Who Moved My Singapore Cheese

The TRUTH about Healthcare .... posted by LuckySingaporean

The US healthcare system is really in bad shape. There is no universal coverage with 47M Americans left uninsured because they can't afford insurance and costs have spiral out of control. In an earlier post, I posted a video that attempts to explain what has gone wrong with their system[Link].

Obama faces a big challenge ahead fixing healthcare[Link] and if he fails to deliver a solution, it will severely undermine his administration as healthcare reform was one of main reasons for the support he received during the elections. What happened to the Americans is a lesson for the rest of the world, if the govt does little and allow the system to evolve driven by market forces, you can end up with a costly system.

In the next few paragraphs, I will point out a number of interesting facts about our healthcare system and you're free to post your opinion and disagree with me....

Okay where do we start....the last major policy initiative was to impose means testing. According to the govt, the rationale behind this is to reduce the subsidy of people who can afford more so that more help can be given to the poor. While this may sound sensible, only the first part has taken place subsidies for the lower middle class and above have been cut, but the subsidy for the poor remains at the same (80% for class "C" and 65% for class "B")[Subsidy Table]. Have a good look at the subsidy table. If you're middleclass and (touch wood) suspect that you have a serious illness, you will choose class "C" to save some money, however your bill is now 75% higher because the subsidy has been reduced from 80% to 65%....you pay 35% instead of 20% which 75% more. Many people don't realise this and think the reduction in subsidy is small. Some people are still happy because they are getting some subsidy..better than other countries?. ...think again!

The chart shows how cost of healthcare is shared between citizens (blue) and govt (red). In UK which makes all treatment free under the NHS, the cost of healthcare to the govt as a % is the highest. Singaporeans needing medical care shoulder the highest (or one of the highest) healthcare cost as a % of total cost among 1st world countries even higher than the Americans whose system is broken. This is because the govt has taken part of the CPF contribution and used it for Medisave since 1984. As the healthcare cost escalates, the rise is cost is passed on to Singaporeans through means testing, Medishield and Medisave. Money paid to Medishield and Medisave is your own money - you can even part-take in private schemes (AIA, Prudential, etc) for Medishield. Private insurers participate only when profits can be made. The chart above was generated before means testing so our govt cost will go down even further and the burden on Singaporeans who get sick will increase. Why is the govt doing this? The main advantage to Singaporeans (who don't get sick) is taxes can be kept low and the govt can allocate the cost savings to other things like defense and upgrading. However, if you look at taxation, it has become more regressive over the years with the govt cutting corporate and high earners' taxes while increasing GST. The benefit of lower taxation goes to those with the highest income earners and corporations. Singaporeans are beginning to question spending on defense[Singapore boosts defense spending][Why are we allocating so much to defense] and other areas while trying to reducing expediture on healthcare - that is an issue that has to be further deliberated but you have to be aware of all the tradeoffs as you will be asked to pay even more healthcare in the future..

You may hear people say, "I went to the hospital and found it affordable", "my mother got warded and the bill was okay" and so on. That is not the way to think about healthcare. In any system in the developed countries the majority of people will get good treatment and be able to pay for it. Even in the US where the system is considered bad, the main problem is 47M of 303M people are uninsured that is about 15% and 85% are covered. Out of the 15%, about 10%-20% will need hospitalisation in the next 5 years. So we are talking about under 5% in the US who will get into serious financial trouble due medical treatment....yet there is a need for reform there. In Taiwan, after studying the best systems in the world and creating their own universal healthcare system, they found that 99.5% of the people covered by the system. What happened to the 0.5%? They found out that the 0.5% were criminals in state prisons where medical treatment is free. For developed countries, where the quality of care is generally good, the main issue is universality....is every single person taken care of?...who is left out?..are there people heavily burdened by medical debt....?

(Incredibly, as I finish the last paragraph, my Sunday Times arrives and the headline is "100,000 women lack Medishield". It is Sunday 6:45am right now...lets continue).

There is a little secret about saving cost in a healthcare system without creating many unhappy people. In a hospital, a disproportionate part of the cost is due to a small number of seriously ill patients. The cost distribution resembles a pareto distribution where 80% of the cost is due to 20% of the patients who are seriously ill. Among the 20%, an even smaller number account for most of the cost. So there is a simple trick to cutting govt expediture and it doesn't take a lot of brains to figure it out - make the seriously ill and their family shoulder a large financial burden. A few days ago, there was this heart breaking story of a little girl called Marjorie Soh who struggled with cancer. Her grandmother sold 4 room flat and her father had to borrow from the banks and friends for her treatment(She was worth it all). Her bill was $400,000. The Soh family are not the only people who have to shoulder heavy financial burdens due to the govt zeal to keep its expenditure down - 400 babies are born every year with congenital defects and they are not covered by Medishield. The cost of treatment in ICU, incubators, operation etc easily reach upwards of $100K and $250K is not uncommon among this group that form 1.5% of the newborn. By leaving these babies out and make the parents shoulder the medical bills, the govt keeps its own expenditure and cost of Medishield down[Link]. The other people who were left out when Medishield was implemented were those with pre-existing conditions again to keep costs down.

We, as a society, have to decide how far we want to go to ensure healthcare is truly affordable for everyone. The issue is who we choose to leave out and why.... whether it is right to for the govt to save the cost of taking care of them to implement corporate tax cuts and increase other types of spending. The govt is already making sick Singaporeans (and the families) shoulder the largest % of total cost among developed countries.....with those who get seriously illness and parents of newborns with congenital shouldering extremely high financial burdens.