MediShield Life: Some challenges to consider
In principle, MediShield Life will provide lifelong catastrophic coverage of medical care, based on mandatory participation to ensure equity of access for the elderly as well as for the poor. TODAY File Photo
Parliament will debate the new MediShield Life scheme tomorrow. MediShield Life will offer many generous benefits, with trade-offs to achieve a balance between affordability and wider coverage. There will be kinks that will need to be ironed out, as these benefits are rolled out later this year.
To ensure that it can achieve its objectives effectively, we can expect new rules and regulatory structures to be introduced. So what are the fundamental issues in implementing MediShield Life, which is the social health insurance mechanism within our 3M (Medisave, MediShield and Medifund) healthcare financing system, predicated on a combination of savings, insurance and taxation?
OPTIMAL FINANCING
We had inherited a dominant tax-based system to provide subsidised health services. But over the years, there has been a concerted shift towards a diversified approach with the introduction of savings (Medisave), followed by a low-cost catastrophic-illness insurance (MediShield) and means-tested subsidies for the indigent (Medifund).
MediShield Life is now the filler to plug the gaps and stretch the social safety nets for universal health coverage of the entire population. With the policy changes in healthcare financing related to MediShield Life, we need to discuss their implications for the healthcare system.
The comparable experiences of other developed countries point to pertinent challenges in implementing universal coverage through national social health insurance programmes.
A one-size-fits-all approach such as a single-payer national system usually ends up with a multitude of problems, but so are heterogeneous methods, which allow too many choices and options, unless these are well-integrated and balanced.
A single-payer system puts the burden of funding social insurance on one monolithic government authority that may degenerate into a bureaucratic monopoly. In theory, it should reduce administrative costs from having to deal with too many insurance plans as the other extreme.
But this control would still be achieved by strengthening the regulatory functions within existing agencies under the purview of the Ministry of Health, without the need to create more statutory bodies for health insurance. What is required is the necessary legislation and additional resources, including the needed expertise to support health insurance.
In principle, MediShield Life will provide lifelong catastrophic coverage of medical care, based on mandatory participation to avoid adverse selection gaps found in voluntary and opt-out schemes and to ensure equity of access for the poor and elderly. The major sources of financing through premiums from Medisave and tax transfers such as the Pioneer Generation Package will ease the financing burden for most, especially the elderly.
Since MediShield Life is administered by the Government, it can ride on the existing centralised public finance systems of the Central Provident Fund and Medisave, to enjoy better coordination and economies of scale. With a central source of fund collection for healthcare financing that is linked to CPF and compulsory savings, Singaporeans do not have to pay varied fees and premiums to different insurance agencies with small risk pools.
There will still be the inherent problems in meeting expectations of Singaporeans who have complaints regarding the quality of public service for the poor and the long waiting lists. And given the perception that subsidised or cheaper services involve generic treatment instead of the latest technology, there will always be strong pressure on the Government to subsidise increasingly higher-quality public services or to control escalating costs of healthcare.
But the greater issue will be the longer-term sustainability of the public heathcare system financed mainly from shrinking taxes along with the demands of an ageing population.
SUCCESSFUL IMPLEMENTATION
Therefore, the approach taken must not only reduce high out-of-pocket and user-fee payments, but also move towards a more organised prepayment scheme. Stronger regulation and appropriate controls on the utilisation of new technologies are also expected in extending coverage.
The functions of the proposed MediShield Life Council should not be only to review premium and payment levels, but also moderate utilisation with tools such as health technology assessment and economic evaluation.
Medical technology can account for an estimated 30 to 40 per cent of healthcare costs. Other than safety and quality issues, the benefits of new drugs and medical devices are also subjected to assessments for cost-effectiveness or value for money.
For example, there are complex diagnosis and treatment methods available for cancers, heart conditions, mental illness and other chronic conditions. Which procedures and medicines will be allowed for insurance claims? What standards or outcomes will be attained? How much will patients have to pay? Will patients (or even doctors) know which treatment modality is most effective and at what cost?
Political will is critical to ensure the success of MediShield Life. Once the scheme becomes viable, the challenge is to ensure fairness in its administration.
The scheme can influence medical decisions and can lead to hospitals and doctors pressuring patients to opt for unnecessary medical care for certain diseases — a phenomenon in health economics known as “supplier-induced demand”, which can result in the moral hazard of healthcare overconsumption.
If there are weak management and accountability systems, inefficiencies will probably be perpetuated. Public education is needed to shape societal behaviour for both providers and consumers, as there is a tendency to spend more than necessary and pass the costs to government financing.
On the part of the Government, there needs to be a strong capacity to administer the fund, to ensure that the specified packages are available, providers comply with procedures, and consumers comply with defined contributions.
These challenges can be addressed with adequate planning and good governance to ensure efficiency, effectiveness and equity.
Importantly, the community will have to sustain the buy-in with their contributions and accept the collective decisions made over how the social insurance is to be administered.
Therefore, ensuring universal health coverage with MediShield Life will require a greater degree of solidarity among Singaporeans.
ABOUT THE AUTHOR:
Dr Phua Kai Hong teaches health and social policy at the Lee Kuan Yew School of Public Policy, National University of Singapore
