Saturday, 13 March 2021

Changes in Singapore’s healthcare subsidy framework from 2022

Singapore stretches healthcare dollar with targeted subsidies
With healthcare spending going up every year as Singapore's population greys and the country's fiscal situation gets tighter than it has been in decades, it has become more crucial than ever to make every dollar count. Insight looks at how the latest changes in the healthcare subsidy framework help make a difference.
By Linette Lai, Political Correspondent, The Straits Times, 13 Mar 2021

Healthcare spending has sometimes been compared to a balloon - squeeze it in one area and a bulge appears in another.

The analogy speaks to how difficult it is to rein in rising healthcare costs, a challenge that Singapore has become increasingly familiar with as its population greys.

The big question is: With limited resources and growing needs on every end, how can the country make every healthcare dollar count?

Stretching the healthcare dollar is one of the main aims behind changes to the subsidy structure in public healthcare institutions announced last week by the Health Ministry.

In a nutshell: Hospitals will use per capita household income to determine subsidies, rather than individual income. There will also be just one subsidy range for the B2 and C ward classes. On top of that, changes in the subsidy structure at specialist outpatient clinics mean that people who earn more will have to pay more.

Lastly, subsidies in community hospitals will rise - to tally more closely with subsidies in acute hospitals - removing one financial barrier that patients may face when making the switch from one to the other.

Singapore has 10 public acute hospitals. They are the eight general hospitals, KK Women's and Children's Hospital, as well as the National Heart Centre Singapore.

The changes are slated to take effect by the middle of next year.

Commenting on the changes, Professor Teo Yik Ying, dean of the Saw Swee Hock School of Public Health at National University of Singapore, said that with healthcare costs expected to go up, it seems likely that the Government's intent is for subsidies to play a larger role.

"But this means subsidies need to be more targeted and equitable, especially towards those who require more assistance," he said.

"This is the main reason underpinning the changes."

Greatest bang for its buck

Singapore has traditionally prided itself on achieving the greatest bang for its buck in healthcare.

A banner that used to hang outside the Health Ministry's headquarters in Outram Park proudly proclaimed: "The World's Most Cost-effective Healthcare System". It has the statistics to bear this out.

The latest available data shows that government spending on healthcare - including expenditure on endowment funds such as MediFund, but excluding transfers - stood at 2.1 per cent of Singapore's gross domestic product in 2017, which is significantly lower than what is routinely spent by other developed countries.

But this is unlikely to last. As it is, the figure is expected to rise to 3 per cent by 2030, when the proportion of Singaporeans aged 65 and older will go up from one in six to one in four.

Already, Singapore is beginning to see signs of this trend. The national health expenditure rose from $13 billion in 2012 to $22 billion in 2017, or around 11 per cent yearly. And the Government's share of healthcare spending went up from 40 per cent in 2013 to 46 per cent in 2018.

The new subsidy changes will help by channelling patients to the facilities that are most cost-effective and best meet their needs - what is known in healthcare parlance as "right-siting".

In other words, not every ailment would be best treated with a long stay at an acute hospital, just as one would not use a sledgehammer to crack a walnut.

In Asia, acute hospitals have traditionally been viewed as the centrepiece of the healthcare system, said Ms Kitty Lee, a partner at Oliver Wyman and head of the firm's health and life sciences practice in the Asia-Pacific.

"We would build a hospital with four walls and many specialists, and as we needed to grow, we would add more beds," she noted.

But as population demographics shifted and the prevalence of chronic diseases such as diabetes surged, it became clear that not every sickness requires the acute care that a general hospital is designed to provide.

For instance, certain operations can now be carried out as day surgery, saving on manpower and hospital bed spaces without compromising on outcomes.

"Things that used to require an overnight stay can now be done faster, safer, and more cost-effectively in other sites," Ms Lee said. "And it's not just about pushing the unit costs down, but finding the right model of care."

In the context of a pandemic, making sure patients are right-sited becomes even more crucial, as one does not want all types of patients gathered in the same place at the same time, she added.

Similarly, community hospitals take in patients who need medical care that is less intensive than what acute hospitals are set up to provide.

Patients in such hospitals are typically older, and require rehabilitative or sub-acute care as they recover from stroke, surgery or other medical conditions, said Dr Loh Yik Hin, chief executive of St Andrew's Community Hospital.

Patient in community hospitals generally stay between two and four weeks - again saving on precious bed space in acute hospitals.

At present, acute hospitals are the only places in the healthcare system where patients are means-tested according to their individual incomes.

This means subsidies may differ quite significantly when patients are moved to other institutions such as community hospitals, all of which use per capita household income as a measure.

In a 2019 ST Forum letter published in The Straits Times, MOH explained that the reason for using individual income to determine subsidies in the acute hospital setting is "to keep the processes simple, as acute hospital stays are typically relatively short".

The road ahead

What more can be done to keep healthcare spending low?

One simple solution is to reduce demand by keeping Singaporeans healthy for as long as possible - although that is far easier said than done.

Already, the Government has made some progress on this front through various health promotion campaigns over the years - from the War on Diabetes to the many iterations of the National Step Challenge.

And last week, Health Minister Gan Kim Yong told Parliament that his ministry will take things a step further by designing programmes that adopt "a life-course approach, taking care of each Singaporean from birth and throughout their life".

But there is still a long journey ahead, Prof Teo said.

In the future, Singapore may choose to offer financial incentives to individuals and healthcare providers who prioritise the maintenance of good health, he noted, adding that doing so would require some fundamental shifts in financing models.

For instance, Prof Teo said, the country may wish to introduce some elements of what is known as capitation healthcare - where healthcare providers are paid a fixed amount for each person who is assigned to them, whether or not he or she needs medical attention.

In theory, doing so would help keep costs in check by encouraging healthcare providers to focus on good outcomes and discouraging the overconsumption of healthcare services, such as unnecessary medical tests or procedures.

Tapping technology to create a system of data-sharing among healthcare clusters - one that goes beyond electronic medical records - will also help, Ms Lee said.

This can be done in a way which does not require new tech infrastructure, she added, noting that patients benefit when there is a system for healthcare providers to share different ways of treatment.

"It can't be the traditional way of thinking about technology... we implement this system, check the box and we are done."

And on the topic of rising healthcare costs, perhaps it is time to accept the inevitable - that certain costs are going to go up, given Singapore's demographic changes, suggested Dr Phua Kai Hong, an adjunct senior research fellow at the Lee Kuan Yew School of Public Policy.

Indeed, the country now has one of the highest life expectancies in the world - today, Singaporeans can expect to live beyond the age of 80.

But Dr Phua, a health economist, said it does not mean that costs should run up unchecked.

Instead, policymakers have to be realistic, hold down costs "rationally" and educate the public on why certain spending is necessary.

"I look at it as a balloon. It's growing bigger and bigger, and you can't let air in too fast or it's going to pop in your face," he added.

"But you watch the whole balloon. Is it fair to everybody? Is it necessary?" he said, adding that if cost increases are fair, reasonable and benefit everyone, paying more makes sense.

Lower costs for most with Singapore's healthcare subsidy revision, and some who pay more can afford it: Experts
By Rei Kurohi, The Straits Times, 13 Mar 2021

When changes to the subsidy framework of Singapore's healthcare system take effect in the middle of next year, most patients will end up paying the same or less out of pocket for their treatments.

But some from higher-income households will end up paying a little more.

Changes are being made to the way subsidies are calculated at acute hospitals, where means testing is now based on one's individual income level. A patient's per capita household income (PCHI) will be used instead, bringing acute hospitals in line with other healthcare settings here.

Meanwhile, subsidies at community hospitals are being enhanced, and patients with a higher PCHI will get less in subsidies at specialist outpatient clinics.

Standardising means testing

The Ministry of Health (MOH) estimates that switching the basis of means testing at acute hospitals to PCHI will result in 15 per cent of patients paying about $200 more out of pocket, mainly those from households with higher per capita income.

Another 30 per cent will see their out-of-pocket costs decrease by about $150, while most others will not see a change.

The current framework based on personal income has not been altered since means testing was first introduced in public hospitals in 2009. This can cause issues for patients who are transferred from one institution to another where a different measure is used.

"Patients coming through the hospital system may find it very confusing. Even for financial assistance applications, there are different criteria," said principal medical social worker Tiffany Soh.

Her job at Ng Teng Fong General Hospital involves helping patients decide on their next move - for instance, whether it is better for them to recuperate in a community hospital or a nursing home.

"With this revised subsidy framework, it has made it more streamlined and easy to understand. It becomes much clearer when we explain it to patients."

One implication of the changes is that a retired person with no personal income will end up paying more out of pocket if the household has other members earning an income.

This will better reflect the patient's actual level of family support, as the family's breadwinner can afford to pay the extra cost.

At the same time, healthcare will become more affordable for the breadwinner.

Ms Soh related an encounter with a man who was the sole income earner in his household of seven, comprising himself, his wife, four children and his mother-in-law. Should he be admitted to hospital in the future, after the changes have taken place, he will pay significantly less than he would now, she said.

Another major change is how subsidies for B2 and C class wards will be unified under a single subsidy range, which goes from 50 per cent to 80 per cent, depending on the PCHI.

Previously, the range for B2 class wards was 50 per cent to 65 per cent, while the range for C class wards was 65 per cent to 80 per cent.

C class wards will still be cheaper overall compared with B2 class wards, but the change means lower-income patients who opt for a B2 class ward will pay less than before, while higher-income patients who choose a C class ward will pay more.

Subsidies for day surgery will follow the same range instead of having just one fixed subsidised rate of 65 per cent, to encourage patients to opt for day surgery rather than staying in hospital.

Dr Tan Tze Lee, a general practitioner and president of the College of Family Physicians, noted that the group that will end up paying more has a "very decent" level of income and can afford it.

"If you can afford it, this is like putting in effort for the national good."

"Two hundred dollars is not an insignificant amount of money, but there is also no upper limit for income under the subsidy range," he said, pointing out that those from higher-income households can still opt for C class wards.

"You could have a per capita household income of $1 million, and you will still get subsidies, so I think it's fair."

Incentivising right-siting

Treating patients in the appropriate setting and charging them accordingly is known as right-siting, and the Government has made this a priority in recent years.

To encourage patients to opt for step-down care in the community setting instead of staying in hospital, MOH is raising subsidies for community hospitals.

The maximum level of subsidy for community hospitals is being raised to 80 per cent, up from 75 per cent now, to match that given for acute hospitals.

The minimum level will also be raised to 30 per cent, up from the current 20 per cent.

This is lower than the 50 per cent minimum set at acute hospitals, but it is because an average community hospital bill is lower than that of an acute hospital.

This new framework will apply to both sub-acute and rehabilitative care at community hospitals, and about 95 per cent of patients will benefit from higher subsidies.

Dr Loh Yik Hin, chief executive of St Andrew's Community Hospital, said affordability is naturally one of the most important concerns of those staying in community hospitals, who tend to be older patients who need rehabilitative and sub-acute care as they recover from stroke, other medical conditions and surgery.

"The announced changes will help address these concerns and give them financial peace of mind for the duration of the hospitalisation, thus allowing them to concentrate on recovering," he added.

Dr Loh noted that PCHI-based subsidies are not the only form of financial support for community hospital patients and should not be seen in isolation.

Once MediShield Life claims are taken into account, almost 60 per cent of patient care episodes will see lower co-payments, with a median decrease of about $120. An episode begins with a patient being referred or admitted to the healthcare institution and ends when the patient is discharged.

MediFund acts as a safety net, and out-of-pocket expenses can also be covered by MediSave, Dr Loh said.

Specialist outpatient clinics (SOCs) will also see changes, with two new subsidy tiers being introduced. This means higher-income households will receive less in subsidies.

For patients whose PCHI is between $3,301 and $6,500, subsidies will be set at 40 per cent, while those with PCHI over $6,500 will get 30 per cent.

Currently, the minimum tier is 50 per cent for anyone with a PCHI above $2,000.

But at the same time, MOH will allow private patients in the inpatient setting - including those who choose A or B1 class wards in public hospitals - to opt for subsidised follow-up care at SOCs, which was not possible before.

Dr Tan said: "Let's say a patient has an operation and stays in an A or B1 ward. Now, he is going to retire and his company insurance no longer covers him for this, so he wants to do a follow-up at an outpatient clinic at a subsidised rate.

"Currently, this is not allowed. You can upgrade, but you cannot downgrade. After the change, you can.

"To me, that is another big cherry on top of this sundae, because people will have more choice."

Budget 2021 debate: Singapore to revamp healthcare subsidy system for more targeted support
By Salma Khalik, Senior Health Correspondent, The Straits Times, 6 Mar 2021

The healthcare subsidy system is being revamped to ensure that those who need financial help the most get more of it.

This comes with the rising consumption of healthcare services as the population ages, and Singapore looking to strengthen its healthcare system.

The Government's share of healthcare spending has been going up - from 40 per cent in 2013 to 46 per cent in 2018. And it will continue to rise.

To ensure that people at the lowest income levels get the help that they need to improve their health outcomes, the Ministry of Health (MOH) will channel more money to them.

To achieve this, it will do a major revamp of the public sector subsidy structure by the middle of next year that will affect inpatient and outpatient subsidies. There will be changes to the subsidies in acute and community hospitals, specialist outpatient clinics and for day surgery.

Speaking at the debate on his ministry's expenditure, Health Minister Gan Kim Yong said: "We have to be prudent in how we allocate limited resources to ensure that the support we provide is more targeted to benefit those with greater need."

There will be just one subsidy range for the two subsidised ward classes - B2 and C - that will go from 50 per cent to 80 per cent.

The change will mean higher subsidies for lower income patients who opt for B2 class, and lower subsidies for higher income patients in C class.

Subsidies for day surgery will follow the same format.

The lowest quintile already gets the lion's share of subsidies - $1.6 billion, or 37 per cent, in 2018.

Changes to the subsidy system will further tilt the financial help in their favour.

Hospital subsidies will change from being based on an individual's income to per capita household income to reflect the number of people dependent on that person's income.

Second Minister for Health Masagos Zulkifli outlined how healthcare will be transformed "to become a proactive and inclusive care system" by addressing health needs across a person's life.

To help the young "start well and achieve their fullest potential", the ministry will develop a child and maternal health and well-being strategy that will span pre-conception to 18 years of age.

At the other end of the spectrum, $180 million has been set aside to roll out more than 200 eldercare centres that will have active ageing programmes, befriending and care services.

Apart from the infrastructure that is being rolled out, attention has also been focused on healthcare professionals.

Senior Minister of State for Health Koh Poh Koon said that healthcare professionals "are key in improving patient care and outcomes".

They have played an important role in the fight against Covid-19, with many suspending their annual leave because of the high call for manpower, he said.

"We are cognisant that salaries play a key role in the attraction and retention of staff," Dr Koh said as he announced that nurses in the public sector will get a 5 per cent to 14 per cent pay rise over the next two years.

After more than a year combating Covid-19, Singapore will also improve its preparedness for future health crises.

Spelling this out, Dr Janil Puthucheary, Senior Minister of State for Health, said: "We will enhance our surveillance and response capabilities by leveraging new technologies to enable us to more effectively consolidate, analyse and generate insights from large amounts of data."

Aside from clinical teams, he said there is also a need for other experts such as epidemiologists, data scientists and statisticians.

Research and development capabilities will be strengthened to "prevent, prepare for and respond to future public health crises", he added.

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