Don't let health insurance become a runaway car

THE universal medical coverage Singapore plans to introduce next year is a double-edged sword. Great care is needed upfront to ensure that it cuts only in the right direction.

The main reason for introducing MediShield Life is to ensure everyone, including those in their twilight years, those who start life with congenital ailments, are not denied affordable medical care.

But conversely, there will be people who will want to "make the most" of their insurance coverage. Such behaviour, if widespread, will push up health-care costs for everyone unnecessarily.

In France where the provision of spectacles to correct eyesight is part of medical coverage, many people get a new pair every year. And they do this not out of need, but because they are entitled to do so.

America's health insurance industry estimates that 20 to 30 per cent of the US$2.7 trillion (S$3.4 trillion) spent on health care in the United States - or as much as US$800 billion a year - "goes to care that is wasteful, redundant or inefficient".

Even before the advent of MediShield Life, there are already many stories of abuse of existing MediShield and other medical insurance cover.

For example, some specialist clinics reportedly first find out if patients are insured before deciding on a course of treatment.

Is that really necessary? Shouldn't doctors treat according to the ailment and not how deep the patients' - or their insurers' - pockets are?

Some doctors justify such inquiries by saying some tests and treatments are very expensive, and they would be cautious about recommending them as benefits from these may not be significant.

However, they explain, if the patient is fully covered, then it would be preferable for them to get that marginal benefit.

Many patients agree, arguing that they pay hefty insurance premiums just for such coverage.

Are they wrong?

Not if they are using their own money. But when it is insurance - in other words, the money comes from everyone else in the country - the consideration is not so straightforward.

In some cases, it might be justified. In others, it would be difficult. How much would you pay for a treatment that promises a small increase in possibility of a good outcome?

It is difficult to quantify such calculations or even to talk about whether one wants to spend, say, $10,000 more for a 5 per cent higher chance of a better outcome.

Yet these are things that Singapore needs to discuss as a society, before the launch of MediShield Life.

Should the insurance cover very costly cancer treatments that will extend a patient's life - but by mere weeks? Should it pay for a whole gamut of tests because it is more convenient for the patient to do it all at one go, rather than return for more tests if the most likely diagnosis is proven wrong?

How much more will all these extras cost? Will all heart patients insist on drug eluting stents, and brand name knees when they have to be replaced?

Patients who have riders, which mean that insurance will pay the entire bill from the first dollar, often do not even bother to find out how much they are being charged for the treatment, as none of the payment comes from them.

People often make very different decisions when they have to pay for treatment themselves, compared with when insurance, or their company, pays most or all of the amount.

The MediShield Life Review Committee has suggested reducing both the deductible and the co-payment. The first refers to the initial amount the patient pays before insurance kicks in.

Co-payment is the patient's share of the rest of the bill. Co-payment typically ranges from 10 to 20 per cent of the insured portion of the bill.

While patients welcome lower deductibles and co-payment, my view is that the amount they need to pay should not be so low that it encourages extravagant health- care spending.

The entire MediShield scheme is currently being reviewed. While the target is to provide good universal coverage, it should also look into ways to prevent potential abuse.

This should apply, not just to the basic scheme, but also to the integrated plans targeted at more expensive private care at both public and private hospitals. Two in three people currently have such added coverage.

The best time to set the brakes is before the car starts - and not when it is running out of control.

If this is not done, Singapore could go the way of the US, which expects to pay 20 per cent of its gross domestic product (GDP) on health care by 2021.

Japan, on the other hand, manages on 8.5 per cent of its GDP, with its population among the healthiest and certainly the longest living in the world.

While Singapore cannot expect to keep health-care costs at the current 4 per cent of GDP, especially with one of the fastest ageing populations in the world, it should strive to make every dollar spent on health care count.

This story was first published in The Straits Times on March 24, 2014