When my wife had knee replacement surgery at a government hospital recently, she did not have to pay a single out-of-pocket cent.
Her Integrated Shield insurer paid the bulk of the $26,000 bill. The rest, about $5,000, was paid out of her MediSave account.
For most people, including my wife, this is exactly the outcome they wish for.
That’s why they pay for healthcare insurance, to take care of the big hospital bills.
Better still if you do not have to pay anything out of your own pocket.
But there is a danger that in thanking our lucky stars that Singapore has comprehensive and universal healthcare insurance, we forget the size of the bill itself – $26,000 for surgery that lasted an hour and a half and for a one-night stay in the hospital.
(The medical care she received from the doctors and nurses was excellent throughout and beyond reproach.)
If it had been done at a private hospital, it might have cost upwards of $40,000.
In fact, the larger the bill, the more people think of ways to make sure they pay as little as possible.
There is nothing wrong with this unless it makes you stop asking why the bill was so large in the first place.
I fear this may be what is happening with healthcare here.
Much of the discussion, especially recently, has been over insurance policies – whether riders attached are a good thing; if insurers have the right to dictate which specialist you see; the size of the panel; and so on.
These issues are important. But the most important has to be the actual cost of medical treatment and what doctors and hospitals charge.
In 2019, there was public outcry over the case of someone who underwent a cataract operation at a government hospital which cost $12,000, out of which his MediShield Life insurance paid out only $4.50.
Predictably, everyone was up in arms over the insurance payout, and there was a complicated explanation for it.
Too few people stopped to ask an even more pertinent question: Why $12,000 for the treatment?
It is time to shift the discussion from the financing side of the equation, which is what insurance is about, to cost.
This part of the problem, however, is more difficult to understand and resolve because it is about doctors and hospitals and medical procedures and drugs, which ordinary people have little knowledge of.
How do you assess if a treatment is cost-effective? Whether a patient has undergone one test too many? How far do you go to save a terminally ill person?
These are complicated issues, far harder to resolve than those to do with financing.
But unless they are tackled, no matter what you do on the financing side, Singapore will not be able to stop its healthcare costs from continuing to rise exponentially.
It was good therefore to hear new Health Minister Ong Ye Kung speak recently about doing more on this front when he pointed out that it took eight years for the national healthcare bill to double from $10 billion in 2010 to $21 billion in 2018 – but that it will take only 12 years for it to triple to $59 billion in 2030.
Has the increased spending resulted in better medical outcomes?
I don’t think anyone has given a satisfactory answer to the question.
Some of the measures Mr Ong highlighted include giving general practitioners a bigger role in treating ailments and doing more to encourage a healthier lifestyle.
These moves are in the right direction. But you can see even from what he highlighted that it will not be easy to do.
Changing the behaviour of GPs and that of an entire population to lead a healthier lifestyle will take years, requiring a mindset and cultural shift.
Other cost issues that need tackling include how drugs are priced, and the whole question of how government hospitals calculate the cost of doing a medical procedure.
Is the value of the hospital land and the buildings included, and how are these numbers arrived at?
These issues matter because government hospitals treat the large majority of patients and set the price nationally.
You can bet that when that cataract operation is priced at $12,000, private hospitals will take their cue from it.
Just as there is now a national committee to look at financing issues, I hope there will be a similar one set up to look at costs.
The two sides of the problem need to be addressed together.
There is one change though that can be done relatively quickly, on the financing side, which will have a major impact on cost.
It has to do with what is called an “as charged” insurance policy provided by all the Integrated Shield providers.
In such a policy, the patient can claim for whatever is charged by doctors and hospitals, up to a certain annual limit, which typically runs into several hundreds of thousands of dollars.
In effect, it gives them almost carte blanche to recommend any treatment.
Although most doctors are professional, they are bound to be influenced by the ability of the patient to pay.
If he or she is covered by an “as charged” policy, it will take a most disciplined doctor not to let this affect his choice of treatment especially if he has bought expensive equipment that has to be repaid.
One commonly used analogy in healthcare insurance is to liken an insured patient to someone at an all-you-can-eat buffet.
Both are free to help themselves without regard to cost since they have already paid for it.
But an “as charged” policy is more than this. It’s akin to allowing the diner to order any dish from the chef that is not on the buffet table – an exquisitely marbled wagyu steak perhaps rather than an ordinary ribeye.
If you have paid for this sort of unlimited meal, why not go for the most expensive dish?
A doctor treating someone with an “as charged” policy will be more likely to overtreat and overcharge, thereby increasing costs unnecessarily.
How then to solve this problem?
What is needed is not just an overall limit on what can be claimed, but sub-limits on different procedures and illnesses.
If the total limit is $200,000, for example, there should be a sub-limit of say, $8,000, for a cataract operation.
Otherwise, one day, you might find a cataract operation priced at $200,000.
One area where costs have risen out of hand is in cancer treatment, which was highlighted by the MediShield Life Council’s report last year.
As reported in The Business Times, the number of chemotherapy claims has risen by 50 per cent from 2017 to 2019, with prices of some of these drugs costing 1.5 to two times higher than in Taiwan and South Korea.
Why the large difference for the same drug?
The Council highlighted one possible reason: The present practice of having only a single claim limit of $3,000 a month for all cancer drugs, on top of the MediSave withdrawal limit of $1,200.
It is quite possible that pharmaceutical companies are taking advantage of this and pricing their drugs accordingly.
These limits are for MediShield policies, but there are no such limits in the case of “as charged” integrated plans.
The problem highlighted by the Council shows that tackling cost is a complex exercise and that Singapore has much to learn from other countries, including how they negotiate with drug companies to get the best possible prices.
Doing away with “as charged” policies will not be popular among the insured public who might feel less protected.
But more expensive treatment does not mean better medical outcomes, and might result in misallocation of scarce healthcare resources.
Unless bold measures are taken, Singapore’s healthcare costs will continue to rise uncontrollably.
Major surgery is needed now.
• Han Fook Kwang is also a senior fellow at the S. Rajaratnam School of International Studies, Nanyang Technological University