YIJC 2023 JC2 H2 Prelim 9570 P1 QP (Final)

YISHUN INNOVA JUNIOR COLLEGE JC 2 PRELIMINARY EXAMINATION Higher 2 CANDIDATE NAME CG INDEX NO ECONOMICS Paper 1 Case Study Questions Additional Materials: Writing Papers Cover Pages 9570/01 28 August 2023 2 hour 30 minutes READ THESE INSTRUCTIONS FIRST Write your name, CG and index number on the work you hand in. Write in dark blue or black pen on both sides of the paper. You may use a HB pencil for any diagrams or graphs. Do not use staples, paper clips, glue or correction fluid/tape. There are two questions in this paper. Answer all questions. Start each question (not each part) on a fresh answer booklet. At the end of the examination, fasten your work for each question separately . The number of marks is given in brackets [ ] at the end of each question or part question. This document consists of 7 printed pages and 3 blank pages. [Turn over

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©YIJC2023 9570/01/Prelim/23 3 Answer all questions. Question 1: Healthcare and Health insurance in Singapore Table 1: Healthcare Inflation Rate in Singapore Year 2017 2018 2019 2020 2021 2022 Healthcare Inflation Rate (%) 2.49 2.04 1.11 -1.54 1.13 2.18 Source: Singapore Department of Statistics Extract 1: Challenges within the healthcare sector The principal challenge facing the healthcare sector today is cost. As medical costs continue to grow, a basic social need becomes increasingly i naccessible to much of the population. Additionally, as we emerge from the pandemic, there will be immense pressure on governments to rein in their spending, of which hea lthcare plays a large role. In Singapore, the cost of healthcare has increased and the averag e healthcare inflation rate was 2.3 per cent. All these factors point to the conclusion that the current model is not sustainable. This collision of ballooning healthcare costs and strain ed budgets leaves hard choices for policymakers. Governments must decide what therapie s they can afford to subsidise, while insurers, as the healthcare payers, are left to determine treatment access restrictions in order to protect their own profitability. Source: The Business Times, 16 June 2021 Extract 2: Drivers of rising healthcare costs Rising healthcare costs to consumers are expected i ncrease in the years ahead, a Ministry of Finance (MOF) paper said, attributing it to three major factors. First, an ageing population means older patients are more likely to have multip le medical conditions and complications and require more medical attention and longer hospi tal stays. Second, there are higher utilisation rates of healthcare, after adjusting fo r the impact of ageing. This is due to rising incomes and greater accessibility of high-quality healthcare services. Third, the cost per unit of healthcare has increased. Newer treatments that improve life quality and lifespan cost more per treatment. The manpower costs of healthcar e staff are also expected to continue rising. Source: The Straits Times, 9 February 2023 Extract 3: Keeping healthcare costs sustainable for both consumers and government To moderate the increase in healthcare costs for consumers, the government has continued to subsidise healthcare substantially, which is the key reason why additional revenue from GST and top marginal personal income tax rate increases, as well as changes to property tax, etc. are needed . Also, it was announced that the government will implement changes to its subsidy frameworks across healthcare settings to target and increase subsidies to those who need them most, to manage healthcare cost growth su stainably. Even so, this may not be sufficient. [Turn over

©YIJC2023 9570/01/Prelim/23 4 The more fundamental way, as noted by Health Minister Ong Ye Kung, is to tackle cost at its roots. One way is to make Singapore healthier. “It won’t reverse the impact of an ageing population, but it can reduce the rate of increase, and ‘bend the cost curve’ downwards in the long run. T here is a need to shift the strategy towards greater preventive care,” he said. For example, the Healthier SG initiative by the governm ent seeks to empower people to take charge of their own health through the promotion of physical exercise and health screening. This shift hopes to improve the population’s health, reduce disease burden for the long term and put Singapore’s healthcare system on a more sustainable financial footing. Source: The Straits Times, 12 October 2022 Extract 4: Singapore insurers’ revenue to benefit from digital distribution The top insurance companies in Singapore are set to witness a revenue growth over coming years, as digital distribution enables them to enha nce their offerings amidst a positive environment created by easing COVID-19 restrictions and a recovery in global economic activity to pre-pandemic levels. By providing insurance products through digital means, it may enhance product experience, and reach out to greater number of consumers. The Singaporean insurance industry is dominated by the top five insurers in terms of gross written premiums (GWP) in 2021, while the top 10 pl ayers occupied a share of 89.2%. The market share of the top five and top ten insurers i ncreased by 3.2% and 0.6% in 2021 compared to 2020, respectively. Table 2: Market Share of Top 5 Insurers in Singapore in 2021 Insurance Companies Great Eastern Life Manulife Prudential AIA NTUC Market Share 25.7% 15.7% 15.2% 11.5% 7.8% Source: Insurance Business 10 December 2022 Extract 5: Singlife’s merger with Aviva Singapore After a merger with Aviva Singapore, digital insurer Singapore Life has been busy setting up an investment team, reworking policies, and creating a sense of cohesion across its insurance policies. In a statement issued by Singlife, the merger has brought its protection solutions to Aviva’s 1.5 million strong consumer base while offering existing Singlife customers a deeper product range and advisory capabilities, bringing up its assets significantly to $11 billion from an undisclosed sum. With this, the business will al so be rolling out new policies to attract policyholders. For example, the insurer launched a new cancer coverage plan that covers treatments not covered by government-backed insurance plans. The insurer has also been working to create cohesiveness across all policies by developing a mobile application that allows its policyholders to access their policies on one single app, catering to changing consumer demands and preferences towards on-demand financial advice. Singlife noted that they will be creating a brand that will go far beyond insurance and deliver on these ambitions by creating innovative financial products with intuitive technology and independent advice.

©YIJC2023 9570/01/Prelim/23 5 While mergers of insurance companies can provide various benefits such as economies of scale, enhanced market presence, and improved financial st ability, they also come with potential downsides and challenges. For example, one of the challenges the Singlife faced with the merger, as with most mergers, was the integration of IT systems. "In our case, the two companies had a number of legacy policy systems that take time to i ntegrate. Once completed in the coming months, we will have a single view of our policyholders and a more effective way to serve them," said Richard Vargo, group head of products, propositions and transformation. Source: Adapted from the Straits Time, 11 September 2020 Questions (a) (i) With reference to Table 1, describe the change in healthcare prices in Singapore from 2017 to 2022.