YIJC 2023 JC2 H2 Prelim 9570 P1 SAMS

2023 JC2 H2 Prelim P1 CSQ 1 Suggested Answers a(i) With reference to Table 1, describe the change in healthcare prices in Singapore from 2017 to 2022. [2] Suggested Answer: Prices of healthcare in Singapore generally increased [1] except for the year 2020 when prices fell [1]. Markers’ comments: - This question is straight forward and a large pro portion of students were able to score full marks. - There was a large handful of students who lost ma rks because they were either careless or confused about falling inflation rate. These students interpreted falling inflation rate as falling prices. - There were also students who lost marks because t hey described the change in inflation rates, instead of describing the change in prices. (ii) With reference to Extract 1, explain one deman d and one supply reason for the above trend in healthcare prices. [4] Success Criteria: Explain how one demand factor led to the increase in healthcare prices. [2] Explain how one supply factor led to the increase in healthcare prices. [2] Suggested Answer: Healthcare price has increased (positive inflation rate). Demand factor: From Extract 1: - Covid pandemic  increase in need for treatment, preventive care  increase in demand for healthcare services From Extract 2: Demand factor: - Aging population – greater proportion of populati on who has a greater need for healthcare  increase demand for healthcare services - OR - Better quality healthcare – increase demand for t reatments to improve quality of life. Supply factor: From Extract 1: - Govt rein in subsidies  reduction in subsidies provided  rise in COP  decrease in supply of healthcare services. - Rising healthcare costs  rising COP  decrease in supply From Extract 2: - Shortages of medical workers  Increase COP  decrease supply

2m for each well-explained and contextual reason If evidence is taken from Extract 2, cap at 3m If factor is generic but well-explained, cap at 1m for DD factor and 1m for SS factor. Markers’ comments: - Good answers were able to identify the demand and /or supply factors from Extract 1 and applied theory (i.e. demand and supply determinants) to explain why the prices were rising. - Some answers lost marks because: o the answers did not refer to Extract 1, e.g. agein g population o the answers did not make any reference to the case material, e.g. change in income - There were also misconceptions observed. o Students confused change in quantity demanded with change in demand or change in quantity supplied with change i n supply. E.g. when the demand increase, the shortage will cause upward pressure on prices and this will lead to an increase in supply. This is wrong. An increase in price will lead to an increase in quantity supplied instead. o Students mistook price elasticity or inelasticity to explain the extent of shift in demand and/or supply curves. - A large proportion of students also wasted time w hen they: o Explained the adjustment process in full (students should know that this question is focused on ‘why’, instead of ‘how’) o Drew separate diagrams (while diagrams are useful to illustrate, there are only 4 marks available, i.e. 2 marks each for e xplaining the demand / supply factors). o Applied PED and PES to explain the extent of chang e in prices (students should note that while PED and PES are re levant when explaining price changes, the extent of change in p rices, ~2%, does not suggest large extent of change in prices and th erefore PED and PES are not as relevant for this question) (iii) “To moderate the increase in healthcare costs to consumers, the government has continued to subsidise healthcare substantially”. Discuss whether subsidies is the most appropriate p olicy to increase accessibility of healthcare. [10] F: how appropriate is subsidies to increase access ibility of healthcare. S: how appropriate is another measure at increasing accessibility of healthcare. Level of Response Mark Scheme (LORMS) Level 2 (4-7 marks): Answers in this level will sho w how subsidies and at least one other policy that will address the issue on accessibility of healthcare. Level 1 (1-3 marks): Answers in this level will show limited understanding of how subsidies and at least one other policy that will address the issue on accessibility of healthcare

Evaluation (1-3 marks): Evaluation marks will be awarded for evaluative comment that considers the relative appropriateness of the policies in addressing the issue on accessibility of healthcare. A conclusion/policy recommendation is provided. Suggested Answer: #1: Subsidies is the most appropriate:  Explain how subsidies work: a. Subsidies reduces COP for firms  increase in SS  reduces price for consumers  increase affordability and accessibility (reduce health care costs for consumers)  Limitations: a. However, it drains the government budget. It will not be sustainable in the LR and presents opportunity costs. Governmen t may also need to raise taxes i..e GST which may reduce the m at SOL for consumers. #2: Other policies:  Explain how other policies work: a. Other LT policy such as preventive healthcare  reduce burden on the healthcare system  reduce DD  cool down the increase in price and healthcare cost in the future  Strengths: a. This not only helps to reduce healthcare costs b ut also to reduce the amount the government needs to subsidise in the future. b. if successful this policy will transfer the owne rship of being healthy to the individuals, reducing the burden on the government’s budget in the long run.  Limitations: a. Though the effectiveness of the policy depends o n the receptiveness of the public. EV: Criteria for evaluation includes (but not limited to) the following: - Sustainability of policy (i.e. SR vs LR) - Tackling root cause (e.g. rising DD, SS bottlenec ks) vs tackling effects (e.g. subsidies or price control to lower prices) - Effectiveness (e.g. subsidies more direct, campai gns more uncertain and takes time) Example of conclusion: While subsidies are needed in the SR to manage heal thcare costs, it is not the most appropriate measure to achieve sustainability in the healthcare sector, especially in the long run.  Root cause: Subsidies does not tackle the root cau se of rising healthcare system and even with targeted subsidies, these expe nditure are likely to rise as demand for healthcare continues to rise, resulting in a drain of the govt’s budget. Targeted subsidies however, would ma ke healthcare expenditure by the government more manageable in the SR.

 By ensuring that the population is healthier, amou nt of government expenditure on healthcare will be significantly lessened and together with targeted subsidies will enable a greater sustainabi lity of healthcare in Singapore.  Healthier population also means greater productivi ty of workforce which may bring about better macroeconomic gains to the economy, which may help to increase revenue. Level Description Marks L2 A+A A+C A+0 or C+C For a well-developed answer that demonstrates how subsidies and one other policy may AND may not address the issue on accessibility of healthcare. 6-7 5 4 L1 C+0 K+K K+0 Answers in this level will show limited understanding of how subsidies and one other policy may AND may not address the issue on accessibility of healthcare. 3 2 1 Evaluation Marks E1 An unsupported judgement which are neither supported nor relevant t o the context of the question. 1 E2 Well-explained judgement and/or an evaluation with some economic justification. 2 A conclusion is provided. +1 If answer applies MPC/MPB approach (e.g. subsidies reduces MPC), cap at C if answer addresses P, Q and therefore accessibility and also strengths/limitations of policies. Markers’ c