Big decision ahead for MediShield Life

By Salma Khalik, Senior Health Correspondent

IS MEDISHIELD Life the best way ahead for Singapore health care?

MediShield, the current national health insurance scheme, stops covering people when they turn 90.

That means more than 10,000 people aged 90 and older have no medical insurance, even though the older you are, the more health care you need.

Coupled with the fact that Singaporeans are living longer, the Government will end up supporting a rising number of elderly folk who have run out of money to pay for their health-care costs.

Some countries do just that, but the rising burden eats heavily into government expenditure and that usually results in higher taxes for the working population.

Singapore has decided to go a different route with MediShield Life, which will be launched next year. It will cover everyone, even those with pre-existing diseases, for the rest of their lives.

By doing this, the burden is shared among society as a whole as well as the individual patient.

The Government provides heavy hospital subsidies, society pays the bulk of the remaining bill through insurance premiums while the individual patient is responsible for the deductible and co-payment.

The deductible is the initial amount of a bill the patient has to pay before insurance kicks in. Under the basic MediShield plan, patients also have to pay a portion of the bill - currently between 10 and 20 per cent - beyond the deductible.

How is having compulsory insurance for all different from levying heavier taxes to pay for health care? With taxes, only the working population and richer individuals pay. With insurance, everyone contributes.

The Government uses taxes to provide subsidies that cover as much as 80 per cent of a hospital bill, after which the bulk of the remaining cost is spread among the population. This is very much like the goods and services tax which each person pays when he buys something, rather than income tax which is paid according to how much a person earns.

Patients still have to pay part of the bill, and this makes it fairer. The person needing treatment pays a larger part of the tab in the form of the deductible and co-payment. Those who keep healthy and out of hospital pay only the annual premiums.

Another reason for introducing MediShield Life is that more than 90 per cent of Singaporeans are already covered by MediShield. So it is practical to expand the existing system rather than launch a totally new scheme.

But covering the other 8 per cent of the population will not be easy. This group includes those who are at higher risk of severe illness requiring hospitalisation or the elderly who might need frequent hospitalisation.

People who have been doing the right thing by signing onto the insurance scheme while they are young and healthy, and paying premiums for many years without making any claims, should not end up being the ones paying for this 8 per cent.

Still, the elderly and those who already are sick cannot be made to pay so much that it will prove too big a burden or make little sense for these latecomers.

A Review Committee, which is looking into how MediShield Life should be structured, will need to decide if everyone should pay a standard premium or if it should vary depending on whether the person has pre-existing illnesses.

It will be a tough choice.

Grouping the healthy with the unhealthy would be unfair to those who are well. But penalising those who are already sick will also be difficult, especially since they will have various illnesses with very different health risks.

Trying to separate those who are less sick from their more sick counterparts will be a massive exercise which could be more costly than beneficial.

However, once all that is ironed out, the scheme should be fairly robust. Younger people will pay more, with the money offsetting the expected higher premiums as they age.

This is the fourth of 12 primers on various current affairs issues, published in the run-up to The Straits Times-Ministry of Education National Current Affairs Quiz.

'Obamacare'

One of the central provisions of President Barack Obama and the Democrats' healthcare reform law, known popularly as "Obamacare", took effect on 1 October 2014. But the rollout has been a White House public relations nightmare, with a federal website bedevilled by errors and millions of Americans' existing policies cancelled, contrary to Mr Obama's promise.

The Patient Protection and Affordable Care Act, signed by Mr Obama in 2010, is the largest overhaul of the US healthcare system since the 1960s.

What does the law do?

Its aim is simple: to extend health insurance coverage to some of the estimated 15% of the US population who lack it. Those people receive no coverage from their employers and are not covered by US health programmes for the poor and the elderly. To achieve this, the law requires all Americans to have health insurance, but offers subsidies to make coverage more affordable and aims to reduce the cost of insurance by bringing younger, healthier people into the health insurance system. It also requires businesses with more than 50 full-time employees to offer health coverage, although this provision was delayed until 2015 to allow more time for compliance.

The law creates marketplaces - with websites akin to online travel and shopping sites - where individuals can compare prices as they shop for coverage. In addition, the law bans insurance companies from denying health coverage to people with pre-existing health conditions, allows young people to remain on their parents' plans until age 26, and expands eligibility for the government-run Medicaid health programme for the poor. The law aims eventually to slow the growth of US healthcare spending, which is the highest in the world.

What happened to the website?

Healthcare.gov is a federal website that serves as a marketplace where individuals in 36 states can compare private insurance plans, learn about available public subsidies, and sign up for a coverage. The remaining 14 states and Washington DC have set up their own websites. The federal portal was plagued with technical glitches from its roll-out on 1 October, including long sign-in wait times, log-in difficulties, insurance account creation problems, slow page loads and outages. Exchanges run by individual states did not appear to have the same problems. Enrolment figures for the first month were a fifth of what the Obama administration initially projected.The White House has promised a "smooth experience" for the "vast majority" of website users by the end of November.

Why were some Americans' plans cancelled?

In autumn 2013, insurance companies began announcing the cancellation of millions of policies that do not meet the law's minimum requirements, including coverage of a range of preventive and emergency healthcare. Millions of Americans with individual plans were affected, despite Mr Obama's oft-repeated promise that those who liked their plans "could keep them". Mr Obama apologised to those whose policies had been cancelled and then announced he would be giving a one-year reprieve from the cancellations. But insurance firms have questioned whether the proposed fix is workable.

Why do conservatives oppose the law?

Republicans say the law imposes too many costs on business, with many describing it as a "job killer". They have also decried it as an unwarranted intrusion into the affairs of private businesses and individuals. The party and a veritable industry of conservative think tanks and advocacy groups have fought the law since Mr Obama first proposed it in 2009 at the start of his first term in office. After the law was passed in 2010, Republicans launched a legal challenge, which ended in June 2012 when the US Supreme Court declared it constitutional. It was also a central issue in the 2012 presidential election, when Mr Obama won a second term in office.Meanwhile, the House of Representatives, controlled by the Republicans, has taken dozens of symbolic votes to repeal the law and forced a partial government shutdown over the issue. Republicans in state capitals have also sought to undermine it in various ways.Democrats say Republicans are politically motivated to attack Mr Obama's flagship domestic achievement in order to weaken him.

When do its elements take effect?

The law takes effect in several stages:

2010: Insurers were banned from denying coverage to children with pre-existing conditions, adults under 26 years of age were allowed to remain on their parents' plans, and insurers were barred from cancelling coverage in some circumstances. Insurers were forbidden from imposing lifetime limits on health coverage.

2011: The law expanded access to preventative health services, and offered drug discounts for people in the Medicare programme for pensioners.

2012: Provisions to encourage healthcare providers to lower costs took effect.

October 2013: Consumer health insurance marketplaces go online, and is plagued by snags and glitches.

2014: People without health coverage from the government or their employers will be required to purchase it. The government Medicaid health programme for the poor will be expanded to cover more people, tax credits will subsidise individual and family purchases of health policies, and insurers will be barred from denying coverage to those with pre-existing health conditions.

15 November 2013 Last updated at 01:55 GMT

http://www.bbc.co.uk/news/world-us-canada-24370967

Spend more, to keep healthcare affordable

BY  JEREMY LIM

http://www.todayonline.com/commentary/spend-more-keep-healthcare-affordable

Singapore’s health system is lauded internationally for its ability to achieve outstanding health outcomes at very low national spending. Yet, 72 per cent of Singaporeans believe “we cannot afford to get sick these days due to high medical costs”, according to a 2012 Mindshare survey.

How can this be? Our low national spending on healthcare is the envy of the world and yet Singaporeans are so worried about healthcare costs.

What makes a great healthcare system? Healthcare planners the world over dream of the ideal health system: High quality, low cost and universal access for all citizens. How would Singapore rank along these dimensions?

The quality of Singapore healthcare is top-notch; 850,000medical tourists in 2012 is testament to our high standards.

What about access? Geography advantages us and, unlike many large countries which need extraordinary measures to provide for far-flung populations, Singaporeans are hardly a stone’s throw from a doctor and barely a 15-minute drive from a hospital.

Our weakness lies in affordability, or at least the perception of affordability. Ironically, why we spend so little may account for why there is so much anxiety.

INDIVIDUAL RESPONSIBILITY: A DOUBLE-EDGED SWORD

In many developed countries, healthcare is funded collectively. Citizens are enrolled into a national health scheme and funds drawn based on individual need. These “solidarity” schemes are designed to offer medically necessary care without consideration of the ability to pay.

Singapore has eschewed this path, with then-Prime Minister Lee Kuan Yew asserting: “Subsidies on consumption are wrong and ruinous ... for however wealthy a nation, it cannot carry health, unemployment and pension benefits without massive taxation and overloading the system, reducing the incentives to work and to save and care for one’s family — when all can look to the state for welfare.”

The Government declared health an “individual responsibility” in the 1980s and established Medisave and MediShield, enabling individuals to finance and hence be “responsible” for personal healthcare.

The principle of emphasising the private financing of healthcare through individual responsibility supported by family has been praised for helping Singapore achieve remarkable cost constraints, but there has been a human cost. While the Government has successfully mitigated the risk of wanton state spending, the consequence arguably is that financial risk from medical catastrophe has been passed to individual citizens and their families, with resultant anxiety.

Support from Medifund is possible, but only upon applicationand on a case-by-case basis with no certainty of coverage, complete or otherwise. C-class wards provide subsidies which can be as high as 80 per cent, but paying even the remaining 20 per cent may be impossible for hefty bills; 20 per cent of S$50,000 is still too heavy a burden for low-income Singaporeans.

THE GERMAN EXAMPLE

And healthcare costs can be very unpredictable.

While virtually every country imposes co-payments to guard against over-consumption, many countries, especially European nations, operate on the reverse principle to Singapore. Co-payments are preserved as with Singapore, but the individual’s share of the total bill is capped — for instance, in Germany at 10 per cent of monthly income — with the government assuming the financial risk for unexpectedly large bills. No need to apply for special dispensations or subsidies.

Princeton University economist Uwe Reinhardt, speaking of the German health system, declared about medicalbankruptcy: “That’s almost impossible … I have not ever read of Germans going bankrupt over healthcare.”

In Singapore, MediShield lifetime dollar coverage is capped at S$200,000 (soon to be S$300,000) with high deductibles and sub-limits on what clinical services can be covered. All these collectively enable relatively low premiums to be imposed and render MediShield financially very healthy — but similar to the structuring of subsidies, financial risk is borne by individuals and their families, with no certainty of help from Medifund or other schemes.

The theme is consistent: In our healthcare financing model, safeguards are built first and foremost to ensure system financial viability and sustainability.

A HUGE MIDDLE GROUND

Defenders of the system will point out the many financially struggling “welfare states” and proclaim Singapore must never go there. But it should be noted that between where we are today and the “fiscal extravagance” of the welfare states, there is a huge middle ground.

Singapore’s total public spending as a proportion of gross domestic product is only 13 per cent, a far cry from the 40 per cent that Finland spends. Singapore’s government spending on healthcare is just above one-third the total, with a long way to go before even sniffing the four-fifths that is the case in the United Kingdom.

Health Minister Gan Kim Yong’s commitment following the release of the Population White Paper — to “look at how we can restructure our primary care sector, our hospitals including our intermediate long-term care sector”, that is, the entire healthcare landscape — is reassuring, especially when juxtaposed against earlier comments on looking at healthcare affordability from the patient’s perspective. Times are changing.

“To live well, live long & with peace of mind” is the mission of the Ministry of Health. How can we balance “individual responsibility” with ‘peace of mind’? Between 13 per cent and 40 per cent, between one-third and four-fifths, where do we want to be?

Dr Jeremy Lim has held senior executive positions in both public and private healthcare sectors. He is currently writing a book on the Singapore health system. This is part of a series on health policies in Singapore.