach.

But this has recently been eroded by a shift towards hospital-based specialised care and high-quality medical technology as the population becomes more affluent.

Globalisation and competition have also opened up new growth areas of trade in health services and medical tourism.

This phenomenon will push national health systems more towards borderless market-based services - which will, in turn, exert greater pressures on the public sector.

Rising health-care costs are inevitable the world over, and Singapore is no exception.

Coupled with the drive to contain costs, the budget squeeze on the public sector is forcing more cost-sharing through higher user-charges and cost-recovery measures.

Sophisticated accounting methods and subsidies have been devised, along with incentives for both providers and consumers to prevent over-utilisation, as found in managed care systems.

Patients can also be channelled through a referral system that practises gate-keeping so they can receive the most appropriate levels of care.

The use of computer-linked medical records systems here also contributes immensely towards greater efficiency - as has giving the public information on pricing.

An important role of the Government is to provide information for markets to function better. In health care, this could be extended to include comparative costs, quality of care and outcomes.

Such initiatives to drive competition among providers and to empower patients should be encouraged.

Singapore's health-care system is relatively stable, given our small size, the Government's strong role and effective controls by the health agencies.

But one policy issue that has emerged revolves around the concerns of an ageing population and rising costs, affordability and perceived inequities.

The proportion of the population aged 65 years and above will increase from 8 per cent presently to 18 per cent by 2030.

The elderly will use between three and five times more health-care services compared to the younger population - and each episode amounts to about two times more than the average cost.

This is exacerbated by the prevalence of chronic degenerative diseases which are long-term and thus more expensive to treat.

We must also recognise that family support in caring for the elderly at home will weaken due to shrinking household sizes and the dislocation of living arrangements for family members.

In the future, a more educated elderly population, demanding greater assistance from the Government, could become a political force.

The rate of population ageing in Singapore is among the fastest in the world, fuelling concerns over the sustainability of health and social services, which are financed mainly from pay-as-you-go methods like taxation and insurance.

This explains the shift to a mixed financing model.

This consists of private payments, employee medical benefits, compulsory medical savings (Medisave) backed up by catastrophic health insurance (MediShield) and an endowment fund for the indigent (Medifund).

Although the 3Ms are intended to increasingly cover a larger share of the health-financing pie, the fact remains that they cover only about 10 per cent of overall expenditure at present, while the largest portion of expenses is paid out-of-pocket.

So there is room to enhance the concept of cost-sharing on the part of individuals, families, employers and the Government, with the expanded use of the 3Ms.

Personal and public responsibility can also be strengthened by integrating the savings approach with a balance of social and private insurance.

The complementary insurance scheme for long-term care, ElderShield, was also introduced to cover step-down care as an alternative to hospitalisation.

ElderShield is a disability insurance which pays out if subscribers can't do at least three of six stipulated activities of daily living - such as eating, bathing or walking - without help.

But the regular complaint that it pays out too little and for too short a time saw a high opt-out rate. There were attempts to address this issue recently by the announcement of more generous plans.

One suggestion is to enhance the ElderShield further - like what was done to the basic MediShield managed by the Central Provident Fund (CPF) - with addition of riders and higher benefits provided by private insurance.

New policies to enhance financial protection, through risk-pooling mechanisms such as annuities or longevity insurance, have been proposed to better meet the financing needs of the rapidly ageing population.

There is ongoing discussion now over their proposed designs, and whether these should be compulsory.

It is clear that more public education is necessary to promote financial planning for old age and encourage the young to save more, invest wisely and insure themselves for greater security.

On the Government's part, higher returns are being offered on hard-earned CPF savings along with stronger social insurance and protection for the people.

This new social compact requires mutual trust and acts of faith from both parties. A compact can be built when all parties contribute equitably towards a common share of the burden of care for the whole community.

Public-private-people partnerships can contribute to new models of eldercare. Personal responsibility for financing one's own health care should also now extend into a civic duty to contribute to the collective risk pool for the care of others, including the sick and old.

Public education measures should include that of greater cost-sharing, and the broad strategies for disease prevention and health promotion.

There has been considerable effort made to educate the public on health matters, healthy lifestyles, and the proper use of health services to minimise expenditure.

But even substitutes for hospitalisation would require the provision of a whole spectrum of intermediate care facilities to bridge the divide between institutions and homes.

Thus the lines between medical and social care will be increasingly blurred.

And such new alternative types of cost-effective community-based long-term care, including hospice and home care, will have to be further integrated with health-care financing.

On the demand side, there must be a parallel strategy to manage patients' expectations: to get them to accept the basic package of subsidised public services such as step-down care, and to pay more for the greater use of personal services, such as specialised care and expensive patented drugs.

Then there is the issue of equity: Whether higher-income individuals should also enjoy heavily subsidised medical care in public hospitals.

Should selective pricing through a means test be used? But in a sense, means-testing is already in place in other parts of the system - such as to determine eligibility for Medifund and step-down care provided by nursing homes.

Our health-care system is not perfect, but we have all the necessary ingredients to make it the best possible and workable model to balance costs, access and quality.

The writer teaches social policy and health economics at the Lee Kuan Yew School of Public Policy, National University of Singapore. He has also consulted for the WHO and World Bank in countries throughout Asia.

Guest writers alternate with Chua Mui Hoong in this weekly column.