Don't discard 3M health model

Better to tweak current system than scrap it for universal coverage

By Eric Finkelstein, Published The Straits Times, 18 May 2012

HEALTHCARE reform in America has been a source of endless debate. Singapore too is under intense pressure to improve the current system, and the debate swirls here as well. The Singapore Democratic Party (SDP) has proposed a health-care plan that would scrap the 3M system of Medisave, Medifund and MediShield in favour of a single payer system.

In a recent commentary in these pages on April 26, 'The moral case for health insurance for all', Dr Jeremy Lim proposes moving towards a national health insurance model.

The basic tenets of both the SDP plan and that proposed by Dr Lim is that the current system must be transformed to promote health and increase access for high-value services.

Every health system reformer believes the poor should not be condemned to a life of illness because they cannot afford treatment, and that individuals should not be bankrupt as a result of high medical bills. These are all noble aspirations.

But I remain unconvinced that they cannot be best achieved without dismantling the current system.

The core of the 3M system is the Medisave account. Because the account is capped and individuals need to rely on it for future ailments, they are expected to truly weigh their private costs and benefits of each treatment decision, much as they do for outpatient services that are typically funded out of pocket. This does not occur when individuals are fully insured and face only a fraction of the true costs of treatment. As such, Medisave for inpatient services and a largely cash payment model for outpatient services acts to dramatically curb excess utilisation.

Individuals are also allowed to tap a family member's Medisave account if need be. Our recent empirical work on end-of-life care in Singapore suggests that the family-based risk pooling inherent in Medisave provides a level of cost containment that would be absent in a national risk pool. For example, in a recent survey of older adults that specifically focused on end-of-life issues, we found that older adults place a roughly 20 per cent greater value on money coming from a family member's Medisave account than from their own, thus suggesting that they are likely to use even less care as a result.

Less care that results in worse health outcomes is clearly not something to be promoted, but evidence dating back to the RAND health insurance experiment and even Singapore's own health indicators when compared to other countries provide little evidence that greater discretion has led to poorer health outcomes. My students in Singapore have told me that they have encouraged their parents to quit smoking because they do not want to have to use their Medisave account to pay for their parents' poor health habits.

It is possible that movement towards a national model could actually degrade health by lowering the financial costs resulting from unhealthy behaviours, in addition to increasing health-care utilisation and costs.

Few cost-containment strategies exist in national health insurance models, which is why they tend to be expensive. Currently, Singapore spends roughly 4 per cent of gross domestic product on health, whereas the average percentage for the Organisation for Economic Cooperation and Development countries, nearly all of which have some form of national health insurance coverage or provision, is 9 per cent. Although more expensive, DrLim argues that one of the benefits of a national model is to promote social cohesion by increasing access for the poor and underserved.

While the universality of these models is likely to provide greater equity than does the current 3M model, they do not truly promote equal access. In every country with national health insurance or provision, those with higher incomes can afford to access higher-quality services with shorter waiting times either within their own country or by travelling to other countries that provide higher-quality services. For example, wealthy individuals from Britain routinely abandon the public system for private clinics and wealthy Canadians often travel to the United States or elsewhere to receive state-of-the-art treatment for many diseases at world-renowned medical centres such as the Mayo Clinic or Duke University.

This is because the national health systems often struggle with excess demand, long waiting times for services, and in some circumstances, lower-quality services. For example, without national health insurance, 74 per cent of Americans are able to obtain specialty care in less than four weeks, whereas this number is only 42 per cent for those in Britain, and even lower in Canada, two countries with universal access. It is unlikely that the same would not occur in Singapore if it were to implement a national model.

Ironically, Dr Lim attempts to justify his stance towards a national model by citing the example of a private insurance plan, Kaiser Permanente, from the US. He notes that Kaiser is renowned the world over for its success in health promotion, including achieving high rates of preventive health adoption such as breast cancer screening and other regular health checks. Dr Lim's praise for Kaiser is deserved, yet its success is largely due to the continual innovation required to fend off other insurers in a very competitive US health insurance market, something that would presumably be absent in a national model. Moreover, many aspects of the Kaiser model could easily be replicated in Singapore without the requisite move to national health insurance.

Every developed health system has strengths and weaknesses. Singapore's system outperforms most national models in terms of cost containment and in many indicators of health outcomes and health-care quality, but is likely to perform less well with respect to equity.

As such, there is certainly room for improvement. As Dr Lim suggests, greater effort needs to be made to move the system towards a model that promotes health, rather than one that is based on treating illnesses after they occur. This is especially true in the light of the future pressures that will undoubtedly come with an ageing population that will be increasingly less able to rely on future generations to backstop their health-care costs due to declining fertility rates.

It should also be stressed that the current system has been constantly improving. The Singapore Government has stated that it intends to raise, even double, health spending. Medisave has recently been expanded to include some outpatient services.

To strengthen equity, new resources could be used to top up Medisave accounts for older adults, smaller families or low-income individuals and/or those who are overburdened with high medical bills, and to allow coverage for additional high-value outpatient services, such as annual foot exams for those with diabetes. These services could also receive additional subsidies, much like the subsidies for inpatient services, in an effort to reduce disparities and improve access to high-value services.

I also agree with Dr Lim that pre-existing condition limitations imposed by health plans should be banned as those limitations expose individuals to significant costs. These plans could also be enhanced to provide greater coverage amounts, perhaps with some government subsidies. Although this will increase rates, this would contribute to reducing income inequalities and add to the effect of other government policies sharing this objective, such as housing subsidies.

In addition to the above, the next generation of health insurance in Singapore needs to do a better job of promoting healthy behaviours as opposed to just waiting to treat people when they become ill. Only then will real health improvements occur. Innovative health insurers in the US and elsewhere are offering incentives for participation in health promotion activities and other wellness programmes. If proven effective, these programmes could be incorporated into the current system.

In summary, I believe that we would all like to see universal access to high- quality services at affordable prices, yet I remain unconvinced that these goals cannot be best achieved without abandoning the framework of the current 3M system.

The writer is an Associate Professor at Duke-National University of Singapore Graduate Medical School Singapore and the Assistant Director of the Health Services and Systems Research Programme at Duke-NUS.