Wednesday, 27 September 2023

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Healthcare: Uniquely Singapore, F1 or F9 – How mean can means testing be?

By Leong Sze Hian

I refer to the articles “No basis for rise in premiums” (Today, Jan 29), “MediShield premiums to go up for better cover” (ST, Jan 30), “Half of workers to get full subsidy” (ST, Jan 16), and “Means testing could take years to implement: Khaw – Process will be made as simple as possible: minister” (BT, Jan 16).

I would like to suggest that a higher workers’ income percentile be used, as a Singaporean earning just $2,170, at the 50th percentile, should not be considered as affluent enough to be means tested.

How about using average workers’ income which I understand is about $4,000. After all, I believe all policy formulation to-date, such as the public transport fare increase formula, are based on average income , and not median income.

Insurance premiums will increase

I also concur with Mr Mark O’Dell, President of the Life Insurance Association’s (LIA) press statement that insurance premiums will increase.

In my view, premiums will increase across the board for the entire population, because of the impracticality and inequity of charging higher yearly premiums for higher income Singaporeans or those who live in private property, even before a hospitalisation claim arises.

The outcome of means testing may be akin to “reverse means testing”, as the majority who are lower income or who live in HDB flats, may all have to pay higher premiums, to in a sense, subsidise richer Singaporeans who fail means testing.

A cost-based approach

I understand that other countries with medical means testing all use a “cost-based approach”, whereas Singapore I believe is the only country which has a “subsidy-based approach”.

In a “cost-based approach” system, the costs of providing medical care, is reduced by the amount of funding from the state, and then charged to patients. Those who are poor, will be means tested so that they will pay less or get free treatment.

In contrast, Singapore’s “subsidy-based approach” tells patients that the lower the ward class one chooses, the higher is the subsidy, which is reflected in the hospital bill.

The subsidy for C, B2 and B1 class wards is 80, 65 and 20 per cent, respectively.

From the perspective of patient psychology, people may perceive that the lower the class they select, the higher is the subsidy they get, at least in percentage terms.

Therefore, it may only be natural, especially for Singaporean’s renowned kiasu-ness, for more people to go for lower class wards.

Thus, a “cost-based approach” may result in more people choosing higher class wards because psychologically, they know what they are paying (cost-based approach), and if their financial resources and medical insurance cover are exhausted, they can resort to means testing to pay less.

Subsidy-based approach

On the other hand, our present “subsidy-based approach” may be the root cause why more people are choosing lower class wards, as it may be perceived as getting higher “subsidies”, which even if lost to some extent or entirely due to means testing, is still always lower than if one selected a higher ward instead.

Let me illustrate the difference between these two approaches in an example:
If the costs of providing a hospitalisation stay is $ 1,000, and the state subsidy is $ 800, all patient’s bills will reflect $ 200. Those who are poor, then go through a means test to determine whether they pay less or nothing at all.

In contrast, our present system bills patients $ 1,000, showing a subsidy of $ 800. Those who fail means testing, then has to pay back some or all of the $ 800 subsidy.

Are there any other countries that have Singapore’s “subsidy-based approach” and now means testing ?

For example, Medicaid in the United States, and the Medical Card System in Ireland, are all as I understand it, “cost-based approach” means testing.

I would like to suggest that we explore the possibility of changing to a “cost-based approach” like other countries.

A possible positive outcome of the change may be that hospitals may no longer have to strive so hard to convince enough patients to opt for non-subsidised treatment and wards, in order to cover the funding for subsidised patients.

After all, the costs and funding by the state is the same, for both approaches, at least from a theoretical perspective.

Reducing the C class subsidy from 80 to 65 per cent is a 75 per cent increase.

Counter-productive means testing

Charging those who fail means testing just 1 to 15 per cent more to reduce the 80 per cent subsidy for Class C wards to at least 65 per cent may defeat the original objective of means testing – to reduce the over-crowding in subsidised wards.

Since the average Class C hospitalisation bill is $ 900, would charging richer Singaporeans $ 45 (1%) to $ 675 (15%), deter them from choosing C class ?

The 80 per cent subsidy means that the original costs of delivery was $4,500.

Instead of focusing on means testing, perhaps we may need to re-examine why our healthcare costs have risen such that the costs of delivery (before the subsidy) is generally more than 10 times the hospitalization bill in countries like Malaysia.

Perhaps the time, money and resources for the implementation of means testing should be diverted to more pressing healthcare issues, like the large number of Singaporeans without medical insurance – “Some 750,000 people – largely housewives and children – have no medical insurance now”, according to Madam Halimah Yacob, Chairperson of the Government Parliamentary Committee on Health, (“Means testing at hospitals: MediShield cover for those over 85?”, ST, Jan 20).

Only working adults need medical treatment?

In this connection, I find the statement that: “According to the MOH, some 10 per cent of the working population is not covered by MediShield or Medisave–approved plans by private insurers” (CNA, Jan 29), to be somewhat irresponsible, as surely what matters to a country and its citizens is what percentage of its citizens are not covered, and not what “per cent of the working population is not covered by MediShield or Medisave–approved plans by private insurers”.

Are we saying, suggesting or implying that only working citizens need medical treatment? What about those who don’t work – children, students, home-makers, retirees, the unemployed, etc?

“In December, healthcare costs were 6.3 per cent higher than the same month in 2006” (“December inflation hits 25-year high” BT, Jan 24).

Singapore’s spending on healthcare

In this connection, did Singapore‘s spending on healthcare increase by 6.3 per cent or more, in view of the rising population? Has our healthcare spending in previous years increased in tandem with healthcare inflation and the increase in the population?

Although PRs will also be means tested, on top of their 10 percentage points lower subsidies than Singaporeans, does it mean that more affluent Singaporeans may have to pay more (up to 15%) than PRs who pass means testing?

According to a government hospital’s Admission Kit given to every patient, the Estimated Bill Size for a 7-day C Class stay is $ 1,200 before the 80 per cent subsidy.

However, according to the Ministry of Health (MOH), the average out-of-pocket hospital bill for C Class hospitaliation, after the subsidy, is about $ 1,097.

So, is it not rather misleading to say to a patient upon admission that the average estimated bill is $ 240 ($ 1,200 less 80 per cent subsidy), when the actual average out-of-pocket bill is $ 1,097, for average stays which are even less than 7 days ?

Since the level of savings in MediSave as at end 2006, is $ 9,300 at the 50th percentile, and the average is $ 13,600, what is the MediSave account balance for the 10th and 25th percentile ?

How many have less than $ 1,097 in their MediSave accounts ?

Discrimination against poorer Singaporeans?

With MediShield premiums going up again by another $120 a year, how many more Singaporeans may not have enough in their MediSave accounts, to pay for MediShield premiums? Consequently, more may lapse their MediShield policy, and be stranded with no medical insurance cover.

According to the National Eye Centre’s “Cost of The LASIK Procedure”, the Lasik surgery (per eye) fee including GST, is $ 1,412.40, $ 1,979.50 and $2,386.10, with a Consultant, Senior Consultant and Head of Department, respectively.

Whilst I can understand the policy of different ward classes to differentiate the comfort level in respect of the number of beds, air-conditioning, etc, why are we increasingly perpetuating a public healthcare system whereby even the quality of care is dependent on one’s ability to pay more ?

Has it become a daily occurrence in hospitals for some patients to be told that they have to wait longer for operations or be treated by less experienced medical practitioners, unless they are able to pay non-subsidised fees?

Isn’t this akin to discrimination against poorer Singaporeans?


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