‘Fundamental shifts’ for a truly national MediShield

I get a sense that the Government and many in civic society have a different sense of what are ‘fundamental shifts’. Health Minister Gan Kim Yong declared ‘fundamental shifts’ in our healthcare financing design in Parliament 2 weeks ago and revealed on Sunday that the Ministry of Health was considering expanding MediShield to cover more outpatient services. Yes, that’ll be great but I’m not sure this would count as fundamental. To Paul and the SDP, fundamental would be tearing down 3M (Medisave, MediShield and Medifund) and moving to a universal health coverage model. I am sanguine about how ‘out of the box’ the government can be and would be personally satisfied if we restructure the existing 3M framework, and especially MediShield.

Now that the need for ‘fundamental shifts’ (however these are defined) has been appreciated and accepted, it’s time to move from advocating for change to offering specific suggestions to move us from where we are (anxiety about the affordability of healthcare, straining infrastructure) to where we want to be (every Singaporean has access to affordable, high quality healthcare.

I’ll focus on MediShield this week. ‘Fundamental shifts’ to me would mean making MediShield truly national, truly inclusive and truly for Singaporeans.

http://www.todayonline.com/commentary/reforming-medishield-be-truly-national (Published 27 Mar 2013)

Reforming MediShield to be truly ‘National’


Every now and then, Singaporeans wake up to a media report of a medical bill in the hundreds of thousands of dollars and everyone seems to know someone struggling financially after a prolonged illness. In fact, the late Dr. Balaji Sadasivan, previously a junior minister in the Health Ministry, while undergoing treatment for cancer, commented, “Cancer treatment can very, very expensive. This is something our health system will have to deal with. It is not surprising if some patients have to sell their house (sic)”.

In dealing with the financials of catastrophic illness, Singaporeans are likely most concerned about two issues- the uncertainty of illness severity with an attendant massive hospital bill, and their share of the bill. On the former, Minister Gan has correctly identified that expanding risk pooling is fundamental. It does not make sense for every Singaporean to try and save for a hospitalization that may never materialize (half of all heart-related deaths are sudden); besides, most Singaporeans will never be able to save enough to pay fully for a complex and long-drawn illness.

MediShield is the bedrock insurance program intended to protect against the financial consequences of medical catastrophes. It is the only health insurance scheme created by an act of Parliament and must be ‘national’. However, MediShield has three limitations that prevent it from truly being ‘national’: exclusion of pre-existing conditions from coverage, non-eligibility upon reaching 90 years of age and sharp premium increases with age. How can we revamp MediShield to assure that it is truly inclusive or ‘national’ and covers every Singaporean?

MediShield for all Singaporeans

Three changes are worth exploring: Firstly, expand MediShield to include all Singaporeans regardless of age or pre-existing illnesses. This is a monumental decision and truly ‘fundamental’ as it reframes MediShield from being a scheme run on commercial principles (albeit as a non-profit scheme) to one that is founded on social principles. The current premium calculations are in age bands excluding Singaporeans with pre-existing illnesses. For a national programme; it is preferable to spread risk across all age groups and all risk groups. This would result in younger and healthier policy holders paying more but would prevent premiums for the elderly (who have healthcare bills 4 times larger than their younger counterparts) from sky rocketing and just as importantly enabling those with prior cancer, heart disease and the like to have affordable insurance.

Affordable premiums

Secondly, ensure all Singaporeans can afford to pay the premiums. Premiums may still be higher for the extreme elderly or those with substantial pre-existing illnesses and government funding for those who cannot afford to pay their own premiums has to come in.

Cap individual’s risk ex ante

Thirdly, limit the individual’s risk of medical bankruptcy by imposing a cap on what patients have to pay as their share of the total bill. How this quantum is worked out needs to be transparent though. The cap will need to be means-tested in keeping with the government’s philosophy of targeting subsidies, but patients need to know before the fact how the cap is determined and what they are expected to pay. A point to note: Setting caps on what patients pay does not remove the financial risks in and of themselves. It just means someone else, in this case, the government, has to bear the risk. This will have downstream consequences: government assuming the risks really means taxpayers carry the can. Social activists advocating for ‘peace of mind’ for all are really asking for the government to do more AND for taxpayers to fund these measures. Is this a price Singaporeans are prepared to pay for a better Singapore? I certainly hope so.

Minimizing Distorting of Behaviour

Minister Gan also highlighted the risks of over-servicing and over-consumption. These are genuine concerns. It would be naïve to depend on the ‘nobility’ of individual healthcare professionals who are paid at least in part on a ‘fee-for-service’ model and equally naïve to expect patients to deliberately constraint themselves for the good of society.

What can be done then? Some suggestions built on self-regulation as a professional community, a privilege society extends to doctors. The Singapore Medical Council is the watchdog for professional misconduct and egregious ethical breaches but what about overall clinical standards of practice? Singapore has a College of Family Physicians for general practitioners and family physicians and an Academy of Medicine for specialists. These professional bodies can step up to the plate. Developing clinical practice guidelines and coupling rigorous auditing processes to them to identify errant over-servicing doctors would be a good start. The government’s electronic medical records system has been in the works for almost a decade now and when fully mature, can enable audits and recognition of negative outliers. Public hospitals already have departmental structures where doctors in the same specialty peer review each other’s cases, appropriateness of treatment and outcomes. These could be built upon by government mandate enabling the College and Academy to take these governance practices nationally. Robust audits will be necessary to assure the government that risks of abuse of insurance schemes can be mitigated and these can be built up progressively.

The challenges are formidable but the reward, a truly ‘national’ MediShield makes it worthwhile. On a trip to Taiwan last year, a young Taiwanese remarked to me: “The NHI (Taiwan’s National Health Insurance) makes me proud to be Taiwanese!” Years from now, what will Singaporeans say?



  1. Hong Yee · · Reply

    Hi Jeremy, great piece! “Guaranteed issue” and “community rating” are already part of the reform in the US system. There is this constant fear of the “premium spiral” where insurers raise premiums across the board, causing low risk people to exit the market, and further worsening the decreased risk pool, making the premiums go up even higher. The “individual mandate” in US makes it compulsory for people to buy insurance (although it was challenged in the courts), and it is can be done in Singapore too. Ultimately, if we want true universal coverage, I think we need to accept a certain increase in the premiums for everyone, which I am totally in favor of.

  2. Hi Hong Yee. Hope you’re enjoying your time in Harvard and learning useful stuff. Have a look at the World Health Report 2010 which discusses healthcare financing. Key points raised: For national insurance to work, it must be mandatory. No opting out by citizens and no cherry picking by insurers- only way for the risk pooling to work. Secondly, governments need to be interventionist in the health insurance market. I would argue this goes all the way into ensuring ‘reasonable’ pricing of premiums and allocation of poor risk patients. Obamacare dictates a minimum Medical Loss Ratio while in Holland, the government sets a threshold for minimum profit for insurers to encourage participation by insurers. All in, health insurance if regulated well can be a profitable business. Not spectacular, but safe, sound and predictable. And yes, premiums will go up over time- general inflation and healthcare inflation.

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