Monday 26 August 2013

Prepare for battle over MediShield Life

Idea of universal health coverage is good, but expect divisive debate over details
By Chua Mui Hoong, The Sunday Times, 25 Aug 2013

I've been writing on health issues for a decade, including calling for MediShield to be broadened into a more universal health insurance plan.

But I won't jump on the bandwagon of those claiming credit like some opposition politicians and bloggers, pointing to past speeches or articles they have written arguing for universal health coverage (UHC).

UHC is such a patently good idea for a civilised society, it is ridiculous for anyone to claim credit now that Prime Minister Lee Hsien Loong has promised the Government will work on a universal health insurance plan for life, and cover pre-existing illnesses too.

At its core, UHC is about giving the individual and his family access to health care and preventing them from facing financial ruin that can come from illness and disability. Rather than bankrupt the individual, the State organises everyone to chip in to pay premiums into a common pool from which claims are paid.

Prussian chancellor Otto von Bismarck, widely credited as the intellectual father of today's UHC programmes, pushed through the "Law concerning Health Insurance for Workers" in June 1883 in Germany, introducing national compulsory insurance for workers.

In Singapore, discussions on a comprehensive social security system were ongoing in the 1950s to protect workers and their families "from financial insecurity arising from retirement, illness, death and unemployment".

"Despite plans at an advanced stage (including draft legislation), the scheme was never realised, an unfortunate casualty in the battle between the People's Action Party, the Barisan Sosialis and their opposing visions of a post-colonial Singapore," Mr Ho Chi Tim, a PhD candidate studying Singapore's social policy evolution, wrote in The Straits Times in April.

Since UHC has been mooted in Singapore for 60 years, I won't follow the lead of those who say: I told you so.

Instead, I will say to the Singapore Government: Well done.

And add a bit of advice: Gird yourself well for battle.

Health-care reform is fraught with political risks. Witness America, where leaders from Bill and Hillary Clinton to current President Barack Obama stake their political career on expanding insurance coverage.

In Singapore, the response to Mr Lee's announcement about MediShield Life has been positive so far. But this should not lull anyone, certainly not the Government, into thinking it will be easy to introduce a plan that people will all agree on.

Just what are the likely sticking points?

First, premium hikes. At its core, the changes mean MediShield Life will cover the very old and very sick: precisely the ones who need the most care, who chalk up the heftiest bills. The claims will go up. A minority and their family might be happy. Most won't, because they will be paying higher premiums.

Just how high should premiums go? This isn't a matter for actuarists alone, but is a question of what each person is prepared to pay to subsidise another person's parent/child/worker, and on the understanding that he himself will benefit if he falls sick. How much premiums a young, healthy person is prepared to pay depends on how much solidarity he feels with those who benefit.

Singapore is untested in this regard. After decades of exhortations about personal responsibility and reward based on individual performance and effort, we probably need a booster shot of altruism and solidarity.

When the discussion on MediShield Life gets under way this year, I hope those now eager to align themselves with the PM's UHC proposal will also be intellectually honest enough to rally public support for higher premiums. The alternative is to expect the State to pick up the tab for the extra cost in full, which would require higher taxes.

Second, the issue of how to cover people with pre-existing conditions will be fractious.

The Government made a brave - and to me morally correct - decision to include them. But Mr Lee also said MediShield Life must "break even", which means premiums collected must be enough to cover claims.

A reader wrote to me elated that her lupus condition will now be covered. But other readers want to know if mental health illnesses will be covered. How about HIV?

If the risk pool is broadened and coverage extended too widely, premiums will rise to an unaffordable level. In the US, some states solved this problem by creating high-risk pools for those rejected by insurers. Rather than lump them under the same risk pool as the healthy and jack up premiums for all, these states devised a special plan for high-risk patients with pre-existing conditions. These plans often had to be operated and subsidised by the government. Having a separate provision for those with pre-existing conditions helps keep premiums down for everybody else.

Will the Singapore Government do likewise and create and subsidise high-risk pools? Or will it include everyone in the same risk pool and expect Singaporeans to bear the brunt of covering pre-existing illness?

A third alternative is to put everyone in the same risk pool and for the Government to step in to pay the additional premiums for those who can't afford them. The cost of insuring pre-existing illnesses will be high: One estimate in 2010 on the National Affairs website (an American policy journal) for insuring four million high-risk patients was US$17 billion (S$21.5 billion), or US$4,250 a year.

As an insurance lemon - a cancer survivor who has been denied private health insurance - I would naturally like it if the cost of insuring folks like me were pooled. But I would also understand that a 30-year-old man with three young children struggling on $2,000 a month shouldn't be paying hundreds more in premiums for me.

So I would prefer a separate high-risk pool into which I would gladly pay that $5,443 premium while I can afford it, in exchange for reassurance that when I retire, the premium will be subsidised.

Given its complexity, MediShield Life isn't likely to be operational for another year at least. If it comes into effect around end-2014 or 2015, Singaporeans will wake up to expanded benefits - and higher premiums - around the time the next general election is due. Governments have been thrown out for less.

Will MediShield Life prove a vote-getter or a vote-loser?

It is by no means clear.

This is why I say the Government is showing leadership in seizing this bull by its horns and why it must gird itself well for battle.

Once the initial euphoria about universal coverage wears off, expect a heated and divisive debate on the details.


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