The fundamentals of Singapore’s national healthcare plan needs to be reassessed, say alternative parties

A long-term priority of the Ministry of Health (MOH) is to ensure that healthcare is affordable, said Minister of Health Ong Ye Kung at the Ministry’s Work Plan Seminar on 25 May.

In his opening address, Mr Ong highlighted the “worrying” rise of healthcare expenditure from S$10 billion in 2010 to S$21 billion in 2018, adding that it is expected to increase further in the next decade.

Unpacking the reasons for escalating healthcare costs globally, Mr Ong suggested that it is driven by “love, rationality and the march of time.”

He said, “Our love for family members means we often spare no expenses on healthcare.

“With full insurance coverage, it becomes rational for us to spend without worry because someone else is paying.

“And with time, we inevitably get older and have more illnesses, and this is compounded by unhealthy lifestyles which often start from young and have irreversible consequences.”

Highlighting the MediShield Life and Integrated Shield Plan (IP) as a “worry-free plan” that people in Singapore benefit from by only needing to pay “little or not out-of-pocket expenses for private care”, Mr Ong noted that the plan creates problems for future generations.

Describing it as a “classic buffet syndrome”, Mr Ong explained: “Insurance companies over time will find it too expensive to sustain, and premiums will go up. When healthcare expenditure goes up, so too subsidies, and that adds pressure to Government’s fiscal position.”

“When we aggregate this experience across all households and individuals, it fuels a rise in our national healthcare bill that we will find increasingly hard to afford.”

One way to tame the cost of healthcare, therefore, is to contain the cost of drugs and treatments by expanding the Standard Drug List, said the Health Minister.

This includes evaluating the most cost-effective drugs and treatments, and aligning it to the government’s subsidy framework and insurance claim limits as well as negotiating with supplies to ensure that prices are “commensurate with the outcomes”.

Next, Mr Ong suggested reining in cost inflation fuelled by insurance.

He said: “Healthcare insurance serves an important purpose, which is why MediShield Life is designed to cover all Singapore residents.”

“The key is to ensure that we do not inadvertently erode the spirit of co-payment.”

The minister added that once consumers have “skin in the game”, they will exercise “prudence” in healthcare spending. He also said that this would lead doctors to “exercise more discretion in recommending the appropriate treatments.”

Relook at administrative costs and unsustainable costs from insurance companies instead: SDP’s Paul Tambyah

Countering Mr Ong’s speech, however, Singapore Democratic Party (SDP) Chairman Prof Paul Tambyah said that the idea of a “buffet syndrome” in healthcare is an old one “perpetrated by neoliberal business interests who try to blame patients and doctors while reaping huge profits from the sickness and suffering of the people.”

Responding to TOC in an email, Prof Tambyah noted: “Even in Singapore, it has been well documented how the rise in insurance premiums is driven largely by unsustainable costs from insurance companies rather than demand from patients or doctors.”

He then referenced a position statement by the Singapore Medical Association on 25 March this year which says that “the current IP [Integrated Shield Plan] sector appears to be loss-making or unsustainable NOT because of excessive or higher claims by policyholders.”

In fact, the SMA Council pointed out that the estimated Average Payout Per Claim decreased by 1 per cent from 2016 to 2019.

It added that for that same period, the growth in management expenses (56.6%) and commission (50.4%) consumed by IP insurers have “far outstripped” that of gross claims (35.9%).

It asserted, “This rapid rise in Management Expenses and Commission seems to be the key factor for the sector remaining unprofitable and unsustainable in the last few years.”

In his response to Mr Ong’s speech, Prof Tambyah stressed: “The minister needs to take a long hard look at the administrative costs and bureaucracy that plague Singapore’s extremely complex healthcare system.”

“For example, the 3Ms (Medisave, Medishield and Medifund)  have never covered more than 20% of total healthcare costs despite huge reserves and a massive administrative bureaucracy.”

Low- and middle-income patients shouldn’t be discouraged from seeking early treatment: WP’s Gerald Giam

Touching on the same idea of a “buffet syndrome”, Workers’ Party (WP) MP Gerald Giam noted that it mostly affects private healthcare, in part due to the zero co-pay riders that have been discontinued.

When it comes to the public healthcare system, however, Mr Giam stressed the importance of ensuring that lower- and middle-income patients are not discouraged from seeking early treatment.

He said in response to TOC’s queries: “The “buffet syndrome” affects mostly private healthcare, in part because of zero co-pay riders, which have already been discontinued.

“However, in the public healthcare system, it is important that high out-of-pocket payments do not discourage middle- and lower-income patients from seeking early treatment, especially for chronic conditions.

“This is why the Workers’ Party continues to call for expanded use of MediSave for chronic disease management and greater drug subsidies.”

Mr Giam has moved an adjournment motion in Parliament recently on healthcare quality and affordability.

Medisave contributions and interest exceed government operating healthcare expenditure: PV’s Leong Sze Hian

Additionally, from a cash flow perspective, financial adviser and member of the People’s Voice (PV) party Leong Sze Hian questioned whether the annual Medisave contributions and interest exceeded the government’s operating healthcare expenditure including MediShield and CareShield Life Premiums and withdrawals.

According to data from the MOH, the government operating health expenditure in 2018 was S$8.9 billion, or 2.1% of the GDP.

The total Medisave balance that same year was S$96.1 billion while the amount withdrawn for medical expenses was S$ 1,027 million. Another S$156.5 million was paid out in approved assistance to patients.

To give you a clearer picture, TOC notes as an example that in 2017, only S$1.94 billion was paid out under the 3M system to relieve the burden of medical bills while at the same time, approximately S$9.4 billion was collected under Medisave and MediShield, not including taxes paid by the government and interest generated from Medisave reserves. A moderate return of 6 per cent of Medisave assets in 2017, if it was invested prudently, would have been S$5.4 billion.

Breaking it down, the total amount withdrawn in direct medical expenses under Medisave in 2017 was S$945 million. This is the same year that roughly S$7.5 billion was collected via MediSave contributions.

For MediShield, as of 2017, a total of S$5.7 billion was recorded in reserve. S$845 million was paid out to cover 555,000 claims in that same year with an average payout of S$1,520 per claim while around S$1.88 billion was collected as premium. The average payout for the top 10 per cent of bills is approximately S$5,800. As for the bottom percentage, a lot of the bills would not qualify for claims because the deductible sum had not been met for the policy year.

For MediFund, MOH reported that it provided a total of $149.8 million through 1,179,525 successful applications in assistance to needy Singaporeans on their medical bills 2017.

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