Tuesday, August 22, 2006

Healthcare Insurance – Slowly (?) But Surely Rising Costs

TODAY carried an exclusive article on August 18th 2006 relating how managed healthcare providers provided medicine in lower doses after the patient showed her a medical management company card of which her employer was a participant.

This does not bode well for the medical consumer in Singapore. We will either get shortchanged in terms of medication as suggested by the article or conversely expect to pay more for ‘proper’ medication. And as will be expounded on later - risk pooling will not help in anyway.

Managed care, managed healthcare, medical management company, medical management scheme are all fancy phrases to describe a phenomena which rocked the American medical, legal and social order as recently as the last decade. The dirty phrase in America was: Heathcare Management Organisations or HMOs in short.

HMOs in the U.S. started out with blatantly social aims of pooling risks and delivering affordable healthcare costs for all Americans. It gradually grew into a monstrous behemoth that not only controlled sectors of the government but worse, had government agencies inevitably condoning practices that would generate profits for the pharmaceutical companies that were eager to make a few more bucks.

Costs began escalating out of control as the pharma giants plumbed the HMOs and government agencies with junkets and retreats ostensibly selling their drugs. These drugs are often newly developed and recently passed by the American Food and Drug Administration for public consumption. Actual healthcare providers were economically and otherwise incentivised not to prescribe or utilize generic drugs for those whose seven year patent life span has run out. (Thereafter which any company in the world can produce this drug and sell it at a dramatically reduced rate of profit due to either lower cost of production or simply not attempting to earn on patent royalties – royalties are what one pays for the ‘intellectual property’ required to develop drugs, much like what you pay for an original music CD. Currently the ‘owners’ of “Tamiflu” are under severe international political pressure to allow the drug to be produced elsewhere and sold at a lower cost then normal due to the incidences of bird flu surfacing internationally.)

The rationale was simple. It only costs each end consumer a few dollars more each year in terms of ‘pooled risks’ and doctors who prescribed the drugs had nothing to lose with a slight possibility of gain while the pharmaceutical firms stood to gain massive market share and therefore profits both locally and internationally.

“In 2005, employer health insurance premiums increased by 9.2 percent - nearly three times the rate of inflation. The annual premium for an employer health plan covering a family of four averaged nearly $11,000. The annual premium for single coverage averaged over $4,000 (3).

Experts agree that our health care system is riddled with inefficiencies, excessive administrative expenses, inflated prices, poor management, and inappropriate care, waste and fraud. These problems significantly increase the cost of medical care and health insurance for employers and workers and affect the security of families.*

Since 2000, employment-based health insurance premiums have increased 73 percent, compared to cumulative inflation of 14 percent and cumulative wage growth of 15 percent during the same period.

Health insurance expenses are the fastest growing cost component for employers. Unless something changes dramatically, health insurance costs will overtake profits by 2008.
According to the Kaiser Family Foundation and the Health Research and Educational Trust, premiums for employer-sponsored health insurance in the United States have been rising five times faster on average than workers' earnings since 2000.

The average employee contribution to company-provided health insurance has increased more than 143 percent since 2000. Average out-of-pocket costs for deductibles, co-payments for medications, and co-insurance for physician and hospital visits rose 115 percent during the same period.

The percentage of Americans under age 65 whose family-level, out-of-pocket spending for health care, including health insurance, exceeds $2,000 a year rose from 37.3 percent in 1996 to 43.1 percent in 2003 - a 16 percent increase.” *

* http://www.nchc.org/facts/cost.shtml

Can Singaporeans withstand such increases in cost in such a short span of time? Can you? Why then is the PAP government backing calls for a managed healthcare scheme for the nation when overseas first world experience shows that the system is open to mis-management and costs which spiral out of control?

But cost is only one factor in a HMO setting. Socially, America began seeing higher and higher incidences of those who are treated and those who are not – medically treated of course. Every sane person of reasonable economic means is enrolled in some sort of managed healthcare program in the U.S.. If you have a card showing you are in a program you are treated, if not, show your credit card, if not ……. And if only it ended there. Healthcare costs, under the HMO scheme for decades has escalated to a point where even credit cards may not be accepted as a form of payment for medical treatment in some instances in the U.S.

Later in the week the Sunday Times, 20th August 2006, carried an article on how the Minister for Health is beaming with the success of his plan to turn Medishield around. The claims for success rests on that fact that consumers now have a choice of insurers and plans while government regulations prevent or attempt to prevent cherry picking so as to maintain the risk pool. Alongside these successes were a statement that Medishield is running in the black, by some $100 million, as opposed to running in the red just a year ago. Makes one wonder if premiums collected are too high or payouts are too low resulting in a surplus within one year of running a deficit in the national healthcare plan.

The article goes on to lists examples of how one would pay less for hospitalization stays compared to the ‘old’ plan as the present plan pays out more from insurance therefore requiring less from the consumer. Funny how the article does not also mention if the total bill for hospitalization stays have been going up or down over the past years. What difference does it make if the 3Ms cover more of a medical bill but if the medical bill rises beyond the original quantum then someone, somewhere, somehow has to pay more.

For example, let’s say insurance covers 50% of a bill of $1000 and your deductible (amount of cash you have to pay) is 10% then the insurance plans pays $500, your Medisave gets $400 deducted and you pay $100 in cash. Now insurance covers 60% of $2000 and your deductible is 5% this means that your Medisave account will be poorer by $900 while you are still paying $100 out of pocket – and in the meantime, the insurer has to fork out $1200. With rising medical costs who will ultimately pay despite insurance schemes that claim to pay out more?

Insurance, as a method of pooling risks, simply means that it will be easier for healthcare providers to charge “each patient” or “each insured person” just a few dollars more as in the example above. It is a national plan and no one can really opt out of it. Not every who buys car insurance ‘uses’ it in the form of a claim but everyone has to buy insurance as a pooled risk for motoring and therefore has to pay for all the risks inherent in motoring. Premium increases affect all motorists despite huge improvements in vehicle safety. Could the same thing happen in healthcare? Perhaps the authorities in all their wisdom could incentivize the population further to stay healthy by offering a ‘no claim bonus’ scheme similar to one for motoring rather then just talking about healthy living?

While government administered (public) healthcare schemes can afford to run in the red every now and then with an eye to recovering the losses later. Private firms cannot afford to do so. They are answerable to their shareholders whose only concern is profit. If government bodies insist on running in the black with a ‘healthy surplus’ at all times it mimics a business model and I would then have to ask if surpluses collected have any impact on civil servants bonus structures.

The Minister topped off his speech with a claim that competition is always good – I wonder if he had political competition in mind as well?

This articles carries three sources of information. TODAY’s article points out a loophole that insurers are taking to lower their cost; the website which statistically lists the cost of insurance on the economy (the employer and the employee) demonstrates ridiculously rising healthcare cost under a privately managed healthcare insurance scheme; the ST article tells us how Medishield is now in the black and how private insurers are actually better for the health of Singaporeans healthcare.

A Response to the National Day Rally Speech

While it is imperative that Singapore addresses the lack of manpower situation in the near and medium term with augmentation by foreign talent we should not overlook local talent as well. All this chatter of foreign talent should come with strings attached to those who are first Singaporean. Recognition and retention of local talent should and always be foremost in the minds and hearts of the government and the people of Singapore. There must exist a dual standard for labour in Singapore - Singaporeans must come first.

The dearth of birth rates are a result of our progress in one way or another. That cannot be denied. The thrust of the globalization argument in the local context is that it leaves Singaporeans with perceived little time for family since we are all in constant pursuit of the best, the brightest, the highest and other such world class achievements. As a people we need to take stock of what is of true importance to us in the spectrum of life and not just passing material requirements though they are important. It is my belief that the behaviour and policies of the government and the PAP, written and otherwise, have played a large part in the shaping of what Singapore is today. Credit given where it is due along with its attendent consequences.

One also wonders if the low birth rates is a result of the PAP's Stop-at-Two programme of the 1980s? You reap what you sow. The PAP is not always correct. It is human and makes mistakes. This underscores the need for a responsible Opposition in parliament to challenge and check the excesses of government policy before it is too late.

Relaxation is required in the out-of-control rat race that we are immersed in and it does not bode well that the ruling party, the PAP and its ever efficient and well oiled machinery are constantly pressing all the competitive buttons at all levels of society. The PAP has been wonderfully successful at imposing and inculcating all the 'right' values to make Singapore what it is today.

That the digital generation needs to be engaged via use of technology simply points to the fact that policy makers are out of touch. Engagement with the populace, no matter which generation, should remain a constant activity of a self-professed democratic government. Technology is the great leveller of the 21st century and it is telling that a policy needs to be crafted to utilise it for engagement. It simply demonstrates a strictly top down mode of governance where the court awaits the mandarin's orders.

Monday, August 21, 2006

Quotes - From Mindblogging Stuff

Taken off MINDBLOGGING STUFF - shocking when viewed in the right context. And yet 66.6% of Singaporeans .............. you decide.


Tuesday, May 23, 2006

Mindboggling quotes by politicians in Singapore

"Retrenchment is good for singapore. If there is no retrenchments, then I worry." - SM Goh

"The opposition's plans to 'give and give' will lead to Singaporeans having to pay higher taxes in order to foot the bill." - then DPM Lee at a rally in Tampines, in 2001. ............ "$2.6b 'Progress Package' for lower-income groups, elderly, NSmen" - now PM Lee, in 2006

"Contrary to public perception, the White Horse classification is not to ensure that sons of influential men gets preferential treatment. Instead it is to ensure that they do not get preferential treatment." - Cedric Foo

"I don't think that there should be a cap on the number of directorship that a person can hold." - PAP MP John Chen who holds 8 directorships.

"It's not for the money because some of the companies pay me as little as $10,000 a year." - PAP MP Wang Kai Yuen who holds 11 directorships.

"We are not considering a casino but an IR - an integrated resort. IRs are quite different." - George Yeo

"If you want to dance on a bar top, some of us will fall off the bar top. Some people will die as a result of liberalising bar top dancing... a young girl with a short skirt dancing on it may attract some insults from some other men, the boyfriend will start fighting and some people will die." - Vivian Balakrishnan, Minister for Community Development, Youth and Sports

"I would want to form an alternative policies group in Parliament, comprising 20 PAP MPs. These 20 PAP MPs will be free to vote in accordance with what they think of a particular policy. In other words, the whip for them will be lifted. This is not playing politics, this is something which I think is worthwhile doing." - SM Goh

"If you sing Jailhouse Rock with your electric guitar when others are playing Beethoven, you are out of order. The whip must be used on you." - SM Goh again, on a dramatic u-turn, rethink or backtrack, whatever you call it.

"The National Kidney Foundation (NKF) spends more than 80 per cent of its funds on its beneficiaries." - Lim Hng Khiang

"Save on one hairdo and use the money for breast screening." - another gem from Lim Hng Kiang

"We started off with (the name) and after looking at everything, the name that really tugged at the heartstrings was in front of us. The name itself is not new, but what has been used informally so far has endeared itself to all parties." - Mah Bow Tan on the $400,000 exercise to rename Marina Bay as Marina Bay.

"Having enjoyed football as a national sport for decades, we in Singapore have set ourselves the target of reaching the final rounds of World Cup in 2010." - Ho Peng Kee

"Only 5% are unemployed. We still have 95% who are employed." - Yeo Cheow Tong

"Singaporean workers have become more expensive than those in the USA and Australia." - Tony Tan

“People support CPF cuts because there are no protest outside parliament." - PM Lee

"No, it was not a U-turn, and neither was it a reversal of government policy. But you can call it a rethink." - Yeo Cheow Tong

"...I regret making the decision because, in the end, the baby continued to be in intensive care, and KKH now runs up a total bill of more than $300,000..." - Lim Hng Kiang, regretting the decision to save a baby's life because KKH ran up a $300,000 bill

"If we want to be a world-class city, if we want to be a nation that has got very good standards of public hygiene and cleanliness, the best place to start with is the public toilet." - Amy Khor, PAP MP

"Restoring the pay cuts of civil servants and ministers is reasonable as Singapore's economy has now regained momentum." - Ng Eng Hen ............. "I don't think my reading for the economy is strong enough for us to even consider asking for the restoration of the cut in CPF." - Lim Boon Heng

"If we ever introduce anything like quotas or incentives based on race, it will reinforce the perception that Malays and Indians have low skills and can only get jobs because of an incentive or quota." - Tharman Shanmugaretnam ...................."These schools (SAP schools) need to remain essentially Chinese to give the edge in interacting with China..." - self contradictory statement made by Tharman Shanmugaretnam again

"We must encourage those who earn less than $200 per month and cannot afford to nurture and educate many children never to have more than two... We will regret the time lost if we do not now take the first tentative steps towards correcting a trend which can leave our society with a large number of the physically, intellecually and culturally anaemic." - MM Lee in 1967 .............. "If you don't include your women graduates in your breeding pool and leave them on the shelf, you would end up a more stupid society...So what happens? There will be less bright people to support dumb people in the next generation. That's a problem." - MM Lee in 1983

"The PAP Government has always thrived on its ability to anticipate problems." - Wong Kan Seng .........."We are not able to be everywhere as a government to know everything in Singapore." - PM Lee