Minister for Health Khaw Boon Wan addressed the 'Healthcare in Asia' conference yesterday. We carry today an edited excerpt from his speech.
FROM Australia to the United States, health-care reform has been a political buzzword in the developed world.
While the context may differ, the key issues underpinning the call for reform are similar:
# Health-care cost continues to rise faster than general inflation;
# More doctors do not lead to price reduction;
# More health-care spending does not seem to lead to better health;
# But patients' expectation continues to rise; and
# Employers and taxpayers are losing the appetite to pick up the bill.
There was a time when medical advances brought dramatic improvements to health outcomes, and were also affordable. The 20th century saw life expectancy in developed countries increase by up to 30 years. The decline in mortality rates was particularly sharp among children as most infectious diseases were eliminated through cost-effective interventions such as immunisation. The 21st century continued to see medical advances, but many came with a high price tag with no clear victory over the diseases they tried to combat.
As a result, medical advances have become a major source of cost escalation, at times by promoting demand for services of dubious benefit. High-tech, high-cost medical interventions, which are also futile during end-of-life care, have presented particularly difficult ethical choices. In poor countries, the terminally ill will simply die. In developed countries, it is not so easy to let go.
A recent BusinessWeek article on Mr Terence Foley's seven-year battle with kidney cancer was illustrative of the ethical dilemma. His medical bills exceeded US$600,000 (S$840,000) of which almost two-thirds were for his final 24 months. Over the final four days before he was admitted to the hospice - two days in intensive care, two days in a cancer ward - his insurance was billed US$43,711 for doctors, medicine, monitors, X-rays and scans. His wife reflected that 'the only thing I can see that the money bought for certain was confirmation he was dying'.
There was a time when the developed world was able and was prepared to pick up ballooning health-care bills. Strong economic growth and young demographic profiles made high-tech, high-cost health care affordable. Rising health-care cost was accepted as a natural development, as a better-off society devoted proportionately more resources to health care.
However, changing demographics and slowing economic growth are putting severe stresses on the existing health-care model. US employers who have been shouldering the cost increases over the years are saying 'enough is enough', for it is hurting their competitiveness. Many are resorting to shifting the costs to employees - that is, the patients.
In continental Europe, the Germans who invented the social health insurance scheme are demanding reforms of the system. A recent article in the German magazine, Focus, noted that under the proposed reform, the employers' share in health insurance contributions would be capped, leaving the insured persons to cover all future increases in costs.
While the health-care cost conundrum seems intractable, the science of it is now fairly well understood:
# The fee-for-service remuneration system perversely incentivises over-servicing by providers;
# The provision of free health care at point of consumption wrongly incentivises over-consumption by patients;
# Over sub-specialisation has fragmented health-care delivery and, if poorly coordinated, will not lead to better care but only higher cost;
# Health outcomes are not easy to measure, making comparison of providers' performance difficult;
# The resultant lack of transparency causes market failure;
# The widespread use of defensive medicine in some countries adds significantly to health-care cost.
While the science is known, the art of addressing it is not easy. In particular, politics has caused major distortions.
The Singapore experience
WE HAVE a functioning health-care system, providing universal coverage to all our citizens, of high clinical standard. For a population of five million, our total national health-care spending was below US$8 billion. This is less than 4 per cent of our gross domestic product (GDP). My American and European friends find it amazing.
But we are not immune to cost escalation. In the past decade, annual consumer price index increases averaged 1.5 per cent, while annual health inflation was 2.9 per cent. So our national health expenditure would not stay at 4 per cent of GDP. With our population ageing, it will rise further. But if we could sustain it at a single-digit percentage of GDP, it would be a remarkable achievement.
The key to a sustainable health-care system is to depoliticise health care, minimise market distortions and allow health care to function as normally as other economic activities. We do so by trying to stick to the basics.
# First, health outcome is a personal matter. Doctors and nurses can only point the way forward; the patient must play his part by dropping bad habits, adopting a healthy lifestyle and complying with his doctor's prescriptions. This is especially so in the case of chronic illnesses which account for the bulk of health problems.
Second, there is no free health care. Every health-care service is eventually paid for by the patient, either through taxes, or reduced wages. Ultimately, patients and their families pay for the bills. Our job is to make sure that the cost of delivery is as low as possible.
# Third, specialisation and sub-specialisation have brought about medical advances, benefiting many acute patients. But there is also such a thing as over-specialisation. For the elderly with several chronic illnesses, treatment by multiple sub-specialists is often not the best approach. The result often is fragmented care without necessarily better outcomes;
# Fourth, despite medical advances, we are mortal. Everyone will have to go one day and we have to accept the limits to medical science.
When designing our health-care system, we try to allow the market to function. So while we inherited the British taxation-based system, we have carefully grafted on to it the US insurance-based system, creating a hybrid that tries to combine the best of both worlds.
We achieve universal coverage for all our citizens through multiple levels: heavy government subsidy, compulsory health savings account and a low-cost national insurance scheme with deductibles and co-payment. The result is a high standard of health care, accessible to all citizens, and among the most cost-effective in the world.
Many economists have concluded that market is doomed to fail in health care. There is empirical evidence of that. But I believe that market fails in health care because we allow it to fail.
If we do not promote competition among providers, how can the market flourish? If we do not publish the performance of providers, how do we expect the consumers to shop around? If we do not measure health outcomes, how do we compare performance? If we pick up the entire bill, why should consumers actively seek out value for money? If consumers do not bother with value for money, why should providers try to save consumers money?
The Singapore health-care market is far from perfect. But there have been market successes in some areas of health care, to inspire us to continue down this journey. For example, the general practitioner, the obstetrics and the Lasik markets in Singapore are highly competitive, with multiple players, good market information and active consumers shopping around. The conditions are there to support a competitive market.
The challenge is to extend market competition to the other parts of the health-care sector. We publish the top 70 most common conditions for admission to hospital. The bill sizes incurred in all the hospitals for these common conditions are analysed and updated regularly. We are adding other important information, such as surgical complication rates and hospital-acquired infection rates. Armed with such information and assisted by their family GPs, consumers will be able to make better choices.
US President Barack Obama's political victory in getting his health-care reform Bill through Congress gives hope that political hot potatoes are not untouchable in Western democracies. His reform is clearly not deep enough and may not even do much to reverse the cost escalation. But it is an important step forward. Changing an established health-care system is never easy and we should not expect overnight miracles.
City planners have recognised the importance of creating a living environment that promotes good health. In Singapore, we have put a lot of effort in this area. Our parks, park connectors, water reservoirs and the many neighbourhood parks make it very easy for Singaporeans to exercise. Even the low crime environment helps as our people feel safe to go out even in the night for walks.
I am particularly optimistic about medical advances. While they are a cause of the current cost conundrum, eventually, they have to be a part of the solution. Advances in genomics, stem-cell research and biomedical science may eventually provide cures to chronic diseases like diabetes and corrections to genetic disorders. Even advances in behavioural science may help us formulate more effective public health interventions to get patients to adopt lifestyle changes with greater ease.
It is rare to live up to 70, an old Chinese saying declared. We have now broken this glass ceiling, and it is no longer rare to live to 100. In 1963, the Japanese government started giving each Japanese a silver cup when he or she crossed 100. That year, 153 cups were given away. Last year, with almost 20,000 people turning 100, they had to reduce the cup size by 15 per cent to save on silver.
This is a triumph for mankind. It is our duty to make sure the health-care system supporting this triumph is fully equipped to give the seniors peace of mind as they age with dignity, walking the final lap. To do so, we must be prepared to break the mould, innovate, and for politicians to tell the people the plain truth.
Serious economists and other academics can help the politicians in their job by backing them up with robust analysis, unbiased by political or ideological inclinations.