AN ECONOMIC ANALYSIS OF MEDICAL BENEFITS IN THE STATUTORY BOARDS IN SINGAPORE

Abstract

It has been a well-known fact that medical cost has been rising for quite some time. Correspondingly, the employers' medical benefits expenditure has also been rising causing many employers to review their existing medical benefit packages. This exercise examines some of the factors which may be responsible for the rising medical benefits expenditures in the statutory boards with the aim of understanding how it has contributed to rising cost. Because of the prevalence of uncertainty existing in the medical care market and the increasing cost, insurance against uncertainty becomes a viable option for the firm. With insurance for medical care, employers will be able to set long term expenditure plans for their policies and hedge themselves from any losses that uncertainty brings. However, it has been found that all the statutory boards listed in the sample do not buy health insurance. This exercise examines the conditions which makes self-insurance a viable option by re-examining the factors that affects the demand for health insurance. Finally, this exercise also investigates whether the additional medical benefits given to the upper income group personals is due to tax preference. If not, what other reasons could have accounted for additional medical benefits.