ACHIEVING AN AFFORDABLE AND SUSTAINABLE HEALTHCARE SYSTEM
1. Mr Chairman, a key priority for the Ministry of Health (MOH) is to keep our healthcare system sustainable and affordable, for this generation and future generations. I will elaborate on our efforts to achieve this outcome under the three Ps: Productivity, Partnerships and Prevention.
Productivity
2. Let me start with Productivity. Dr Chia Shi-Lu and Mr Gan Thiam Poh asked how MOH encourages healthcare innovation and productivity.
3. We set up the Healthcare Tripartite Committee for Workforce Innovation and Productivity in 2016. The Committee has reviewed rules and policies based on ground feedback to streamline work processes, encourage adoption of smart technology, and empower different groups of healthcare workers to maximise their contributions.
4. MOH introduced the Healthcare Productivity Fund (HPF) in 2012. More than 250 projects have been implemented so far, benefiting over 70 public healthcare and community care organisations.
Second Tranche of the HPF
5. Our productivity movement is achieving good progress. To encourage more to participate and seize opportunities to improve productivity, we will add another $80 million in productivity funding to the HPF over the next three years to support our institutions and healthcare workers. Use of smart technologies will be integrated in existing and upcoming public healthcare facilities, to increase system-level productivity, improve patient care and prepare our healthcare facilities for the future.
6. The productivity efforts extend beyond hospitals to the community. The Agency for Integrated Care (AIC) will collaborate with providers to re-design traditionally manpower intensive processes such as rehabilitation and showering. AIC will also help providers to adopt assistive equipment, such as ceiling hoists, to ease the physical strain on healthcare workers.
Partnerships
7. I will now speak on the next “P” - Partnerships. Besides working closely with public healthcare institutions, we collaborate with private sector providers to tap on their expertise and resources. For example, a local start-up Kronikare developed a smartphone application using Artificial Intelligence to analyse wounds. It can do so within seconds to detect early stages of infection, a task that previously required two or more nurses up to 30 minutes to perform.
Partnerships with ILTC sector
8. In the Intermediate and Long Term Care (ILTC) sector, MOH invites voluntary welfare organisations (VWOs) and private operators to tender for operating rights at our Build-Own-Lease (BOL) facilities, and we partner private operators to provide subsidised nursing home care through the portable subsidy scheme (PSS).
9. BOL and PSS operators are appointed via competitive requests-for-proposal, where operators propose and commit to their fees and charges for subsidised residents. As Ms Cheng Li Hui said, this helps to ensure prices for quality care remain reasonable. MOH supports providers, including private nursing homes, with manpower development and productivity initiatives.
10. Partnerships also means all stakeholders – patients and caregivers, healthcare providers and professionals, insurers and employers, and the government - working together on a common goal to keep healthcare costs sustainable and affordable for everyone over the longer-term.
Progressive Healthcare Financing System
11. At the most fundamental level, it is in the philosophy and design of our healthcare financing system.
12. During the Budget Debate, Ms Sylvia Lim asked if the higher MediShield Life deductible for older policyholders was a form of “reverse discrimination”. This is not the case. We should look at the complete picture rather than focus on a single observation in isolation. Allow me to clarify.
13. The MediShield Life Review Committee wanted Medishield Life to be a basic health insurance plan for all Singaporeans. The objective was to provide coverage for large hospital bills based on inpatient treatment at subsidised wards, as well as costly outpatient treatments like dialysis and chemotherapy. For the scheme to remain sustainable, premiums are computed to be actuarially sound. The government then provides means-tested subsidies and additional premium support to ensure that premiums remain affordable for lower and middle income Singaporeans. This is a progressive and inclusive scheme.
14. On MediShield Life deductibles, the amount is set for each policy year, and not for each treatment. The deductible amount can be paid using Medisave, and Singaporeans who require further financial support can approach our medical social workers for assistance. As older policyholders incur higher medical bills in each policy year compared to younger cohorts, their premiums are higher to reflect the larger and more frequent claims. There is a trade-off between the deductible amount and premiums, with lower deductible amounts resulting in higher premiums. On balance, the Committee recommended a higher deductible for those age 81 and above to reduce their premiums.
15. The Government accepted the Committee’s recommendations. Recognising that policyholders will pay higher premiums as they age, the Government has provided higher MediShield Life premium subsidies for older Singaporeans. This is in line with the progressive design of our healthcare financing system - with more government subsidies going to older Singaporeans and those from lower and middle-income families.
16. On average, an elderly Singaporean aged 65 and above obtains more than six times the amount of government subsidies per year compared to younger Singaporeans below 65. Besides higher MediShield Life premium subsidies, they also receive 50% more subsidies in polyclinics. For the Pioneer Generation, they enjoy further benefits such as special CHAS subsidies at GP clinics, additional MediShield Life premium subsidies and Medisave top-ups every year.
17. So rather than having “reverse discrimination” against older Singaporeans, our healthcare system is in fact providing them with more financial subsidies. We do the same for the lower and middle income. Singaporeans support this financing approach because it is consistent with our values to build a fair and just society.
Working Together for Sustainable and Affordable Healthcare Cost
18. Beyond healthcare financing, partnership among all stakeholders is also needed to ensure that quality care is delivered at sustainable and affordable costs for Singaporeans.
(i) Since May 2017, MOH has issued Appropriate Care Guidances on medical treatments and drugs, to guide healthcare providers in making decisions that are based on clinical and cost effectiveness.
(ii) Last year, the Singapore Medical Council revised their ethical guidelines for doctors, indicating that fees paid to Third Party Administrators must not be based on a proportion of the doctors’ fees or what is commonly known as “fee splitting”. This is to prevent unnecessary inflation of healthcare costs.
(iii) In January this year, MOH set up the Fee Benchmarks Advisory Committee to recommend and develop fee benchmarks for medical procedures and services. The purpose is to encourage appropriate charging by healthcare providers and enable patients and payers to make better informed decisions.
(iv) As I said in this House at a previous sitting, most of our doctors do charge appropriately as they have their patients’ well-being at heart. But for the ones who charge excessive fees, please know that MOH is monitoring and will take action against doctors who overcharge.
19. During the Budget Debate, Ms Sylvia Lim suggested reviewing medical insurance schemes to include deductibles and co-payments, to discourage over-consumption and inefficient use of resources. These were similar to the earlier recommendations from the Health Insurance Task Force (HITF), which Dr Chia Shi-Lu has asked for an update. Let me explain why these are important issues and what MOH intends to do.
IP Rider Changes
20. Every Singaporean citizen and PR is covered by MediShield Life. Today, about two in three Singapore Residents have also bought Integrated Shield Plans or IPs. These are private insurance products that offer added coverage. Both MediShield Life and IPs have co-payment features in the form of deductibles and co-insurance, and their premiums can be paid using Medisave.
21. Among those who have bought IPs, some have paid additional cash for what is known as “full riders”. These cover the entire co-payment under the IP plan, so the policyholder ends up paying nothing regardless of the bill size. Currently, about 29% of Singapore Residents have these full riders.
Impact of Full Riders on Healthcare Costs
22. As highlighted in HITF’s report, the zero co-payment feature of these full riders has resulted in a “buffet syndrome”, leading to over-consumption, over-servicing and over-charging of healthcare services. In 2016, the average medical bill size for full rider policyholders was about 60% higher than the average bill size for those without riders, even though rider policyholders are younger and generally in better health.
23. Some of the examples of over-consumption and over-servicing are – to put it plainly – disturbing.
(i) In one case, a full rider policyholder made claims for 12 nose scopes in a year, without clear medical need.
(ii) We also have patients who were admitted for gastritis or piles, and then referred to many other specialities ranging from dermatology, ophthalmology, ear nose and throat, and orthopaedics, for additional scans and tests. The final bill? Up to $25,000 for a hospital stay that was less than 24 hours!
(iii) There was also a full rider policyholder who underwent an expensive surgery for a small breast lump removal that costs $70,000 in doctor fees alone, when there was an equally effective alternative procedure which costs only $5,000.
24. To be fair, not all doctors prescribe such expensive treatments and not all full rider policyholders submit such large claims. But it is clear that full riders have a detrimental impact on overall healthcare costs in Singapore. This is a key reason why rider premiums have increased by up to 225% over the past two years.
25. The negative impact of the zero co-payment feature extends beyond full rider policyholders. Over the last two years, IP premiums have also risen by up to 80%, with older policyholders and those on private hospital plans experiencing higher increases. If this trend continues, IP and rider policyholders will find their insurance premiums increasingly unaffordable as they age.
26. The zero co-payment feature of riders also pushes up healthcare costs in Singapore. Over-consumption, over-servicing and over-charging of healthcare services will lead to faster and larger increases in overall healthcare expenditure. These increases will ultimately be borne by all Singaporeans through higher medical fees, insurance premiums and taxes, which all of us will pay directly or indirectly.
27. I am glad there is support from both sides of the House on the need for co-payment to keep healthcare expenditure sustainable and affordable for all Singaporeans over the longer term. Ms Salma Khalik has also written an insightful piece on this in The Straits Times. We have to make a change now, to prevent the problem from becoming worse in future.
28. In line with the Health Insurance Task Force’s recommendations, MOH will issue the following requirements for all new rider plans with immediate effect.
a. New IP riders must incorporate a co-payment of 5% or more.
b. To address concerns from some policyholders that they may face high co-payment amounts due to the unlikely event of very large bills, the new riders will have a cap on the co-payment amount each year. Most insurers are planning to launch their new riders with an annual cap of $3,000, though they are allowed to set higher thresholds. This places an upper limit on the risk exposure for policyholders, to protect them against very large bills.
c. New riders will be available within a year. In the meantime, insurers can continue selling their existing rider plans, but must inform new policyholders that they will transit to the new riders with co-payment from 1 April 2021. Once the new riders are ready, these policyholders can choose to switch to the new riders earlier if they wish to do so, and any pre-existing conditions that are covered prior to the switch will not be excluded. We expect the new riders to have lower premiums than full riders, so the switch will result in premium savings for policyholders.
29. Let me be clear that MOH is not issuing these requirements to bail out the insurers. Our objective is to address the concerns with over-consumption, over-servicing and over-charging, as these will lead to patients and policyholders paying rapidly escalating fees and premiums over time. It will be an unsustainable and undesirable outcome for Singapore, especially when we are ageing as a society.
30. Policyholders can continue to tap on Medisave to pay for their co-payment amounts under the new riders. At 5% co-payment, half of the inpatient bills in 2016 would have a co-payment amount of $100 or less. Three quarters of inpatient bills would have a co-payment of $250 or less, and 9 in 10 inpatient bills would have a co-payment of $550 or less. The 5% co-payment can be covered within the current Medisave withdrawal limits for 99% of all inpatient bills. For private hospital inpatient bills in 2016, 1 in 2 would have a co-payment of $380 or less, 3 in 4 would have a co-payment of $670 or less, and 9 in 10 would have a co-payment of $1,270 or less.
31. The above requirements will apply to new rider policies. We recognise that existing rider policies are commercial contracts between insurers and their policyholders. If insurers intend to make changes to their existing policies, they should consider the interest and well-being of all policyholders, as they seek to keep premiums affordable for everyone in the longer term.
32. The requirements for new riders will not affect MediShield Life and Integrated Shield Plans which already have co-payment features. For patients who face financial difficulties with their bills, Medifund remains available as a safety net to ensure they continue to have access to quality subsidised healthcare in our public hospitals.
Prevention – Update on War on Diabetes
33. Let me now move to the 3rd P – Prevention. An important aspect of Prevention focuses on early screening and intervention. Last year, I announced the enhancements to the Screen for Life programme where eligible Singaporeans can have access to subsidised health screenings at a cost of $5, which includes the first post-screening consultation with a doctor. CHAS cardholders will pay $2, while the package is free for Pioneers.
Inclusion of Pre-DM and IHD under CDMP & CHAS Chronic
34. Dr Chia Shi-Lu asked whether the Ministry is considering further enhancements to the Chronic Disease Management Programme (CDMP), as well as the Flexi-Medisave Scheme. I recall that Ms Thanaletchimi had raised a similar query during an earlier COS debate.
35. From June this year, MOH will make the following enhancements to CDMP. These will also broaden the coverage of our Community Health Assist Scheme (CHAS) Chronic subsidies.
a. First, we will extend the scope of diabetes to cover pre-diabetes. Based on current trends, 1 in 3 people with pre-diabetes could develop Type 2 diabetes within eight years. Through early detection and intervention, we hope more patients with pre-diabetes can improve their condition and avoid developing diabetes.
b. Second, we will expand the list of CDMP conditions to cover ischaemic heart disease (IHD), bringing the total number of covered conditions to 20. This will benefit all patients with IHD, even if their condition is not linked to diabetes or hypertension.
c. Third, we will enhance the support for diabetics who require insulin injections, as they require lancets and test strips to regularly monitor their blood glucose levels. To support these patients, MOH will extend CDMP to lancets and test strips.
36. In addition, we will raise the withdrawal limit for Medisave400 scheme by 25%, from $400 per year to $500 per year. This will take effect from June this year.
37. We will also lower the eligible age for Flexi-Medisave, which is currently set at 65. From June this year, Singaporeans aged 60 and above can use up to $200 of their Medisave per year, for outpatient medical treatments at public sector SOCs, polyclinics and CHAS GPs. This expansion of Flexi-Medisave will benefit an additional 260,000 Singaporeans between the ages of 60 to 64.
38. To conclude, Mr Chairman, we need to transform our healthcare system so that it remains sustainable and affordable for all Singaporeans. Productivity, Partnerships and Prevention are key enablers. Everyone needs to play our part to stay healthy and prevent healthcare costs from rising too rapidly. Together, we can achieve better health and better life for our people.
39. Thank you.