State needs to compel insurers to cover pre-existing conditions
By Chua Mui Hoong, The Straits Times, 2 May 2012
I AM all of 43, earn a decent salary each month, and have assets in the bank. But I belong to the ranks of Singaporeans terrified of growing sick and old, who fear that all our savings will be wiped out by illness and that we will age alone and in pain in a rental flat, or some home for the destitute run by the state.
In my case, it isn't just paranoia.
At 43, I am uninsurable.
I had cancer 10 years ago. I went through the classic slash-burn-poison treatments of surgery, radiation, chemotherapy. My doctors have given me a clean bill of health. After five years in remission, you're considered cured of cancer. But insurers treat me like a pariah.
When I applied to upgrade my basic MediShield to a premium plan so I can stay in Class A or B1 hospital wards if I want to, two insurers said 'no'. My applications for critical illness cover, hospitalisation cover, and for a portable medical scheme that will cover me if I leave my company - have all been rejected over the years.
Access to health insurance has become a global issue. One group of people left out by health insurers are those, like me, with pre-existing medical conditions.
There are no figures for the numbers in this group. But think of the people who have survived serious illnesses like cancer, or who are battling chronic ailments like diabetes, and you know there must be tens of thousands of Singaporeans whose pre-existing medical conditions rob them of the level of health coverage they need when they grow old.
The issue has sparked lively debate in The Straits Times. Mr Aaron Lee wrote in the Forum Page: 'The 'unhealthy minority' did not choose to contract heart disease, diabetes or cancer... Anyone from the healthy majority can find himself in the unhappy position of being in the 'unhealthy minority' tomorrow.'
Fortis Hospital Singapore chief executive Jeremy Lim put the case starkly in the Review Page: 'National health insurance is not an economic decision. Cost-effectiveness analyses and actuarial models can inform decisions on coverage extent and funding needs, but these tools cannot decide for us. National health insurance... is at its core a moral decision, defining what sort of society we are and want to be.'
A recent study noted that universal health coverage has touched nearly 100 countries, all studying how to institute government-funded programmes of health care. This included emerging economies like Indonesia, China and India.
In the United States, President Barack Obama's so-called ObamaCare Bill wants to compel patients to buy insurance, and more critically, make it mandatory for insurers to cover them even if they have pre-existing medical conditions.
Why would the US, the bastion of capitalism, want to interfere in the private market by compelling insurance companies to insure even the sick?
The reason is simple. Because it benefits society as a whole, and only the state can do it.
Unlike regular markets for widgets, the health insurance market is fraught with market failure. Insurers want to maximise profits; individuals want financial help to pay for treatment when sick; and society as a whole wants to provide sick people with treatment in a way that everyone can afford.
But profit-maximising insurers want to cherry-pick only the healthy and leave out lemons like me. Healthy folk don't want lemons like me to make big claims on insurance companies that will drive up premiums for them. They may forget that tomorrow, they or their wife/brother/son may fall into the unhealthy category.
The result: Premiums are kept low for most by keeping out those with pre-existing conditions, to keep the majority happy. But the minority with pre-existing conditions end up without adequate protection. They can shun treatment and die. Or they can bankrupt themselves and their families, and end up on state assistance. Then the government's spending on health care (and welfare for the families in disarray) goes up.
Who pays for all that? Taxpayers. Who are, of course, made up of the healthy majority in the first place.
Hear it from the insurers. NTUC Income chief executive Tan Suee Chieh wrote to the Forum Page on the issue of insuring those with pre-existing conditions: 'To make it a reality, universal health coverage must be nationally mandated so that all insurers offer it, eliminating anti-selection against any one insurer.'
This is a classic game theory dilemma showing how everyone is worse off because no one can take the lead to coordinate a response that works for all. If every insurer agrees to cover the unhealthy minority, and everyone agrees to higher premiums because they know they can fall into that sick category any time, then there is perfect equilibrium. Everyone gets good health coverage at a rate that insurers are prepared to provide. But no insurer now wants to take the first step to expand coverage, fearing that its higher premiums would scare off the healthy and that would drive down profits.
Solution? The state has to referee the health insurance sector and set the rules.
There are lessons from other countries on what rules might work, but that's for a later phase of debate. First, we need to agree as a society that it's better to bring the large numbers of unhealthy into the insurance fold.
As Dr Lim put it, it's a moral question.
Right now, what kind of society are we, with the status quo level of coverage?
Children's congenital birth defects are left out of coverage - even from MediShield. Unless the state steps in and changes the rules of the insurance industry, these kids' conditions remain uncovered for the rest of their lives.
Or say you just retired at 62. Your company's health insurance stops. No other insurer wants you because you've got hypertension, a heart murmur or are just too old. You discover to your horror that your health coverage stops just when your income shrinks or becomes zero.
Singapore's ongoing push to raise productivity will see companies close and workers lose their jobs - and their company-provided health coverage. Many won't be able to get any other coverage, because chances are, many of them will be middle-aged with some ailment.
What kind of society do we want to be?
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