4 myths about national health insurance

Singapore's 3M model does not need major surgery, only targeted therapy

By Jeremy Lim, Published The Straits Times, 31 May 2012

NATIONAL health insurance (NHI) has been in the media limelight, with no less than Ambassador-at-Large Tommy Koh calling for reform, saying health insurance was one area Singapore 'didn't get it right'.

In the other corner, academics Lim Meng Kin and Eric Finkelstein have urged restraint, highlighting the strengths of the 3M (Medisave, Medifund and MediShield) model.

As the debate grows more heated, it is worthwhile to strip away the rhetoric and the misconceptions so that Singaporeans can have a proper national conversation about the direction our health-care system should be heading. Four myths in particular need to be challenged.

Myth #1

NATIONAL health insurance is a 'free for all'.

This pernicious myth arises from the misunderstanding that NHI provides a free-for-all buffet. It does not.

Mitigating mechanisms like co-payments exist in virtually all systems: In Germany, patients pay €10 (S$16) per inpatient day and co-payments of between €5 and €10 per prescription drug. In Sweden, another country with NHI, patients pay 100 krona (S$18) for a general practitioner visit and 250 krona for seeing a specialist.

Countries with NHI, just like those without, recognise the very real risk of 'moral hazard' and institute co-payment measures to dampen excessive and inappropriate demand.

Myth #2

NATIONAL health insurance is unaffordable.

The bogeyman of European 'welfare states' is often raised to justify why Singapore cannot go down this same path.

Of all the countries in the Organisation for Economic Cooperation and Development (OECD), only three do not have universal health coverage: the United States, Turkey and Mexico. Do they spend less than the rest? Unfortunately for critics of NHI, there is no pattern: These three countries bookend OECD health- care spending.

The US surges ahead, spending 21/2 times more than the OECD average while Turkey and Mexico hold up the rear.

Let us look at another OECD country, Israel. Israel enacted its National Health Insurance Law in 1995. What was the impact on health-care spending? In the 10 years preceding the law (1985 to 1994), health-care spending was 6.6 per cent to 7.8 per cent of gross domestic product (GDP). After 1995? It was 7.6 per cent to 8 per cent of GDP.

Taking the first and second myths collectively, it is clear that what is crucial for cost control and 'affordability' is not the presence or absence of NHI.

Rather, the critical factor is determining what should be covered and what should not, and having good governance and government to tailor to the country's financial health.

Where do we draw the line on what to cover? In health care, demand is infinite and resources finite.

Regardless of the model of health-care financing, difficult trade-offs have to be made.

Australia, South Korea and Britain all have universal health coverage; they also all have national agencies which examine the clinical and economic data to determine which treatments should be included for national coverage.

Such cost-effectiveness analyses help governments decide what to include in national health coverage and what to exclude.

The coat can be cut to the cloth to ensure long-term financial sustainability.

Myth #3

NATIONAL health insurance precludes competition.

Critics have warned that a national model would eventually grow bloated and wasteful due to a lack of competition. This is not what the facts bear out.

Germany has mandatory health-care coverage but the country also has about 200 'sickness funds' which have to compete for members. But there is a caveat; as German magazine Spiegel simply puts it: 'The system only works if everyone takes part.'

Allowing exclusions enables insurers to take the easy way out and simply leave the higher-risk cases out in the cold, to the detriment of equity and the national interest. Markets can work very well to serve citizens and countries, but only under the watchful eyes of a benevolent government.

Myth #4

RADICAL reform is needed for national health insurance.

Eminent policy commentators, Professors Lim and Finkelstein, have argued that there is no need to throw the baby out with the bath water.

I agree. Implementing NHI does not necessitate an overhaul; it can be overlaid to achieve greater equity and coverage for all Singaporeans.

Singapore's health-care financing system has the correct fundamentals and rather than radical surgery, precise targeted therapy would suffice.

Where can this start? Preventive health and primary care are two areas: Health screening and basic care of chronic conditions such as diabetes merit greater funding. Basic childhood immunisations in Singapore are free; why not mammography and Pap smears?

There will be abuse if funded by NHI, critics will rail, but the data shows no parent subjects her child to multiple vaccinations simply because they are free. Likewise, no woman would seek excessive mammograms because they are free.

Coverage for children with congenital illnesses, Singaporeans with pre-existing diseases and Singaporeans over 85 years of age? MediShield can be harnessed for mandatory inclusion with the premiums appropriately pegged. Singaporeans who cannot afford these higher premiums could be subsidised.

Will it cost more? Perhaps, properly structured NHI can encourage the proactive management of health, which may translate into lower costs due to earlier detection of complications. The jury is still out.

Either 3M or NHI is a false dichotomy. We can build on the 3M model to make it even better and more inclusive. These four myths confuse and merit dispelling so that society can debate the sort of health system it wants.

At its core, a national health system is as much about equity as it is about economics. Perhaps it is appropriate to end by recalling the words of Pope John Paul II: 'A society will be judged on the basis of how it treats its weakest members and among the most vulnerable are surely the unborn and the dying.'

How will future generations of Singaporeans judge us?

The writer is CEO, Fortis Hospital Singapore.

* Government will refine fundamentally sound health-care system: MOH

WE THANK Dr Jeremy Lim ('4 myths about national health insurance'; last Thursday), Dr Lim Meng Kin, Dr Eric Finkelstein and fellow Singaporeans mentioned in the article for sharing their perspectives on the funding of health care in Singapore.

We are glad that there is broad consensus that our framework of government subsidies and the 3Ms - Medisave, MediShield and Medifund - is fundamentally sound.

Medisave is a personal savings scheme that helps individuals with their share of health-care costs, while MediShield is an insurance scheme that helps patients cope with large medical bills by risk pooling.

Medifund is a targeted government subsidy scheme to help the middle-lower income patients.

This framework balances between individual responsibility and government subsidy, and allows us to keep health care affordable in a sustainable way while achieving good national health outcomes that are better than most countries'.

There is undoubtedly room for refinement of the framework, especially as we respond to future changes in disease patterns and the ageing of our population.

In doing so, we should build on existing strengths while minimising the risks and avoiding the pitfalls that other countries have experienced, such as the moral hazard of a buffet syndrome arising from free medical treatment.

We have announced in the Budget that coverage of MediShield, which already covers 92 per cent of Singaporeans, will be extended to members up to 90 years of age.

The ministry is also reviewing the extension of coverage to help meet the needs of other groups.

We hope that Singaporeans will support these changes.

Most of all, we agree that the key to a higher quality of life is to encourage and support Singaporeans to live healthily - through regular exercise, having a balanced diet and taking care of their health.

The Health Promotion Board runs national health promotion and disease prevention programmes.

Its Integrated Screening Programme provides subsidised health screening for common chronic conditions such as diabetes, hypertension and high cholesterol at very affordable rates.

Together, we can help Singaporeans live long and live in good health.
Bey Mui Leng (Ms)
Director, Corporate Communications
Ministry of Health (MOH)
ST Forum, 5 Jun 2012