TOC News ? Evaluating the SDP's National Healthcare Plan

Evaluating the SDP?s National Healthcare Plan

Published by The Online Citizen on September 5, 2012

By Yeoh Lai Lin -

"One can die in Singapore, but one must not fall ill?" So goes the general sentiment on affordability of healthcare in the country ? that it is more affordable to await death than to pay for the high costs of treatment, especially so with chronic illnesses. Is this a sentiment we can categorize as "sad but true"?

In view of growing concerns on the affordability and accessibility of healthcare, the Singapore Democratic Party has proposed that this is indeed so for many Singaporeans. As such, it has put together a Healthcare Advisory Panel comprising eminent healthcare professionals who crafted an alternative healthcare plan for Singapore.

The SDP National Healthcare Plan: Caring for all Citizens is a healthcare insurance scheme and the product of a nine-month study conducted by healthcare professionals who care about the healthcare system and have personal experience in the provision of healthcare services in Singapore. It is groundbreaking in the sense that is the first of its kind in Singapore that proposes a healthcare system premised on the following sets of values: universalism, healthcare as a basic right, and equitable treatment for citizens. Our current healthcare system is based on a different set of values: cost-consciousness, pragmatism, fear of over-consumption and the consequent emphasis on rationing, and healthcare being the responsibility of every individual.

A close examination and comparative study of the SDP's National Healthcare Plan and our current healthcare insurance plan comprising of the 3Ms ? Medisave, Medishield and Medifund ? suggests that starting off with different value systems could lead us to ending up with very different healthcare systems.

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Risk Pooling versus the 3Ms

The SDP National Healthcare Plan functions under the premise of greater healthcare risk pooling. Under the plan, every Singapore resident contributes an insurance premium annually. This insurance premium will not exceed $600 a year and will depend on the income of the individual or the family. For example, a family whose total monthly income ranging from $2000 to $3500 would pay $300 a year, while a single earning $800 or less per month would be entitled to full healthcare subsidies. In return, each citizen will be subsidized by the government every time he or she requires medical treatment and unless eligible for full subsidy, will be required to make a reasonable co-payment amount. This co-payment amount is 10% of total bill size in most cases.

The current 3Ms system, comprising Medisave, Medishield and Medifund, are touted to be providing comprehensive social support in healthcare to cover everyone's healthcare needs. However, a closer examination of each of these components reveal some gaps that do not necessarily match this ideal ? including requirements for the individual to pay significant out of pocket expenses, or imbued with various limiting preconditions.

For example, under Medisave, a family earning $2000-$3000 a month would have set aside $1680 a year, which they can use to pay for their hospital bills and very limited outpatient services. Furthermore, this sum can only be used under certain conditions and with certain caps which limit most private healthcare.

Medishield is a scheme in which Singaporeans need to opt out of or they will be automatically be covered. Furthermore, it has been likened to run on a commercial basis. Indeed, the average Medishield medical loss ratio (MLR, the ratio of total expenses incurred (paid and reserved) in claims plus adjustment costs divided by the total earned premiums) from 2008 to 2010 was 58%. This is an extremely low ratio, which suggests that it might be making a profit out of the pockets of contributing citizens. To put things in perspective, Obamacare in the US now mandates minimum MLRs of 85% in the large group market and 80% in the individual and small group markets.

Medifund is the endowment scheme aimed to cater to the needs of those who cannot afford healthcare. However, it runs by a means-testing qualification which requires that the patient's family members have had to exhaust their funds, including Medisave accounts, and that the individual has to sell all his disposable assets before being eligible for free treatment. Bearing in mind personal values like dignity, that is hardly a situation that most Singaporeans would wish to find themselves in, making Medifund a limited-use scheme that would arguably be of use to exceptional cases rather than the majority.

Against this backdrop of the inadequacies of the 3Ms system, it is a telling statistic that in 2010, the 3Ms accounted for less than 10 per cent of total healthcare expenditure of $12 billion, with Medisave contributing $732 million, Medifund $80 million, and MediShield $248 million. The rest is funded by employers' health benefits and out-of-pocket expenses ? the highest level in developed East Asia.

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Then again, it could be said that in terms of providing basic healthcare, the government does a reasonable job. The problem is that everyone has a different conception of what comprises "basic" healthcare and this is what needs to be decided on ? what we are willing to pay for, ultimately, what is affordable.

In contrast, the SDP National Healthcare Plan, in calling for greater risk pooling, would nurture greater compassion and egalitarianism and thus, greater social solidarity among the people and perhaps a better ability to make collective decisions. For we should ask ourselves this question: "if those who work and can afford it do not help pay for the healthcare of those who cannot afford it, (i.e. spreading the risk across the population), who will? Do we leave them to die under the name of self-responsibility?" Furthermore, current ambiguities such as means-testing would be done away with, relying instead on a standard that should be applicable to all based on the single benchmark of household income.

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Government Spending on Healthcare

The SDP National Healthcare Plan proposes that the Government Healthcare Expenditure be raised to $10.5 billion immediately, from the current $4.1 billion. This would include at least $1.5 billion in infrastructure and manpower expansion programmes. This sum of $10.5 billion would be used to account for the shift of financial risk in healthcare from the individual to the government. This is based on the SDP's starting point ideology and the belief that healthcare is a basic human right and the government has a responsibility to provide affordable, adequate healthcare to the people. Where would this money come from? Perhaps some will come from the $11 billion that is currently being spent on defence. Singaporeans need to be able to afford healthcare to protect themselves and their families on a daily basis, more than to the ability to fight a war which is not imminent at present. A recent study by the World Bank and World Health Organization has revealed that investing in healthcare leads to more economic growth. ?Healthy citizens are more productive, earn more, consume more and work longer, all of which have a positive impact on the Gross Domestic Product of a country.

On the other hand, the government has proposed that public spending on healthcare will double from $4 billion to $8 billion over the next five years. This may seem like a large increase but to put things into perspective, this is merely raising the percentage of GDP spent on healthcare from 2% to 4%, which is half of what Taiwan spent on healthcare ten years ago.

Furthermore, the government has pledged to focus on building new hospitals with this raise in healthcare budget. In the recent national day rally speech, PM Lee mentioned that Singaporeans could look forward to new public health infrastructure, such as two new hospitals, and various nursing homes and day-care centres. However, he maintained that the best healthcare is to keep fit, emphasizing the PAP's stance on healthcare ? that every individual should be responsible for his own health.

While fitness and personal health are very important, many people get diseases such as congenital illnesses through no fault of their own. No amount of exercise or fitness is going to prevent someone from having a child born with leukaemia. A health budget focused on infrastructure also supports the notion upheld by the PAP, for spending on infrastructure would alleviate short-term problems such as long queues and the lack of beds in public hospitals. Alleviating these more visible concerns would reap results fast and serve as a quick fix for current surface-level problems without addressing the underlying problems.

However, the professionals who crafted the SDP National Healthcare Plan highlighted that the money would be better spent on access than on infrastructure. For what is the point of having many more hospital beds if they remain unaffordable? A more comprehensive system would also help reduce some of the bottlenecks which are keeping many older Singaporeans in hospital.

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Possible Concerns of the SDP Healthcare Plan

Perhaps the greatest concerns with regards to the SDP Healthcare Plan are with regards to its sustainability. To answer this, the SDP has named in its proposal the Healthcare Contingency Fund which acts as an endowment fund. Being set aside from the reserves, it calculates that with a conservative returns-on-investment of 6%, the plan should be able to finance any future increase in government healthcare expenditure of up to 10% without touching the principal.

The plan has also taken into consideration the concerns raised with regards to the "buffet syndrome", where the patient may claim more healthcare subsidy than he potentially needs eg. the woman who would want to take a pap smear test every week or a mammogram every month. If all health care is highly subsidized, the fear is that many patients may choose more expensive medical treatments and there would be a lot of inappropriate consumption, especially since all patients are sick and require care and medicine.

To answer this concern, the SDP National Healthcare Plan has proposed "evidence-based" healthcare, which is the cost-effective and efficient provision of healthcare to those in need- such that only patients who are in need of high cost healthcare technology and treatment would receive it, so that inappropriate consumption would be minimized. This would naturally necessitate a closer working relationship between healthcare providers and the government. Furthermore, the healthcare professionals who designed the plan maintain that people who would deliberately take advantage of their proposed plan are in the minority, especially since falling ill or acquiring a terminal illness just to enjoy expensive subsidized care is not something most people would intentionally plan to do.

The SDP argues that capping government expenditure on healthcare by transferring it to the private individual, as is the case now, is not sustainable as seen by the lessening affordability of healthcare. It claims to have proposed a framework on how healthcare expenditure can be sustainably handled. With the help and expertise of healthcare economists and providers themselves, the SDP National Healthcare Plan seems to be crafted such that it is economically feasible.

At this stage, the SDP Healthcare Plan is not completely foolproof. As an insurance-based policy, it would seem to go against the traditional mode of operation that most Singaporeans would be familiar with: The more you contribute, the more you would be able to claim back from. By proposing that those who can afford it essentially cover costs for those who can?t, the plan would no doubt raise many an eyebrow in our society.

In addition, a healthcare plan based on salary quantum might also be problematic. In our greying society with increasing life expectancy, it would be logical to assume that the majority of claims to the pool would be from those who are not working anymore ? that is, where our income is virtually zero, to whom full healthcare subsidy would then be made available. This test of the system minimally needs better theoretical analysis before it can be taken further, if for no other reason than to determine a more sustainable premium.

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Conclusion

On the whole, the issue of having an affordable and sustainable healthcare system boils down to ideology. The SDP National Healthcare Plan, underscored by the core values of compassion and egalitarianism, holds true to the ideal that healthcare is a basic human right as enshrined in the Universal Declaration of Human Rights. In comparison, the current healthcare system, which is based on the values of self reliance and individual responsibility can sometimes be said to treat healthcare more like a commodity than a basic human right.

It is true that Singapore has a competent healthcare system and that the government has done a good job on several different fronts such as providing high technology medicine and excellent public health infrastructure. It has also recently been ranked one of the healthiest countries in the world.

It is also true that it may be unfair to compare Singapore's healthcare system to that of other countries' as Singapore is philosophically very different from any other nation. Perhaps our healthcare spending is so low because we are a young country, are compact, have no rural areas with most if not all our citizens living in a modern urban city. As such, perhaps a lot of healthcare spending is avoided as a lot of communicable diseases are taken care of. For example, we have gotten rid of tropical diseases such as malaria, cholera and so on for several decades. As a tropical country, we do not have the frigid winters that other countries have. We have good gun control and relatively fewer traffic accidents than other countries. This means that we do not have as many healthcare considerations that a lot of other developing and developed countries do and therefore, do not have to spend as much on healthcare.

However, starting off from different value systems and with different ideologies may give rise to very different systems. It is important to choose which ideals we want to govern our healthcare policies such that we are promised greater social cohesion, greater social citizenship and a successful ageing population, which definitely requires good organization of social and healthcare systems. Perhaps what is required is greater literacy among the citizenry so that Singaporeans are able to know how to engage in educated and informed debate so that they may choose the ideals important in structuring healthcare and other social policies.

It would be a stretch to say that the SDP?s National Healthcare Plan is the magic pill to the shortfalls of the current 3Ms system. But the least of its achievement would be to invite Singaporeans and healthcare policy makers alike to think outside of our current comfort zone and generate new ideas, as we seek an improve model that benefits both individuals and the nation in the long term.

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