SINGAPORE: There is one sure way to reduce the ever-rising cost of healthcare in Singapore but no one wants to tackle it head-on.
Instead, everyone is dancing around the problem and skirting the main issue. The sick elephant in the room: The health insurance plan called “as charged”.
Depending on what your needs are, an “as charged” plan can either be the best thing you ever signed up for or a national financial disaster.
To understand why this is so, you have to go back to its beginnings, in 2005 when a newcomer to health insurance in Singapore, Aviva, introduced this novel plan.
If ever there was an original sin to Singapore’s healthcare woes, this was it.
A LAVISH BUFFET OF CLAIMS“As charged” means the insurer will cover any claim that is sanctioned by a doctor or hospital. Some people have likened healthcare insurance to an eat-as-much-as-you-want buffet. You’ve already paid for it, so you binge eat what’s on the table, especially the most expensive items like fresh oysters.
But “as charged” is even more lavish than this.
At the buffet you are limited by what’s on the table. In “as charged”, you are not and can order the kitchen to cook whatever you fancy including the most exotic dishes.
In healthcare insurance, that might mean the latest drugs or procedure as long as it is medically justifiable.
Doctors and hospitals love it because they can opt for the most expensive treatment and get paid for it by the insurer. Patients want it because they believe they deserve the best and have already paid for the plan.
As to be expected, after Aviva launched this product, all other insurers followed suit and “as charged” is now the default plan for the large majority. The problem is that it all has to be paid in the end, often through ever-rising insurance premiums and ballooning state budgets on healthcare.
These are the stark numbers: Government spending on healthcare quadrupled from S$3.7 billion in 2009 to S$15.2 billion in 2020, and is expected to hit S$27 billion in 2030.
Senior Minister Lee Hsien Loong last month spoke about the need to curb overtreating and overprescribing to rein in costs which have become unsustainable. In fact, the problem was recognised much earlier.
In a 2016 paper, the Health Insurance Task Force examined what was driving up costs and insurance premiums and found that "overcharging and inappropriate treatment by healthcare providers not only contribute to increase in medical treatment frequency and charges, but also threaten the patient’s well-being".
Its study showed that overall bill sizes in private hospitals increased by 8.7 per cent a year between 2012 and 2014 compared with only 0.6 per cent in public hospitals.
The cost in private hospitals was two times more than in public hospitals for inpatients, 2.5 to three times more for outpatients and four times more for day surgery.
It concluded that one major reason for escalating costs were insurance plans such as “as charged” Integrated Shield Plans (IPs), including those with riders that pay for deductibles.
In fact, it found that those with riders pay up to 25 per cent higher for their medical treatment than those without. If it is so clear to so many people what is driving up costs, why has it taken so long to find a solution?
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Healthcare is a life and death issue for most people and they do not want to compromise and choose an inferior plan if they think a better one is available. Because it is an emotional issue, many end up choosing the less rational and less practical option.
One example: 60 per cent of IP clients opt for private hospital plans, the most expensive option but when they fall sick and require care, the majority choose to be treated in government hospitals instead.
For most of them, a government hospital was good enough even though they already paid for a private plan.
In the same way, the majority may not require the full works that go with an “as charged” plan. What might work as well could be a less expensive plan with limits on what can be claimed. In effect, it would not be “as charged” but a plan with a comprehensive list of treatments with different claim limits on each.
My suggestion is to remove “as charged” coverage in IPs for which MediSave funds are used.
But if anyone wants to continue having such coverage as part of a higher end plan and willing to pay the high premiums for it, they should be entitled to. Just don’t make it part of a national scheme for the majority.
Tackling the problem this way - directly - is much better than the piecemeal solutions that have been tried in recent years.
One example of such a patchwork approach: Restricting the choice of doctors available in prescribed panels specified by the insurer.
This was introduced as a way of controlling costs but it immediately raised questions on how the selection of doctors was done and what happens when none on the panel are suitable.
For some patients, the doctors treating them were not even on the panel.
Another example: In 2018, the authorities disallowed the purchase of riders that pay for the full amount of the patient’s bill.
But riders are mere attachments to the main product which is the “as charged” plan. Wouldn’t it be more effective to deal with the chief culprit rather than its sidekick?
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Commentary: The future of healthcare in Singapore looks like a hospital without walls There is some hope though that the government recognises this and is moving in the right direction. Last year, it introduced an approved cancer drug list that those with IPs have to use, to qualify for coverage.
It is a good start and will limit the claims made for cancer treatments. But to make a serious dent on rising costs, it will have to be extended to other treatments beyond cancer.
Removing “as charged” coverage will be a major exercise that will involve all parties - government, medical institutions, doctors, insurers and the public. There needs to be a comprehensive plan to explain the change to Singaporeans and the consequence of not doing so.
The other change that should be implemented concerns portability of insurance plans, which I wrote about last year.
Currently, it is almost impossible to switch insurers because if you do, your new insurer will not cover your preexisting conditions. Hence, most people are stuck with what they have even if another insurer might have a more attractive plan for them.
Health Minister Ong Ye Kung announced recently that the government was looking into the issue and that the study would be completed by the end of the year.
The Singapore Actuarial Society wrote a consultation paper early this year on the subject, examining various options and their implications.
Portability is important to ensure a competitive market, allowing Singaporeans to choose freely what best suits them.
The two changes I have highlighted are fundamental to tackling the problem.
It will be major surgery but urgently required.
Han Fook Kwang was a veteran newspaper editor and is senior fellow at the S Rajaratnam School of International Studiessabong online, Nanyang Technological University.