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Thursday, January 10, 2008

Jan 8, 2008 Get set for means test

Jan 8, 2008
Get set for means test
THE likely shape of means testing in public hospitals, as sketched by the Health Minister yesterday, will be reassuring to most. Patients will be free to choose the subsidised ward class, with no ban placed on the well-off for, say, stays in C class which is subsidised at 80 per cent. A prohibition could divert resources more efficiently to the needy, but it cannot be defended on grounds of equity and fairness. Income will almost certainly be the sole criterion to test means, not patients' property category and liquid assets such as deposit savings and portfolio investments. This is being practical. A convoluted system of including all asset classes will be hard to administer, besides incurring the risk of encouraging fraudulent behaviour.
But Minister Khaw Boon Wan made no mention of the five-day rule, floated last year as a probable cutoff after which means testing will be triggered. This is not so good news, but sensible. Discharge of patients should be made on clinical considerations, not financial cost to the patient or cost to the hospital in that demand for subsidised beds frequently exceeds supply. In any case, the Health Ministry will continually build more subsidised facilities and of a better quality than is available now. The most pleasing aspect of the likely implementation model is the possibility that retirees, besides the long-term unemployed, will not be subject to any other measure of the means test. They will enjoy full subsidy of whichever ward class they choose. This is just, a necessary concession in an ageing society. The retired elderly are the most vulnerable in health, and their dread of medical bills will grow with advancing years. As for the complaint that the wealthy can access subsidies like the needy and the poor, the fact is that the rich elderly sick are more likely to choose treatment in private hospitals.

Two exogenous features arise from Mr Khaw's preview. First, the 'poorest' of middle-income earners who are barely able to make ends meet - the squeezed group with families which earns moderate income, pays taxes and receives no welfare benefits - will expect fair treatment when the quantum of subsidies relative to income is decided. Mr Khaw's assurance that the present profile of B2 and C patients fits the target beneficiaries is not to be taken as a static situation. Second, Singaporeans should consider private hospitalisation insurance to supplement MediShield and employer-provided cover. This is the appropriate response to the coming of the means-test age, the better to prepare for the grey years. Those with spare income would even want to take out disability or critical illness plans to protect themselves against prolonged loss of employment income.

Jan 8, 2008
Sharing limited health-care resources fairly
Health Minister Khaw Boon Wan explained the need for means testing in a speech at Changi General Hospital yesterday

THE health-care challenge, for Singapore and the rest of the world, is a classic case of demand perpetually exceeding supply. Indeed, health- care demand is effectively bottomless. This is because all patients will prefer the best senior consultant to look after them, even if their condition is routine and can be competently handled by others.
Given a choice, patients here in Changi General Hospital (CGH) will want Professor Low Cheng Ooi or Professor Fock Kwong Min to look after them. Those with sports injuries will want to be treated by Dr Ben Tan, never mind if it is only a minor injury.

But there is a limit to how many patients each senior doctor can serve. Unfortunately we have not yet figured out a way to clone these doctors!

This phenomenon is not unique to health care. For instance, the demand for subsidised public housing, whether for purchase or rental, also exceeds supply and we need to distribute it in a fair manner.

HDB way

THE Housing and Development Board provides a range of housing options from one- room rental flats to five-room home ownership flats. While all are subsidised, there are different degrees of subsidy.

For example, three-room flats are smaller than five- room flats but are more heavily subsidised proportionally, as they aim to benefit the lower-income group. Lower-income flat buyers also receive additional housing subsidy through the Additional CPF Housing Grant.

To make sure the smaller flats are allocated to those most in need, applicants are assessed carefully on their financial situation. Specifically, those buying subsidised three- room flats need to satisfy a more stringent income ceiling of $3,000 per month, compared to a higher income ceiling of $8,000 for subsidised five-room flats.

This way, we ensure lower-income Singaporeans do not get crowded out by those who can afford larger HDB flats or private properties. Occasionally, some three-room flat owners also buy Mercedes -Benzes, and then we get complaints from their neighbours that we should not have allowed such luxury-car owners access to three-room flats.

I should clarify that there is no income ceiling for the purchase of resale HDB flats since there is no government subsidy involved, but this may not be clear to those who complain of three-room flat owners driving expensive cars.

The fact that there are such complaints shows that Singaporeans accept the HDB method of sharing limited public housing resources and consider it to be fair. They are therefore upset when they see some people seemingly 'getting around the system'.

MOH way

FOR subsidised hospital services, the Ministry of Health (MOH) has taken a different approach. Like HDB, public hospitals also provide a range of options, from Class C to Class A. While clinical care in all wards is of a high standard, there are distinct differences between the classes.

First, the creature comforts of the ward accommodation are different. Class C has no air-conditioning and offers a very basic level of privacy.

Second, competent doctors are assigned to treat the Class C patients through a roster system, while Class A patients can choose their doctors.

Third, while all emergency patients are immediately attended to regardless of ward class, non-emergency referrals of subsidised patients to specialists generally face a longer waiting time than those for private patients.

But, unlike HDB, patients are free to choose the class of ward, regardless of their financial status. They are charged according to their choice. A patient earning say $10,000 per month can choose Class C and be warded next to another earning $1,000 per month, but both will be subsidised by 80 per cent.

The MOH approach is not without merit. Patients welcome the freedom to choose. Hospital costs are high and patients who require prolonged hospitalisation, especially in ICUs (intensive care units), or the chronic sick who need frequent hospitalisation, do worry about their ability to pay.

Middle-income Singaporeans, for example, are concerned whether any kind of financial assessment may block their access to Class C wards and cause them severe financial hardship should they develop a major complication. Their concerns are valid, and I am well aware of them.

Not sustainable

THE MOH way is, however, not without problems.

First, there is a question of fairness. Last year, health subsidies for Singaporeans exceeded $1.5 billion. While this is not a small sum and we will continue to increase the quantum, it is not unlimited.

A high-income patient occupying a Class C bed does prevent another low-income patient from using that service. When a Class C or B2 ward is full, the high-income patient can easily afford an alternative ward, but a low-income patient faced with such a situation does not have such a choice. An unduly overcrowded Class C or B2 ward thus comes at the expense of the low-income patients.

Second, there is rising expectation of better services from all patients, rich or poor. The MOH approach is based on there being distinct differences in ward accommodation between the subsidised and private wards. The differences used to be stark. For example, Class C ward was 40-bedded, with little privacy.

But as we rebuild public hospitals, we are significantly narrowing the differences between these wards. Class C wards in CGH are 10-bedded and much more comfortable than those in the old Toa Payoh Hospital.

And we would like to continue to raise the standard of physical facilities in the subsidised wards. For example, Class C and B2 patients share communal toilets outside the ward. This is a common complaint from the patients and their relatives.

For the new Khoo Teck Puat Hospital (KTPH), we have decided to move the toilets into the wards. I am sure this will be greatly welcomed by the patients. But in so doing, Class B2 and Class C wards in KTPH will be as comfortable as Class B1, except for the absence of air-conditioning. Indeed, many elderly patients do not regard air-conditioning as a plus.

With such marginal difference in ward facilities, even though fees for Class B1 are more than double those for Class B2 and four times those in Class C, we expect many patients who would normally choose Class B1 to now choose Class B2 or C. This will further reduce the lower- income patients' access to B2 and C facilities.

We have already observed this development in the polyclinics. Over the years, we have significantly improved the polyclinics. Modern polyclinics are much better equipped and organised than many neighbourhood GPs.

We have also increased the number of polyclinic doctors and nurses to cut down waiting times by patients. But these improvements in service standards do not have lasting effect. As soon as we reduce waiting times, even more patients who used to visit GPs are drawn into polyclinics, for better care at much reduced fees.

By improving facilities and service standards primarily for the benefit of lower-income patients, we have inadvertently driven up patient numbers all over again, and we are then back to the same problem of over-crowding and long waiting times.

Economists' way

ECONOMISTS are familiar with this phenomenon of demand exceeding supply, and have studied options on how to solve the allocation problem. There are two ways to distribute limited supply: either raise the price until supply equals demand, or let the queue mechanism sort out the distribution. Those who can afford private treatment but cannot afford to wait will leave the queue and go elsewhere.

We know some subsidised patients are unhappy with long waiting times. Our priority is to make sure the waiting times for the various conditions do not compromise patient care from a clinical point of view. Patients who need to be seen fairly quickly will be seen early. But beyond that, subsidised patients will need to endure some waiting.

MOH would very much like to improve care for subsidised patients, whether in polyclinics or in hospitals. But if significant improvement results in us drawing in patients who can well afford private treatment, our efforts will be nullified.

A third way

WE NEED a third way to share the limited health-care resources among competing demands. The question is how to do so fairly.

The extreme cases are easily addressed. All emergency cases should be treated immediately by the most competent doctors available. A patient's ability to pay should not be a barrier to life-saving services.

On the other extreme, demand for frills and cosmetic services can be left to the market, leaving patients to choose the providers based on their preference and what they are prepared to pay. Many Singaporeans, for example, seem happy to fork out thousands of dollars for non-medically necessary Lasik services provided by private operators.

Between these extremes lie a wide range of health-care services to address differing needs and ability to pay. For example, the use of generic medicine helps to keep health-care costs low but without compromising the outcome. Hence our policy is to only prescribe generic drugs for subsidised patients where generics are available. This is the right thing to do, but in the private wards we do allow brand-name drugs for patients who are prepared to pay for them.

With higher expectations, subsidised patients are increasingly demanding a higher level of care, including access to non-standard drugs based on their perceptions of what they need. With economic growth and rising standards of living, we can afford better treatments. We would like to extend such benefits to subsidised patients too. But we must do so in a way which does not unwittingly draw in patients who would have chosen the private wards.

The most logical way to address this contradiction is to apply the principle that higher-income patients should co- pay more for the same treatment than lower-income patients, if they choose to be treated in the subsidised wards. The former should get less subsidy than the latter. That is a fair and practical way to share limited health- care resources.

The lower-income patients will not be affected by this approach, but I know middle-income patients are particularly worried. While the principle is easy to explain, the implementation details worry a lot of people. We have studied this issue for some time and will continue to discuss the details with unionists, fellow MPs and the public. I am confident I can find a way of doing this which is fair to all and which does not impose unnecessary burdens on patients.

I think a fair way of doing this must fulfil five criteria:

First, patients must retain the freedom to choose. Rich or poor, they must be able to choose, say, a Class B2 ward if they wish. Anybody can choose to be admitted to a subsidised ward.

Second, all patients in Class C and B2 will be subsidised, but to different degrees. Higher-income patients will be subsidised less than lower-income patients, but their bills will remain affordable. For example, a better-off patient in Class B2 will still get higher subsidy than if he opts for Class B1, and should find his bill affordable.

Third, given the acute nature of hospitalisation, we need a simple way to make an assessment. The way it is done in nursing homes, whereby the entire family's income is ascertained, cannot be applied. We need a different approach. For example, we may base it on the patient's individual eligibility. Furthermore, any assessment of the patient's financial status should preferably be automated, based on objective evidence, such as wages as declared to Iras (Inland Revenue Authority of Singapore) or CPF Board.

Fourth, we will be sensitive to the circumstances of retirees and others who are not working. Without any income, they are particularly fearful that any chronic disease may wipe out their past savings. If we use their housing type to assess their eligibility, we may deliberately set the threshold at a sufficiently high level.

Fifth, no patient should be denied treatment because he cannot afford it. We will be flexible in implementation so that, at the margins, we will always give patients the benefit of the doubt. All needy citizens will remain protected by Medifund, the ultimate safety net for patients.
The implementation details will need to be fleshed out, but I feel confident we can work out a way to allocate health-care subsidies fairly to all segments of the population. Currently the profile of patients in Class C and Class B2 largely reflects our intended target beneficiaries of these wards. What this means is that a majority of Singaporeans should continue to receive the same level of subsidies as they do today and will not be affected.

Nevertheless, we need to put the system in place now, so that as we pump in more resources to upgrade the subsidised wards, we do not unwittingly cannibalise the private wards and services at the expense of the low-income patients. Our objective is to safeguard our current high standard of public hospitals and to ensure that all patients who need the care continue to receive it in a timely manner.

I hope to get your support for this proposal.



No patient should be denied treatment because he cannot afford it. We will be flexible in implementation so that, at the margins, we will always give patients the benefit of the doubt. All needy citizens will remain protected by Medifund, the ultimate safety net for patients.

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