Singapore Insurance Reform

11 Oct 2024 Categorised under:  PrevMed

Disclaimer

Views published are my own and do not represent the views of my employers and the academic institutions which I am affliated to.

Background

MediShield Life premiums to increase as government expands national health insurance scheme. Premiums may increase by as much as 35 per cent from April 2025 over a three-year period but for most Singaporeans, this will be fully offset by government support measures.

On 10th October, Associate Professor Jeremy Lim and Associate Profossor Wee Hwee Lin published articles in The Straits Times on the topic of Medishield Life and public healthcare insurance.

Realities

Universal healthcare is a pipe dream

There must be no doubt that universal healthcare (UHC) system is a pipe dream. UHC is for idealists or for politicians to win elections. It has no place in the lexicon of realists or healthcare reformers. Something has to give. Either you do not have the best quality of care (poor health outcomes, low standard of service delivery) or the access is poor (gatekeeping for specialist care, long wait times). Ensuring everyone gets the best possible standard of care, especially at no cost, is impossible.

Value based care sounds good but …

Prima facie, value based care sounds good. In layman terms, it is getting the most out of your buck. For instance, in the US, both private and public insurance have shifted to reimbursing healthcare providers and hospitals based on diagnosis codes and service delivery outcomes with success in controlling cost. However, while the concept is great, the question is how do you define value? While healthcare providers quibble over how much value a procedure or a consult is and should cost, healthcare services debate over what healthcare outcomes they should be measured by. The inherent problem with value based care is that it neither provides more supply or control the demand for healthcare. It is therefore unsurprising that it is not the panacea for healthcare cost controls.

The mirage of technology to lower costs

It is probably funny to hear this coming from a healthcare AI researcher and practitioner but it is important to do a reality check. The promise that technology like Telehealth and AI can lower healthcare costs is likely an empty one, at least in the short term. The most obvious way to explain this is through the example of the Electronic Health Record (EHR). It was touted as a gamechanger in improving quality of care, service delivery and healthcare outcomes through comprehensive clinical documentation, seamless healthcare communications, clinician decision support and other features. However, high upfront investment costs, lacklustre clinical workflow culture and change management issues continue to plague the effective use of EHRs for its cost. I hypothesize these issues would remain true for telehealth and AI.

Take the example of healthcare AI, it is well known that AI is data and compute intensive. Bearing in mind that EHRs without AI costed the Singapore government an estimated $450 million over 3 years, it is unlikely that EHRs with AI would cost less, after accounting for additional compute and storage resources required. Furthermore, people must have understood by now that technology (AI by extension) fundamentally isn’t a solution for human process issues and productivity isn’t like to be transformed overnight. We should make full use of technology but I would say lower your expectations.

Going back to Singapore’s first principles

No aircon in hospitals

I will argue that Singapore’s principles to financing the healthcare system have always been rooted in rigourous demand and supply controls. We should continue to do this. One famous, or rather infamous example, is our founding prime minister Mr Lee Kuan Yew’s objections to having air conditioning in hospitals. An uncomfortable stay at the hospital serve as both a demand control (people would avoid staying in hospital too long) and a supply control (hositals would be less costly to run).

Problem with using financial incentives to control cost

One has to look no further than the US to see that, if you put all your healthcare reform attention on healthcare financing (Medicare, Medicaid, private insurance), you neglect other levers to control healthcare costs. While it is not wrong to use financial incentives to control pricing, it puts policymakers in a bind of trying to look for different ways to use taxpayers monies to plug the gap. This has been the source of much debate in the US, where there have been partisanship over how the Affordable Care Act should be reformed. On one hand, the republicans are probably correct that Americans are paying too much for healthcare through the various national UHC subventions. The Democrats are also correct that a lot of Americans would be left with no healthcare if the national support is rescinded.

Looking outwards for healthcare financing reforms

Singapore’s healthcare system has been relatively affordable. In recent years, the fee for service model had stopped working for insurers as more insurees start to accrue increasingly unreasonable expenditures e.g. staying overnight in hospitals with extravagant meal options for simple day surgery procedures. While both private hospitals and doctors cannot escape the blame of these unreasonable expenditures completely, this phenomenon is well studied in healthcare financing academica, also known as “moral hazard”. Unsurprisingly, coupled with global inflation, insurance are seeing escalating operating costs. Insurers have since implemented empanelment of heatlthcare professionals in an attempt to control their “losses”, which caused quite a bit of stir amongst healthcare professionals. What people do not realise is that empanelment is not a new concept. For the longest time, US healthcare insurers have implemented network providers, facilities and vendors. This incentivises insurees to seek healthcare within a specific set of trusted parties that will not charge a price that is not affordable from the insurer’s perspective.

While it is not a great idea to learn the US approach to address high healthcare costs, it is worthwhile to think about how to adapt the innovative healthcare financing regulations and models that have emerged as a result of free market competition within the US. For instance, the Affordable Care Act (ACA) created a marketplace for users to select the most price competitive insurance policy, forcing companies to provide market competititve prices for the masses or risk losing business. Another example from the ACA is the gauranteed issuance which would help to take some steam off the national insurance like Medishield Life.

Conclusion

At the end the day, I would like to remind readers that there is very little difference between government healthcare subsidies / subvention in comparison to private insurance. The taxes you pay that goes to healthcare is like insurance premium and the subsidies / subvention provided by government is like insurance payouts when you are ill. Finessing how to pay for healthcare is important but I will argue that the best is to NOT pay if you stay healthy and far far away from doctors and healthcare institutions. Instead of optimising for financing, we should put 200% more effort in comparison on supply and demand controls.