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.
This story was first published in The Straits Times on Sept 23, 2013
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