Healthcare Financing Reform: Only One ‘Right’ Question

“What are you trying to achieve?” is the question we would ask clients embarking on new initiatives. Similarly, when we undertake a ‘fundamental’ review of the healthcare financing system, we have to go back to basics. Dr. Daniel Kim, whom I studied under in an intense series of workshops on systems thinking when I was in the health ministry (I must thank Ms. Yong Ying-I, then-Permanent Secretary of the Health Ministry for forcing a small group of us to go through the training which was rigorous, painful but ultimately very, very helpful!), describes this in a framework called the ‘Hierarchy of Choices’.

Daniel argues that ‘strategy’ despite being linked to ‘blue oceans’ and ‘green fields’ is paradoxically a second-order issue as it is derived from an organization’s ‘fundamental choice’ which is its mission and vision. Hence, for the Ministry of Health when it comes to healthcare financing, its mission to enable ‘peace of mind’ already frames downstream considerations of what to change in the financing framework.

Another related issue is that of ‘sacred cows’ and how hard it is to slaughter them. Well, the world changes and food preferences change too! Again, the issue is being very clear about what is ‘fundamental’ and what is not. I like the following from Jim Collins, author of ‘Good to Great’:

“Every truly great organization demonstrates the characteristics of preserve the core, yet stimulate progress. On the one hand, it is guided by a set of core values and fundamental purpose- a core mission that changes little or not at all over time; and on the other hand, it stimulates progress: change, improvement, innovation, renewal. The core mission remains fixed while operating practices, cultural norms, strategies, tactics, processes, structures, and methods continually change in response to changing realities.” (Emphasis added)

Below is the commentary I submitted to ‘Today’ to try to share these thoughts.


Healthcare Financing Reform: Only one ‘right question’ to ask

A fundamental review of Singapore’s healthcare financing system is underway. In last week’s Committee of Supply debates, Minister Gan declared “The review of our healthcare financing system will be extensive, and will involve fundamental shifts”. He even announced that the government will “take on a greater share of national spending, from the current one-third to about 40 percent and possibly even further”. During the ensuing debates, there had been various calls to allow Medisave usage for screening, certain disease treatments, to increase coverage of MediShield, and to enable more Singaporeans to tap on Medifund. Are these “fundamental shifts”?

I teach strategy in the local universities and one key insight is that in deciding strategies, always go back to an organization’s mission and vision. If in doubt, ‘true north’ is to be found by taking bearing from one’s mission. What is the mission of the health ministry? It is “Championing a healthy nation with our people – To live well, live long & with peace of mind”. Since the emphasis is on healthcare financing, let’s focus on ‘peace of mind’. Rather than labour over whether to tweak Medisave or expand MediShield, may I humbly suggest asking instead: What will give ‘peace of mind’?

‘Free healthcare’ is the glib retort but Singaporeans are responsible enough to know that ‘free’ anything leads to over-consumption and wastage. In fact, the Singapore Democratic Party’s health plan, cleverly sub-titled ‘Caring for All Singaporeans’, calls for co-payments of 10%, albeit with caps of $2,000 per calendar year. The Workers’ Party 2011 Manifesto likewise agrees with the need for co-payments. I think we can safely conclude there is unanimity across the political spectrum that ‘free healthcare’ in the model of the original English National Health Service is not for Singapore.

The critical issue then in determining ‘peace of mind’ is the level of co-payment by citizens and that should be the rightful starting point for a fundamental review. SingHealth, the largest public healthcare group in Singapore, proudly declares “Patients. At the Heart of All We Do”. In similar vein, a fundamental review of our healthcare financing must focus on the patient. Only one question is paramount then: “What is the appropriate level of co-payment?” This question can be further sharpened by income stratification or type of healthcare to conserve limited funds. However, looking firstly at Medisave, MediShield, Medifund and subsidies, is akin to the tail wagging the dog. These are second order questions which follow on after answering the first.

Once we have determined what is appropriate co-payment, the rest of the financing mechanisms can then come into play. How can the rest of the medical bill be paid for? Whom should the government subsidize more? Whom less? How much to come from Medisave? How much from MediShield? What about those with limited Medisave dollars? When does Medifund kick in?

Some would argue that such an approach would be reckless, putting at risk the country’s finances and everything built up over the last 5 decades. To them, I would remind of the words of Thomas Jefferson, “The purpose of government is to enable the people of a nation to live in safety and happiness. Government exists for the interests of the governed, not for the governors”. I would further add that fears of wanton over-spending are overblown. No one is advocating ‘free healthcare’; rather the calls are for ‘peace of mind’ and affordable healthcare.

It has been thirty years since Singapore introduced Medisave and the notion of individual responsibility. Interestingly, the British paper, the Guardian in a piece entitled “From user fees to universal healthcare – a 30-year journey” described the Damascene conversion of one David de Ferranti, who in the 1980s was central to the World Bank’s efforts to introduce user fees into healthcare. In 1985, he had written “… there appears to be considerable scope for having users bear a larger share of healthcare costs”. Fast forward to the present and Mr. de Ferranti is the lead for a prominent Lancet medical journal series (launched together with the Rockefeller Foundation and Results for Development Institute at last year’s United Nations General Assembly) advocating for universal health coverage. Speaking to the Guardian, he mused, “The world has completely changed. Thirty years. Three decades. That’s a long time. Things change and arguments should change. And in the presence of more resources and the ability not just financially but administratively of countries to manage these programmes, which was again not there 30 years ago, it just now makes eminent sense and I have been outspoken in this – to move towards universal health coverage systems.”

“The world has completely changed”. “Three decades. That’s a long time”. Minister Gan Kim Yong should be applauded for initiating a fundamental review of Singapore’s healthcare financing framework. I hope think tanks, academics, clinicians, citizens, all support him in asking and answering the right questions.


One comment

  1. S$600 a year for your health: SDP
    A Letter to ‘Today’ mentioning the commentary; published on 23 March 2013

    From Paul Tambyah, for the Singapore Democratic Party Healthcare Advisory Panel –

    During the recent Committee of Supply debates, the Health Minister said: “The review of our healthcare financing system will be extensive, and will involve fundamental shifts.”
    The Government will “take on a greater share of national spending, from the current one-third to about 40 per cent and possibly even further”. The Singapore Democratic Party (SDP) applauds these steps, which bring Singapore closer to where we were in the 1980s. However, we share Dr Jeremy Lim’s concern, in his commentary “Only one ‘right’ question to ask” (March 20), that there is a need to go beyond incremental steps to real fundamental shifts.
    As he stated, the important question in the healthcare cost debate is whether Singapore’s healthcare is affordable to the extent that it gives people “peace of mind”.
    By simply tweaking the fundamentally flawed 3M system (Medisave, MediShield and Medifund), the Health Minister would miss the point.
    Medisave funds are taken from Singaporeans’ Central Provident Fund savings. Even if its usage is liberalised, users would continue to expend their retirement income, leaving them with insufficient savings for the future. Medisave is also used for our children’s and elderly parents’ hospital bills. All these add to people’s financial burden. This is not the way forward to a sustainable system that affordably takes care of Singaporeans’ healthcare needs.
    As Dr Lim notes, the SDP does not advocate a system where the Government shoulders all of the cost and users pay nothing. Our plan calls for Singaporeans to pay S$600 a year on average from our CPF into a National Health Investment Fund — a universal, national health insurance scheme, based on the principle of risk pooling, to ensure that Singaporeans have peace of mind in healthcare.
    The Government would contribute to the fund for those who cannot afford the payments. There are also different co-payments for outpatient treatment of acute conditions and for serious hospitalisations, which are capped.
    Such a single-payer system is streamlined and cleaner than the 3M system, requiring less bureaucracy and administrative costs. Most importantly, this plan treats healthcare as a basic right of Singaporeans rather than a commodity one purchases when one falls ill.
    Such an approach undergirds the difference between the SDP’s and the current system. The last thing we want when we or our loved ones fall ill is to worry whether we can afford the treatment.

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