How much healthcare must a Singaporean consume per year to "break even" under SDP's proposed "National Healthcare Plan"?
Under SDP's "NHP", the average Singaporean pays an annual contribution of $600. To offset this compulsory payment, he must consume $600 worth of healthcare to begin with.
However, since the "NHP" covers only 90% of that $600, he has now paid $660 to consume $600 worth of healthcare!
To make up that difference, he must consume another $60 of healthcare, which will mean he has to come up with another $6 out of his pocket, which put him out by another $6, which means he has to consume a further...
(Yes, it's closer to $667, but that number is more dramatic...)
Now you may think that that is a joke (and not a very good one at that), but I will not be surprised if Singaporeans who previously spent fewer than a hundred dollars on healthcare each year mysteriously start chalking up $666-healthcare bills if SDP's scheme comes into effect.
You may ask why we do not already over-utilise services such as the police, ambulance and fire services since we have all already "pre-paid" for them via taxes. Well, for one thing, these payments are hidden in the sense that they are not separate accounts into which you pay, and the prices of these services are also not known, making it impossible to determine where the break-even point is. Secondly, people do in fact utilise them inappropriately, which is why there are penalties for calling the police, an ambulance or the fire department frivolously.
What about the Medisave account that we have presently?
Yes, that is a distinct account into which you are compelled to contribute to, but that money stays in your account if not expended - it is not "forfeited" at the end of the year if not consumed (like those eMart credits - ever seen a reservist buy more pairs of socks than he can wear out just because he has $200 left in his account?). Also, that amount is reserved for your own use or the use of your family, and is returned to your "estate" if sums remain after your death, so there is no incentive to ensure that you use all you can every year of your life while you live so that money doesn't go towards paying for some stranger's illness.
Yet even under those terms, patients still make healthcare choices based on CPF policies instead of medical reasons. For example, they will decide on whether or not to undergo an investigation or procedure based on whether it is "Medisave-claimable". After MOH started allowing Medisave to be used for outpatient chronic care, my colleagues in primary care related to me how some patients would try to make sure their bills exceed the minimum co-pay amount so that they can utilise their Medisave (yes, actually wanting to pay more in total so that they can pay less out-of-pocket!), to the point of asking the doctor to prescribe a longer duration of medication, to not discontinue medications which are no longer needed, or to prescribe vitamins and supplements to bulk up the bill.
Sounds bizarre? Well, don't just take my word for it - ask a friend who is in healthcare if what I wrote in the second part is true, and what I wrote in the first part is likely to happen. Perhaps SDP should have asked some healthcare workers too before coming up with their... Wait a minute...
SDP continues to try to sell its "National Healthcare Plan" on its website, now comparing it to auto insurance.
There are a couple of problems with this analogy: for one thing, when you get into a traffic accident, other people may be harmed; the insurance is not just to pay for your losses, but for other people affected by your actions - this is not always true of healthcare (except in the case of infectious diseases). Secondly, one may go through a lifetime of driving without getting into a single accident, but everyone requires healthcare.
Now I am not a fan of Mr Tan Kin Lian, but today I would like to borrow his wisdom, specifically in something he wrote about health insurance:
I want to be frank. Insurance may NOT be the answer. Here are my reason insurance works on the principle of risk pooling. Many people pay a small premium to buy insurance, so that a large payout can be given to the person who suffers the insured event. A good example is insurance covering death by accident. The expected claim rate is 1 in 2,000. If each person pays a premium of $50, the insurance pool can pay $100,000 to the single person who happens to die by accident. The actual premium payable will be more than $50 as the insurance company has to pay its expenses and wants to make a profit.
- This pooling does not apply to health insurance because each person wants to be insured for a lifetime and every one will eventually have to get a serious illness, either by cancer, organ failure (e.g. heart) or other critical conditions. It is likely that every person will make a claim on the health insurance policy – the question is whether it occurs earlier or later
- Insurance has the tendency to increase the cost of treatment. The insured person is likely to go for more expensive treatment, as it is covered by insurance...
- Every insured person wants the high medical bills will be paid by the insurance pool, i.e. by other people. Are they willing to pay for somebody else’s bill?
What this means in the context of a national health insurance scheme is this: collectively, the "premium" paid into the pool must be at least equal to the total payout; and since everyone is covered by a national insurance scheme, and "every one will eventually have to get a serious illness, either by cancer, organ failure (e.g. heart) or other critical conditions", and "every person will make a claim on the health insurance policy – the question is whether it occurs earlier or later", then it tells us that what is happening here is NOT a pooling of risk, but of some people being made to pay for the healthcare of other people.
Now you may argue that the premium or subscription to the health insurance is roughly equal despite one's income, but remember that the bulk of the payout is not funded by the subscription, but by other types of taxes. To carry on the analogy of the buffet from our earlier post, we have a situation where everyone is made to pay $5 for the buffet, but some people having to pay an additional surcharge of $45 to eat the same food as everyone else.
When I criticised SDP's plan in my earlier post, a reader challenged me to come up with a "better system".
Now I have little doubt that in the short term, before moral hazard and the silver tsunami bankrupt the system, SDP's proposed system is definitely "better" for the majority of Singaporeans: they get to pay less for consuming the same or even more healthcare, while the bulk of the tab is picked up by a small percentage of Singaporeans.
But "better" is not always fair, even when it is "better" for the majority of people.
"... recent research suggests that judging care in terms of desirable customer experiences could be expensive and may even be dangerous. A new paper by Joshua Fenton, an assistant professor at the University of California, Davis, and colleagues found that higher satisfaction scores correlated with greater use of hospital services (driving up costs), but also with increased mortality.
(full article here)
As predicted, SDP's "National Healthcare Plan" involves increasing the government's healthcare expenditure from the $8 billion this year (up from the figure of $4 billion last year) to $10.5 billion, with the projectd increase being be paid for in part by "[i]ntroducing luxury tax" and "[i]ncreasing corporate tax". So now the rich will not only not be allowed to "buy immediate and better treatment [while] the poor have to wait months on end to receive medical care", they will be made to pay even more for healthcare they do not consume themselves than they already do now.
You can read the details of SDP's plan following the links on their site which I linked to above, but what it boils down to really is a $500-a-year consume-all-you-can healthcare buffet, even as SDP dismisses the existence of the "buffet syndrome" with what is effectively an "Oh, I'm sure it won't happen".
Now you only have to read the comments to the few posts before this one to know that it already is happening, and that it is naive to expect that the situation will in fact improve when such a plan is implemented.
Granted, we don't all spend $500 a year on healthcare now, but eventually more than half of us will die of cancers, heart diseases and strokes, and in getting there consume many times more than $500 during each of those final year; when the "silver tsunami" hits, this great "Plan" will fall apart.
I'll end with the words by a fellow doctor-blogger, a comment he posted on my blog when I looked at the subject of free healthcare many years ago:
I am absolutely certain that having medical care free at the point of entry leads to complacency and abuse. I have watched it with increasing horror in the NHS for 20 years.
People attend for medical consultations for the most unmitigated trivia; they demand inappropriate tests and, in particular, inappropriate medication.
I am committed to good health care for all, and I never thought I would ever want to change the "free" principle but common sense has triumphed.
As I have argued many times (and people seem to thing it is a trivial debating point - it is not) why is food not "free at the point of entry to the supermarket"?
Food is even more important than health care.
In the comment to the previous post, a reader commented that:
Given our lack of doctors, it appears that the public hospitals are resorting to importing doctors from 3rd world countries to make up the shortfall. Beware of wage depression. It hits. Everyone.
Public sector healthcare workers can look forward to pay increases costing some S$200 million. This will be fully funded by the government.
On average, doctors will see an increase in their total remuneration of about 20 per cent by 2014.
"But that's not the way things should be. Healthcare is not a commodity. It is a right." - Singapore Democrats
If healthcare is not a commodity, I wonder what I am (and for that matter what SDP's "team of medical doctors" are) being paid for doing every day.
It is very easy for wannabe politicians to label every need as a right and champion the people's right. What is not addressed upfront is whose obligation it then becomes to provide for that right.
Healthcare is not something that you can simply harvest or dig out from the ground like natural resources. It *is* a commodity provided by healthcare workers, pharmaceutical companies, medical equipment manufacturers, as well as the people who fund and run hospitals and clinics.
When someone says that healthcare is not a commodity but a right, he can mean two things:
1. That he thinks he has a right to the property and labour of those people who provide healthcare
2. That he thinks that he has a right to having someone else pay for his consumption of healthcare.
If you believe that a man's need entitles him to other people's property and labour or money to pay for the same, then why stop at healthcare? As I stated before (and will no doubt have to again in the future), healthcare is the 'wedge argument' for welfarism; if today they can claim that they are entitled to the commodity provided by the healthcare workers (or having other pay for their healthcare consumption), then tomorrow they can claim the same for that produced by those who provide food, water, clothing and shelter.
SDP is acting coy about what their self-proclaimed "landmark publication" of a "National Healthcare Plan" will entail, but I will hazard a guess that it involves the government picking up more of the tab than it already is, and that the amount of money required to fund this should come from taxing the rich even more than they are being taxed now.
Let's see if I will be proven wrong...