Saturday 17 August 2013

Baby-boomers need more govt help

By Salma Khalik, The Straits Times, 16 Aug 2013

THE Government Parliamentary Committee (GPC) for Health has worked months to produce a report on how health care can be tweaked to become more affordable for Singaporeans.

The GPC members must be lauded for this effort which collates many wishes people have been voicing over the years, such as allowing Medisave use for more things, and reducing out of pocket health-care expenses with higher government subsidies and greater use of insurance.

The report was, on Tuesday, given to Health Minister Gan Kim Yong, who promised to seriously study the recommendations.

Perhaps the most useful suggestion from the team is to allow for tiered Medisave withdrawals - with older people allowed to withdraw more. Medisave rules stipulate a flat sum regardless of age. A tiered scheme would allow an older person to take more from his Medisave for, say, nursing home or chronic care, than a younger person with arguably more medical bills ahead.

This is an interesting concept and would certainly be welcomed by seniors who face hefty medical bills they have to settle in cash, unable to draw on healthy Medisave balances.

Today, people aged 65 to 70 have an average of $19,000 in their Medisave accounts. If more of this money can be used to keep them healthy and out of hospital, it would certainly be something worth implementing.

The GPC's reiteration of the need to level up Medisave payouts in different health-care facilities or for different service providers is also timely, if not new.

Today, Medisave claims are highest for patients in acute hospitals. Less can be claimed for the same service in a step-down facility such as a nursing home or hospice, or for treatment through a home medical or nursing scheme.

This, as the GPC has rightly pointed out, has resulted in people who do not require hospital treatment insisting they be hospitalised in order to reduce their cash payment for the treatment.

"Gaming" the system this way helps no one - not the hospitals, which are hard-pressed to find enough beds to meet the growing demand, nor the state as subsidies for hospital stays are higher, nor the patient, who is not being treated at the place most suited to his problem.

Pegging Medisave withdrawal amounts to the patient's condition rather than where he is treated would do away with this need to find loopholes in the system.

But the recommendations on MediShield, the national medical insurance which covers 92 per cent of Singaporeans, are rather perplexing.

They bemoan the high premiums that result in some older people letting their insurance coverage lapse. The GPC report cites doctors who advise older patients to let the insurance lapse because of the high premiums, and to turn to Medifund - the Government's safety net for people too poor to pay their medical bills - for help instead. This is sound advice for the financially strapped elderly person, even if it appears to free-ride on state subsidies.

After all, MediShield for the elderly is expensive - it is not just the more than $1,000 in annual premiums for people aged 81 years and older that are of concern. Elderly people have to cover more of their bill before insurance kicks in - $2,000 in a C-class ward compared with $1,500 for younger patients.

Even if the Government were to pay their premiums, the patient has to pay a $2,000 deductible, plus the 10 per cent to 20 per cent co-payment for the rest of the bill. How is an elderly poor patient to find that $2,000 plus?

If the answer is Medifund, it is back to square one. In other words, it makes no difference to poor patients whether they are on MediShield, as they won't be able to afford the high cash payments insurance doesn't cover, and end up relying on Medifund anyway.

Of course, the sensible solution is the one the GPC suggested: Reduce both the deductible and the co-payment so insurance pays a larger share of the bill.

The problem is that doing so will raise premiums substantially.

Will premiums for basic MediShield go up to $2,000 a year to bring down the deductible to less than $1,500?

Premiums for the enhanced Shield plans are likely to become even more prohibitive. Already, premiums for older people range from $2,000 a year to over $8,000, depending on coverage. Two in three people under MediShield are on such enhanced plans. Lowering deductibles further will just jack up the premiums significantly - and add to the burden of retirees. Raising premiums too high could also see more people choosing to drop out of MediShield altogether.

While shifting more of the health-care cost burden to insurance sounds like a good idea in theory, in practice it might not be the best option for baby-boomers who are entering retirement now, and who may not be able to afford the higher premiums that result.

For future generations who have time to build up greater savings in Medisave to pay for those high premiums, it might be.

But for the current generation, more help from the Government for the rare patient with exceptionally large bills, or for those who have depleted their savings, might be the better solution.


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