MI_H2_ECONS_(9757_01)

Class Adm No Candidate Name: _______________ ______________ This question paper consists of 7 printed pages and 1 blank page. [Turn over 2018 Preliminary Exams Pre-University 3 ECONOMICS 9757/01 Paper 1: Case Study 12 September 2018 2 hours 15 minutes Additional Materials: Answer Paper READ THESE INSTRUCTIONS FIRST Write your name and class on all the work you hand in. Write in dark blue or black pen on both sides of the paper. You may use a soft pencil for any diagrams or graphs. Do not use staples, paper clips, highlighters, glue or correction fluid. Answer all questions. Begin your answer to Question 2 on a fresh sheet of writing paper. At the end of the examination, hand in your answers to the 2 questions separately. The number of marks is given in brackets [ ] at the end of each question or part question.

2 9757/01/PRELIMINARY EXAMINATION/MI/2018 Answer all questions. Question 1 Healthcare and Health Insurance Extract 1: Global trends in healthcare expenditure Between 2004 and 2014, the World Bank reckons that the average share of health expenditures of high-income countries has increased from 10.9 to 12.3 per cent of gross domestic product (GDP). Singapore is no exception as its share of health expenditure as a percentage of GDP has increased from 3.3 to 4.6 per cent between 2011 and 2015. However, this was not the case for all countries. The equivalent figures for Ireland were 9.9 in 2011 and 7.8 in 2015. An important factor is the development and adoption of new and expensive health technologies such as biologics - extremely costly drugs revolutionising the treatment of rheumatoid arthritis, cancers and diabetes. Another factor is rising wages, fuelled in part by competition between private providers to attract the best healthca re professionals. This is compounded by the fact that retrenched PMETs from other fields cannot easily enter the healthcare sector due to a mismatch of skills. The quantity of care consumed in Singapore is also increasing. While population ageing is often cited as a cause, lifestyle risk factors, such as eating too much and exercising too little, also contribute to the rise of costly chronic conditions. Adapted from: Various Extract 2: The balance needed in health insurance Health insurance plays a central role in influencing healthcare consumption. By significantly decreasing the price of care at the point of consumption, insurance plans increase the quantity of care consumed. Part of this increase is actually a good thing as it reflects better access to healthcare, especially for lower-income individuals who could not afford treatment otherwise. However, by distorting the price of care, health insurance may induce overconsumption. Having an insurer pay 100 per cent of a patient's bill is hardly conducive to