Tuesday 10 September 2013

MediShield Life to cover pre-existing illnesses, assures minister

By Salma Khalik, The Straits Times, 9 Sep 2013

SINGAPORE residents whose pre-existing illnesses are not covered by MediShield will be fully insured once MediShield Life kicks in, assured Health Minister Gan Kim Yong yesterday.

But it will take a year or more for the new scheme to take off, he explained at the sidelines of a post-National Day Rally (NDR) dialogue yesterday at the Health Promotion Board.

Prime Minister Lee Hsien Loong had announced in his NDR speech that MediShield Life will cover all residents for life. Currently, 8 per cent of residents are not covered by MediShield.

But MediShield also currently does not allow policyholders to claim for certain conditions they were already suffering from or had a high risk of when they first signed up. These include heart disease, cancer and organ failure.

With claims from this group expected to increase with the launch of MediShield Life, it will take time for the Health Ministry to formulate the new scheme.

"We are going through the records to get a sense of the size of those with exclusions today," said Mr Gan, who again promised that the Government will "play a larger role" in ensuring that premiums remain affordable for all.

At the dialogue, a participant asked about the rationale for not covering her brother's mental illness which requires long-term hospital care.

Mental and congenital illnesses were previously excluded under MediShield. This was changed in March, but only for those whose condition was diagnosed after the change came into effect.

The woman's brother has been a long-time MediShield policyholder and did not have the mental condition when he joined, she said. His hospital bills over the past two years had almost depleted his Medisave account, as insurance does not cover any of them.

Replying, Mr Gan assured her that once MediShield Life started, it would help pick up his large hospital bills. He also said that if her brother needed help in the meantime, the ministry would look into the case.

The minister added that MediShield Life will take care of people with congenital illnesses, regardless of whether they are currently signed up with MediShield.

About 800 babies are born yearly with a serious congenital defect, such as a malformed heart, intestines and nervous system.

The high cost of health care was a key worry expressed at yesterday's dialogue.

Several participants bemoaned the price of medicine, while others wanted Medisave freed up for more uses "since it's our money".

Mr Gan explained that people need enough in their Medisave to last through their lifetime, since it will also pay for MediShield premiums in their old age.

"We need to balance how much can be used, but we also don't want to oversave," he said.

In her opening address, the chairman of the government feedback unit REACH, Dr Amy Khor, said health issues had received the most feedback following PM Lee's NDR speech, during which he had announced several policy changes.

The Senior Minister of State for Health and Manpower added that feedback on education came next, followed by housing.

Nine in 10 people approved of expanding the Community Health Assist Scheme to provide subsidised care at private general practice and dental clinics for about half of all Singaporeans.

MediShield Life, meanwhile, received support from 86 per cent of people.

Balancing social justice, personal responsibility and efficiency in national health systems is not easy, as these two articles show.

Striking a healthy balance

By Phua Kai Hong, Published The Straits Times, 16 Sep 2013

THE health-care policy shifts announced recently have raised many critical questions.

Advocates of universal health insurance have appealed for wider coverage on grounds of social justice and solidarity. This is now being expressed as a shared obligation that is significantly different from the past emphasis on personal responsibility. But there are many aspects of the new scheme that have yet to be clarified.

The reform of MediShield into MediShield Life has generated expectations that a universal national health insurance plan will be developed similar to those of social welfare systems in other developed countries.

But who really pays for the additional Medisave contributions required to finance the increased health-care benefits? This is the first question.

The Government has promised to pay the premiums of the poor and the old (the "pioneer generation") for the new MediShield Life plan, presumably from taxes. There will also be cover for pre-existing illnesses and compulsory coverage for life. This sits well with Singapore's cultural values of respect for its elders and filial piety, emphasised in the Asian family and Confucian ethics.

But the fundamental 3-M financing framework, consisting of Medisave compulsory savings, MediShield insurance for catastrophic illnesses and Medifund for the poor, will likely remain.

Medisave balances will be used to pay premiums into a more generous MediShield Life. This is unlike the case for many other national health insurance plans, which require increases of premiums or taxes that are politically and financially difficult to sustain.

But instead of each generation being expected to save and pay for individual and family health expenses, will there also be more cross-subsidising across age groups or transferring of costs to the next generation?

Second question: How will MediShield Life work with the existing tier of Integrated Shield plans that sit on top of the basic MediShield plan, offering more benefits, coverage, and choice of hospitals in exchange for higher premiums?

To recap: The passage of Medisave in 1984 was well accepted because it appealed to people's sense that personal responsibility and family support were important in health-care matters. A limited MediShield insurance was added later to insure against the higher cost of treatment for catastrophic diseases such as cancer. However, its poor design soon led to difficulties. This happened when private sector health insurers "cherry-picked" or "skim-creamed" the low-risk young, healthy working adults into what are now called Integrated Shield plans. This left older and more unhealthy groups to be covered by the more basic MediShield. Industry practices also excluded pre-existing illnesses, imposed benefit limits and insisted on non-guaranteed renewability of coverage. This forced people to pay even higher premiums or lose their private insurance coverage as they got older.

It is not clear whether and how the Government's new compulsory health plan will eliminate this problem of adverse selection. Will the Government continue to allow people to use their Medisave to buy additional private health insurance schemes, when these may encourage overspending by health-care providers and patients?

Third question: Just what is the proper balance between the State, individual and employer in financing health care?

It is expected that both the Government's budgetary allocation for health and individuals' compulsory Medisave savings will be increased to pay the higher premiums for more universal health insurance. But what is a good balance? More coverage means higher premiums. More spending by the State means less for other public services, or higher taxes.

Increases in government spending must be matched by necessary regulation on the use of new drugs, high-cost technology and fees charged by providers, to avoid moral hazard from supplier-induced demand, such as from doctors over-prescribing treatment.

Also needed are rules on such issues as health-care technology assessment, pricing, subsidies and quality assurance, to protect the consumer and safeguard the public interest. Otherwise, we risk seeing a slew of expensive, unproven procedures or medication foisted onto unsuspecting patients simply because insurance will pay for them.

Since Medisave savings may go up, employers may be obliged to increase their contribution to employees' Central Provident Fund accounts that feed into Medisave. If so, will employers pass on the costs in the form of higher prices, or lower the wages of their employees?

These are not easy questions to answer. More consultation and public education are necessary so people are more informed about the issues and trade-offs involved. Some technical aspects require expert knowledge and evidence, while others merely reflect societal values and the interests of stakeholders. There may be many more questions that will have to be answered before the new policy can be implemented.

The writer, a health economist who has consulted with the World Bank and World Health Organisation, teaches health and social policy at the Lee Kuan Yew School of Public Policy, National University of Singapore.

Being personally responsible is key in preventive care

By Tilak Abeysinghe And Yang Shu Wen, Published The Straits Times, 16 Sep 2013

AT A time when Singapore's health-care financing system is undergoing major reforms, many are giving their views about how the restructuring process should proceed. We draw attention to some observations on personal responsibility and preventive health care.

Devising an ideal health-care financing system seems difficult, if not impossible. At the core of the problem lies the need to balance efficiency and equity. Singapore has done exceptionally well on efficiency grounds, with excellent overall health outcomes per dollar spent. It is on equity grounds that the system falls short. In 2000, the World Health Organisation (WHO) ranked Singapore sixth among 191 countries in terms of overall health achievements. In terms of "fairness in financial contribution", however, Singapore received a ranking of 101-102.

Personal responsibility combined with targeted subsidies are the major pillars of Singapore's health-care financing system. The critical question is whether Singapore should deviate from the personal responsibility principle in order to achieve greater equity. To help resolve this issue, it is necessary to look at the extent to which personal responsibility in health-care financing has enhanced preventive healthcare activities in Singapore.

In an attempt to explore the relationship between personal responsibility and preventive health care, we looked into behavioural risk factors across four different health-care financing systems - in Britain, Australia, Hong Kong and Singapore. According to WHO records, private health expenditure as a proportion of total health expenditure in 2010 in these economies were: Britain 18 per cent, Australia 33 per cent, Hong Kong 48 per cent, and Singapore 67 per cent.

Because of data limitations, only four risk factors were identified. They were smoking, excessive alcohol consumption, obesity and physical inactivity. All have been found to be closely correlated with many preventable ailments such as heart diseases, diabetes and cancer.

The hypothesis we wanted to test was whether high private spending on health would lower a population's risk factors. In other words, are people more likely to adopt healthier lifestyles when they know they have to pay a large proportion of their medical bills?

Unfortunately, the definitions used to compile data we used are not strictly compatible across the economies concerned. For example, excessive alcohol consumption is defined in terms of daily volume in Australia and Britain, and weekly frequency in Hong Kong and Singapore. But the data does provide us with enough information to make broad comparisons.

We examined trends across successive birth cohorts in the four economies after removing age and income effects from the data. With the exception of excessive alcohol consumption, other variables show interesting trends and levels.

Smoking by birth cohort has trended downwards across all four economies, partly in response to anti-smoking campaigns. Singapore, however, continues to have the lowest incidence of smoking.

The obesity indexes of both Singapore and Hong Kong also lie well below those of Australia and Britain in recent birth cohorts.

To assess changes in inactivity, we removed the effect of obesity from the data. This was because many people may start physical exercise only when they see their waistlines bulging. When we do this, it is clear that the proportion of inactive people in Singapore is much lower than in the other three economies.

Comparing different age cohorts in Singapore, we noted a strong negative relationship between inactivity and private spending on health care. In other words, when the private proportion of total health spending of a cohort increased, the percentage of people who were physically inactive fell. Such a tight relationship is unlikely if expected medical costs are not a concern.

We did not see a similar pattern in Australia. But this can be explained by the fact that the proportion of total medical expenses borne by individuals is small. Fear of high medical bills is, therefore, unlikely to motivate people to be more physically active.

These results, though coming from limited data sets, suggest personal responsibility plays an important role in preventive health-care practices, thus enabling Singapore to keep overall health expenditure levels low.

That said, it is important to avoid pushing the principle of personal responsibility too far. Placing excessive health-care financing burdens on individuals will simply encourage people to defer seeking medical attention until an illness becomes serious. This is not only detrimental to the individual (both in terms of health and finance), but it will also drive up national health expenditures.

Tilak Abeysinghe is director of the Singapore Centre for Applied and Policy Economics at the Department of Economics, National University of Singapore (NUS) and Yang Shu Wen is an NUS economics graduate who is pursuing a music career.

Breathing life into MediShield Life

By Jeremy Lim, Published The Straits Times, 23 Sep 2013

SINCE "MediShield Life" entered the public lexicon a month ago, commentators and citizens alike have raised concerns on everything from the setting of premiums to the fairness of the healthy paying for the unhealthy, to mitigating the dangers of "abuse". As the Ministry of Health engages in public consultation, it is worth stepping back and re-examining some fundamentals of health care and health insurance. After that, the design principles of MediShield Life should become clearer.

Health care hard truths

HEALTH CARE is about finite resources and infinite demand. No one wants to die and everyone wants to live well. This hard truth must lead to hard choices. As New York Times writer David Leonhardt pithily comments: "There is no such thing as a free lunch. The choice isn't between rationing and not rationing. It's between rationing well and rationing badly."

The second hard truth is moral hazard. Moral hazard, the phenomenon of over-consumption and over-servicing when someone else is paying, is easily understood just by watching Singaporeans pile their plates high at the buffet table. Whatever we may want to believe, moral hazard in health care is real. Perhaps not as real as fiscal conservatives believe, but real enough to be a major consideration in insurance design.

Balanced against moral hazard is the widespread societal desire for fairness in health care provision. Most, if not all of us, believe that health care access should not and cannot be determined by financial means alone. This aspiration is the basis for the growing demands for "universal health coverage", which World Health Organisation director-general Margaret Chan calls a "powerful social equaliser and the ultimate expression of fairness".

Four design considerations

GIVEN these hard truths, how should MediShield Life be conceptualised and structured? I would offer four suggestions. First, recognise that not everything can be covered by MediShield Life. Planners need to decide what to include and to what extent but just as importantly, define the process by which such decisions are made. In this rambunctious age of public scepticism, this is crucial to maintain the integrity of MediShield Life and assure wide support.

I would go as far as considering an independent commission to make these decisions on an ongoing basis. The English have the National Institute for Health and Clinical Excellence which, while government-funded, exercises independent decision-making. Its decisions on what the health service needs to offer are binding.

Crucial to the Institute's independence is its transparency in decision-making. The academic research, industry input, patient advocates' filing, demographic and epidemiologic data that go into the decision-making process are freely available. It would be impossible to please everyone but Singapore must strive to get citizens to understand how coverage decisions are made and be reassured the process is fair across disease groups and therapies.

Second, some control of premium pricing is needed. This newspaper has published numerous letters challenging whether the improved benefits justifying the hefty premium increases in MediShield and the Integrated Shield Plans are what citizens really need, want and can afford. Remember "finite resources and infinite demand"?

MediShield Life needs to not just provide cloth but also cut the coat according to the cloth. If premium increases are capped at say 5 to 8 per cent per year, what new services can be added? What services need to be taken out?

Giving peace of mind is a key priority of the ongoing reforms, and the lack of regulatory restraints in premium setting year on year does not enable peace of mind. Again, an independent commission would be helpful.

The third aspect relates to transparency and public discourse. Transparency of decision-making in clinical coverage is a must, but equally important is transparency of MediShield Life's financials. What are the target and actual Medical Loss Ratios (the ratio of claims paid out to premiums collected)?

How will these affect premium rates? Which segments merit subsidies of premiums? How will all these decisions be made, and on what basis? The government running a tight but fair ship financially and being transparent about it will help assure Singaporeans that their best interests are being served by MediShield Life and that insurers, including Government-endorsed ones, are not taking advantage of them.

Finally, the Government needs to be more than an administrator of MediShield Life. At least one commentator has declared "the burden of caring for the poor and sick facing large bills will be shifted from the Government to the rest of society".

The basis of this statement is that the Government currently funds such care through Medifund and hospitals writing off bad debts. Once every Singaporean is included in MediShield Life and hence insured, the collective - the rest of the insured - will be paying these bills.

This is, to put it mildly, outrageous. The Government is part of society and must play its part too. Even a commitment of x million dollars in the form of an endowment with the investment returns flowing into MediShield Life to increase claim limits, reduce premiums and so on would be meaningful and likely politically necessary. It goes against the principle of means-testing that Deputy Prime Minister Tharman Shanmugaratnam eloquently defended recently, but we do so for education. Rich or poor, all students in our public universities enjoy subsidies and hence lower tuition fees. During the financial crisis, the Jobs Credit scheme was extended to all employers, not just the struggling ones. It does not really matter what form the contribution takes but the Government needs to demonstrate convincingly it is playing its part financially beyond mandating participation.

Singaporeans are rightly concerned about health care affordability. The Government's response is MediShield Life, an insurance scheme that will cover every Singaporean young and old, rich or poor, well or sick. It is the right thing to do. Let's do it right.

The writer is principal consultant, Insights Health Associates and author of Myth Or Magic: The Singapore Healthcare System.

Paying for value in health care
By Loke Wai Chiong, Published The Straits Times, 14 Oct 2013

THE introduction of universal health insurance through MediShield Life is the Government's latest move to keep health care affordable and to provide peace of mind to Singaporeans.

However, there is concern in some quarters that rising costs will soon place medical care out of the reach of many if nothing is done to keep costs in check. Universal coverage may ease the financial burden of a serious illness when it strikes. But there is still silence on the broader issue of long-term affordability.

If health-care costs continue to rise uncontrollably, it will not be enough to increase medical savings or collect higher premiums when the insured person is younger. The fundamental challenge is to control costs.

Globally, there are four commonly adopted payment systems. The first is fee for service, where every individual activity is separately paid for. The second is the block grant or block budget system, which refers to a wholesale budget for a hospital. The third is episode-based payment through diagnosis-related groups. This system classifies inpatient and day surgery cases into one of hundreds of possible groupings according to the patient's diagnosis and treatment. The final payment system is called capitated general practitioner (GP) payment. This is a fixed, risk-adjusted sum paid by a patient (or for a patient) regardless of actual use.

In all these systems, hospitals are paid for treating a patient for a given condition and not for the results achieved.

By increasing volume, hospitals can increase their income, regardless of the quality or appropriateness of the care provided. In other words, delivering high-quality health care efficiently does not always generate higher revenues for hospitals or doctors.

In fact, there are perverse incentives for health-care providers willing to provide only mediocre care, since doing so can bring in even more revenue. For example, medical complications such as in-hospital infections can result in longer hospital stays, thus producing more revenue for the provider.

The current payment modes reflect and perpetuate the failures of existing health-care systems. We may be paying for disjointed, uncoordinated medical advice, when we should be receiving holistic care with an integrated outcome.

Singapore has tried the first three of the four payment systems listed above. Today, it operates a hybrid model suited to its health-care policy and needs.

There have also been early steps towards a system more focused on population health and treatment outcomes. These include the organisation and integration of services into Regional Health Systems, the opening up of Medisave for primary care of chronic diseases and the development of the Chronic Disease Management Programme for General Practitioners.

Globally, policymakers and insurers are considering the benefits of a value-based contracting payment system. This is a system in which patients pay only for good, effective and agreed-upon or contracted outcomes of care, rather than the processes that go into it.

However, it is not easy to implement such a system.

Most systems find it easier to reward process compliance. For example, doctors may focus on improving indicators which yield the most points, or which "check the boxes". This may involve complying with various processes such as calling for a blood test to be done biannually, rather than developing ways to improve outcomes.

Doctors, insurers and patients all have differing access to and understanding of medical information. This makes it difficult to determine what sort of care is appropriate and necessary, and can lead to providers gaming the system. For instance, providers can introduce unnecessary or more expensive tests, treatments and services to get higher revenue when it comes time for reporting and claiming payment.

In fact, it would seem almost too complex to put the patient's medical problem central in the payment system, given the broad scope of medical problems that patients may present with, and the challenge to define where care processes "begin" and "end". For example, does the care for a patient who has undergone hip surgery end when he leaves the hospital or when he is able to walk independently?

For a contracting value system to work, three building blocks must be in place. The first is to delineate care services into "units of care". This means paying only for integrated care services or products that lead to an effective final treatment outcome based on best available evidence, and which is agreed upon by both the patient and the doctor.

Payment could be on a per illness basis, such as treatment for an acute heart attack or a fracture. It could also be based on per year of care and continuous across primary (such as GP) and hospital care settings - for example, chronic diabetes care.

The second building block determines what and how to measure the core outcomes that patients and professionals aim to achieve. These must be both measurable and meaningful. These are easier to identify once the types of care are determined.

Take a patient's recovery from a heart attack. The measures to evaluate whether the hospital has done its job could include high rescue rate, low mortality and morbidity as measured three months after the heart attack.

For frail elderly people with multiple chronic diseases, measures could be based on the quality of life, low readmission rates, and the patient's sense of empowerment and self-management of the ailments concerned.

The third building block of a contracting value system is then to contract for desired outcomes. Payment for medical services is made when contractual terms are fulfilled.

These three building blocks will enable an environment which encourages care organisations to be holistic and innovative in delivering the best possible care to their patients.

In Singapore, the development of such integrated care outcomes and indicators is already under way, although time will be needed to work out all the necessary building blocks.

The day may soon come when payment by the Government or the insurer to the health-care provider is ultimately tied to the achievement of better health of the patient and the population.

Value-based payment or payment for outcomes may turn out to be the most important factor in ensuring that MediShield Life becomes a sustainable solution.

The writer is director of Global Healthcare Centre of Excellence, KPMG in Singapore. KPMG is a network of professional services firms.

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