Share health-care burden fairly to help the needy

18 Feb 2008, The Straits Times

Question

Name of the Person: Salma Khalik

Insurance alone cannot pay the big bills

MEDISHIELD premiums are set to rise again, just three years after an extensive overhaul of the Medisave-based insurance scheme.

Health Minister Khaw Boon Wan decided on this course to give subsidised patients some relief from having to fork out too much in cash. He wants patients with bills of $10,000 or more to pay less than the 40 per cent they now have to fork out. Only 'a small percentage' of subsidised patients are landed with such huge bills each year, said his ministry's spokesman. But the pain from such out-of-pocket payment can be crippling.

But how are such large bills accumulated in the first place? The Health Ministry gives two main causes: days spent in intensive care units (ICU) and expensive, but better quality, implants.  How is it possible that, even with the generous medical financing in place, subsidised patients still need to make hefty out-of- pocket payments?

The answer turns on the kinds of treatment a subsidised patient is eligible for. Such a patient, for example, cannot pick the more expensive drug eluting stent that keeps arteries open, if his doctor does not think it is necessary.

A patient who insists on the stent must switch to a private ward class. So subsidised patients, by definition, are given only treatments that doctors say they need.

For such treatments, the Government pays about 80 per cent of the bill for C class patients and 65 per cent for B2 class patients. On top of that, the Government also absorbs the 7 per cent Goods and Services Tax for them.

Granted, the above doesn't explain a $10,000 out-of-pocket payment, unless the total bill for a C Class patient is $50,000. But a closer look at the make-up of the bill will shed some light, The subsidy for ICU ward fees for C class patients ranges from about 66 per cent to 85 per cent, with patients paying between $100 and $200 a day. They also need to pay for the medication and treatment they get in ICU.  Some may require medicines that are not on the subsidised list. For example, haemophiliacs who lack the coagulant that stops bleeding may need 10 to 12 vials of a non-subsidised medicine to stop them from bleeding to death following surgery. At $1,500 a vial, the total bill can be staggering.

Such medicine is not subsidised, since there are cheaper coagulants available. For the small number of patients for whom the cheaper drug is not effective, getting the expensive one is a matter of life and death.

MediShield insurance allows claims of up to a maximum of $500 daily for ICU stay and treatment. And at $1,500 a vial, the medicine alone would more than bust the limit.  Implants, too, can be very expensive. A spinal implant, for example, could set a patient back by up to $18,000.  The 1993 White Paper on Affordable Health Care called for basic medical care to be heavily subsidised. It defined basic medical care as 'essential and cost-effective medical treatment of proven value for illnesses, without which the patient's health and quality of life will be significantly compromised'.

This did not include 'artificial appliances other than the most basic models for the heart, hips, knees, etc'.

As a result, the subsidy on implants was capped at 50 per cent of the cost of the implant, up to a maximum of $500, for patients in both B2 and C class wards.

This means that if the implant costs $1,000, the Government will pay $500 or the full 50 per cent subsidy. But if the implant is more expensive, the percentage subsidised will be lower than half. A $2,000 implant will have only a 25 per cent subsidy, while a $5,000 implant will get only a 10 per cent subsidy.

Orthopaedic implants are no longer a rarity, with thousands of patients getting them every year - mainly for the knees, hips and spine. Singapore General Hospital alone carries out about 100 knee implants a month.

In the 15 years since the White Paper was drawn up, orthopaedic implants have become part and parcel of basic medical care - without which quality of life will be 'significantly compromised''. No one would want an artificial knee or vertebra unless it were medically necessary.

While only several hundred people may need spinal implants each year, the cost is high, between $2,500 and $18,000 each. At the higher end of the price range, the subsidy for a C class patient does not even come to 3 per cent. Those with MediShield can claim up to $2,500 for implants.  With such big bills, Mr Khaw's plans to tweak MediShield seems a perfectly rational way to help patients defray medical costs. The obvious solution is for the insurer to cover a bigger portion of the bill. But for them to be able to do so, premiums must go up.

Perhaps we should also ask other questions: Is the Government subsidy for C and B2 patients sufficient and equitable in the first place? Should the 15-year-old definition of what constitutes basic medical care be broadened?

If implants are considered part of basic health care, then a C Class patient's share of a $18,000 implant would be 20 per cent or $3,600. With MediShield insurance, his out-of-pocket payment will be just $1,100 - a sum that many patients can dip into their Medisave to pay for. Expecting insurance - which means the 2.8 million people insured under MediShield - to make up for the shortfall in subsidy seems to be passing the burden of caring for the poor to people who have taken the precaution of buying insurance.

When Mr Khaw was pushing for means testing at public hospitals, he took the view that society should not begrudge poorer patients better quality health care.  He was referring to improvements in the quality of subsidised wards today, with the promise of more improvements in future. Nicer surroundings would be welcome, of course. But better still would be if funds could be channelled to B2 and C class patients to give them the full 65 per cent and 80 per cent subsidies for needed treatments. Patients would then not have to face such enormous out-of-pocket payments.

Orthopaedic implants are generally needed by the elderly, many of whom do not have medical insurance. MediShield also stops covering patients once they reach the age of 85. Raising the insurance payout is not going to help them, but increasing the subsidy will.

Reply

Reply from MOH 

Share health-care burden fairly to help the needy

We agree with Ms Salma Khalik that "Insurance alone cannot pay the big bills" (13 Feb).  Healthcare financing requires all stakeholders – patients, employers, insurer

s and the government- to play their part.  Hence, we have heavy government subsidies at B2/C level, with co-payment by patients through their Medisave and MediShield, supplemented by employers' medical benefits.

As pointed out by Ms Khalik, there is a wide range of treatment options with very different price tags.  Implants or stents, can range from a few hundred to tens of thousands of dollars.  Often the marginal effectiveness of the more expensive devices is not even proven.  For many treatment options, there is also no clear consensus among the medical specialists of what constitutes "standard" care. 

For the government to take full charge of all large bills, increasing the effective subsidy beyond current levels, extending coverage beyond standard care, will be most unwise.

Hence, we limit full subsidy to "only treatments that doctors say they (the patients) need"  to ensure that healthcare cost does not spiral out of control.  Because of such limits, large Class C bills exceeding, say, $10,000 are a rare minority here, which  would be regarded as small bills in the US.  For a common surgical procedure such as knee-joint replacement, it would cost about S$15,000 (or S$3,000-$4,000 after heavy subsidies) here versus S$59,000 to S$84,000 in the US, and with similar clinical outcome.

More healthcare spending does not necessarily lead to better health outcome.  The correct approach is to spend within our means, to go for lower-cost solutions wherever appropriate and only fully subsidise treatments that are genuinely essential.

For some patients who may require prolonged, costly ICU stays because of medical complications, the rational way to fund these "catastrophic" events is via MediShield.  Such occurrences are uncommon but the financial burden to the individuals is huge.  A few dollars per month of additional premiums can buy financial protection against such an event.  When MediShield was reformed in 2005, we wanted to reduce co-payment of such large bills from 60% (pre-2005) to about 20%.  However the public feedback then suggested that premium hikes should ideally not exceed, say, $10 per month.  That is why the reform was implemented in phases: reducing co-payment to 40% in the first instance and to 20% this year.

Moderating cost escalation requires a fair distribution amongst the stakeholders. The more we can share the burden fairly amongst those who are in a position to shoulder it, the better we can target government funding to help the needy or the uninsurable.  The alternative approach of spreading limited resources among all will just draw in patients who may not need such assistance, at the expense of the poor.