The 1 ‘S’Care scheme

— The Black Cactus
The Malaysian Insider
Feb 08, 2012

FEB 8 — In the last few weeks, there has been immense debate on the proposed national health scheme dubbed 1 Care in both the internet and the mainstream media. A collective conclusion shared by both the public and the very professionals alike (who play a major role in the system) is the uncanny ability to fully comprehend the confusing entity which remains an uncertainty till today.

This commentary was written to achieve the following objectives

1. To help the public understand why this system was proposed and what led to the genesis of this scheme;

2. If possible, to pressure the government to be more transparent in providing information on the 1 Care scheme to allay fears among the general public; and

3. To help the layperson understand the unaddressed policy issues but highly crucial perspectives surrounding the 1 Care scheme

First, it would be wise to have a quick update on the prevailing Malaysian health care system so that it would help shine some light as to why there is a sudden accelerated interest to bring the 1 Care scheme into an imminent reality.

The Malaysian health care scenario

The Malaysian health care system has often been hailed globally for its ability to endorse a sustainable health policy that reflects an outstanding and equitable health status at a relatively low economic burden.

By allocating just three per cent of its GDP to health care (majority of industrialised countries invest rough about six per cent, with the exception of the United States, which devotes 16 per cent), data compiled by World Health Organization shows that the performance of the Malaysian health system is, in fact, highly efficient.

This is evidenced by the “Health Adjusted Life Expectancy (HALE)” at birth indicator, which categorises Malaysia as equal to most industrialised countries, at 63 years.

However, the complexity of the system has also brought in much uncertainty that has not only slowed down service delivery, but has been closely related to the gradual increase in economic burden.

In an effort to make health care accessible (and most importantly equal) to all fabrics of the society, the concept of Universal Health Care was formulated and adopted by most countries around the world including Malaysia.

The system attempts to finance the health benefits for all by a balance of tax revenues and medical insurance (mostly recommended by private health caregiver in Malaysia currently). This is imposed on employed, working class population. In Malaysia, much of the public medical fees are subsidised to a great extent from the much gained tax revenues.

It is important to note that the Malaysian Ministry Of Health only manages to recover three per cent of its total operating cost through fees collected at health care premises. The amount is strikingly lower than most payments made in most European health system (which employs the co-payment system where funds are partly subsidized by the government and the insurance premium paid by the patient). The average consultation at a token rate of RM1 at any primary care centre barely covers 1 per cent of the economic cost per visit.

The resulting non sustainable system calls for fiscal limitations and will eventually cause much financial loss due to:

1. The spur of an unrealistic and unachievable demand for public health care;

2. The operational costs to cover universal health care will surpass the government’s current fiscal capacity.

By understanding this, it comes as no surprise that the proposed 1 Care scheme is a platform designed to re-coup the wastages from a bleeding pre-existing ( but noble and functional if properly handled) health care system that is sub-optimally managed.

Like any other subsidised policies, the current health care system is resilient to any structural reform partly due to the lack of political will (where it is vital to appease voters by holding on to the unsustainable RM1 token fee and RM15-20 token fee paid at primary and specialist health clinics respectively) and the society itself whom have become so accustomed to enjoying cheap but scarce medical resources that has been perpetually vulnerable to potential abuse all these years.

The single most important question: Where is the information?

Unlike most countries that have proposed and implemented such a scheme, information on the mechanics and the policies enshrined in the health care scheme is widely available for public scrutiny. One could easily access any updates and knowledge on the health care scheme through the Ministry Of Health website of the respective countries.

The same cannot be said for the 1 Care system. The public, at large, have very patchy ideas on the health scheme without corroborative evidence from the Ministry Of Health. It would have been prudent, with all the disparate views available from all avenues of the mass media, to allay all concerns by allowing the public to peer into the workings of the proposed scheme or at least highlight the salient points that matters most to the average Malaysian. Efforts to make it an intellectual discourse by taking in question from the public would have been highly commendable.

Strangely, the documents or information regarding its modus operandi has remained elusive and is not available on the Ministry Of Health website (which is mandatory in most civil nations). The reason as to why this has been enshrouded in secrecy remains anyone’s best guess.

However, one could only speculate that perhaps the precise knowledge of the system is within the confines of a privileged few elites who are still, themselves, grappling reach a consensus on how to implement a scheme that is totally not viable given the current economic climate.

Hypothesized 1 Care scheme model

Care scheme as the utility towards managed care

With the escalating medical expenditure of the country, a cost containment approach has to be put in place to eradicate or replace an ailing healthcare system that burdens the economy. One such option would be the 1 Care scheme. Given the very sketchy information on how this would be implemented, one could only draw inferences from other similar healthcare systems.

Bearing that in mind, it would suffice to say that the scheme would promote the technique of “managed care” (by managed care organisations or MCOs) where the autonomy of patients is sacrificed and replaced by a predetermined set of rules.

These rules govern patient’s rights to which doctor, the type of care and the kind of medications he/she receives. Many of us are aware of this has been given much focus in the previous attempts to describe the proposed health system in the media.

This has, in the past, led to reprisals from the public dissatisfaction due to denial of care stemming from government legislation to tight labour rules that restricts the access one has to healthcare options. Employers would then offer private health care plans (which are private insurance plans) to fill in this vacuum so that employees could afford all available treatments. Ultimately (and to the contrary of cost containment), this incident would give rise to the ballooning of medical expenditure in the country.

Free treatment for all, really?

Unless the full blueprint is made public, one could only hypothesize the magnitude or the process of financing involved in the 1 Care scheme, which is the crux of understanding how the whole system functions.

The population might be divided up to two broad classes namely:

1. The general public;

2. Concessional patients (the ageing public, citizens below the poverty line, disabled/handicapped).

It will be compulsory for all working citizens of the general public, who have wages within the taxable bracket, to pay 10 per cent of their earnings as contribution necessary for the funding of the scheme.

Remember that this 10 per cent tax does not mean that one is entitled to the type of care, it is just a contribution that is used to pay the wages of the physicians and other miscellaneous expenses (purchase of new equipments or subsidising the concessional patients etc.). This will be collected as federal taxes.

Secondly, to be amenable to treatments within the system, the general public will have to take up an insurance policy (social health insurance). Treatments within this system will be closely regulated by MCOs which could mean that a patient might not be covered for a wide range of interventions (eg. optical surgeries, prosthesis, aesthetics, etc.).

One burning question: Is the scheme really free so that it provides universal healthcare in a similar vein to the current system? Will drugs be free now that payments have been made by contributing to taxes and insurance schemes? Read on carefully.

So much focus has been given to the taxable amount that we need to contribute but the society has become oblivious about other aspects of the mandatory payments that one has to make in order to get the full package of services available. In summary, this would be the likely formula for the 1 Care scheme:

Social health insurance (SHI) + General taxation + minimal Co-payments for a defined Benefits Package

The fundamentals of SHIs and general taxation have been explained in detail earlier. What are copayments and benefit packages that are also an inherent part of the formula though?

Of copayments, benefit packages and additional private health insurances

Copayments are payments that have to be made by patients when their treatment has exceeded the threshold tolerated by the health scheme. Thus, a patient has to fork out a certain amount of money once the treatment requires more financial assistance due to the nature of their illness.

Benefit packages seem define the type of insurance from which special group within the population will be stratified according to deserve exemption from payments or will have their treatments partially subsidised.

Extrapolating from the statement above, even the casual layperson would demand an explanation by posing several questions below:

1. It was said that free treatment will be given to all. But what are these copayments, then?

2. Will there be copayments for drugs? Is there a minimum pricing policy?

3. Which class of society will be eligible to total subsidy and exempted from all payments?

4. How will the general public gain access to other treatments that the SHI does not cover?

To minimise copayments, steps will be taken to provide cheap but “equally” good quality drugs or services determined by the MCOs. This is called the minimum pricing policy, a key policy issue that has been very much in the shadows since the planning of 1 Care policy.

MCOs will only allow more patient autonomy if they are willing to endure an additional cost by purchasing an additional private insurance. The results would be:

1. Patients will now be provided with the added benefits which are not covered by the SHI policy;

2. Patients will be able to then choose doctors and types of procedures (dental/optical/physiotherapy that was previously not available in the SHI scheme).

Rise in public health care burden secondary to rise in market demand

The trend of an increase in purchase of additional private health insurance will influence the increase in demand of services as a whole. With the access to an affordable yearly insurance premium, the growing population will have a lowered out-of-the pocket price to pay when seeking medical treatment. This will directly lead to the increase in market demand for health care services for the medical needy and indirectly cause the sudden surge of prices for medical services.

With the increase in slow increase in inflation rates in Malaysia (upward trend towards the level of 3.3 per cent in December 2011), larger spectrum of the working population would be pushed into the higher marginal tax brackets. This would often leave citizens with lesser disposal income for their utilization.

In line with this scenario, many tax payers would prefer out-of pocket medical expenses be paid before-tax ringgit than after-tax ringgit (which is subject to tax imposition) by purchasing health insurance. Thus, this will inexorably increase market demand and simultaneously increase prices of medical services, especially if it is poorly regulated and unprepared.

Reeling from the aftermath

Repercussions

Faced with rising medical expenditure, the federal government will be dogged by limited and painful options.

1. Raise the 1 Care payroll tax and incomes taxes on the non age to sustain the failing 1 Care scheme;

2. Necessitate higher premiums for 1 Care among the aged and increase their deductibles and copayments;

3. Reduce payments to hospitals and physicians

The full brunt of the burden will be directed towards the public if the system goes awry. Physicians will opt out of the 1 Care scheme as their fees will be slashed to lower levels. Patients will then need to pay higher out of the pocket settlements to their doctors who are no longer under the 1 Care scheme.

The aged and the non-working class, who have little or minimum wage, will have to face a less forgiving reality that their benefits to subsidy will be greatly reduced.

The working population, with already rapidly diminishing disposal income will find it extremely difficult to come to terms with a scheme that requires them to be taxed higher and receive very little benefit from such health policy.

Recommendations

It is time that the government stepped up to the plate and educates the nation on their intentions behind the 1 Care Scheme. Let it not be a half baked policy reminiscent of the recent SBPA debacle (that still remains unresolved till this date) as the stakes are much greater and bigger calamity looms if the scheme is not reviewed with due diligence.

It would be pertinent, for the time being (while 1 Care scheme is being mulled upon), that the following recommendations be considered:

1. Assess the agent status of the majority of practitioners (whether they are they are perfect or imperfect agents for the proposed health care system)?

2. Take all steps possible, and in a transparent manner, to convince the nation regarding the relevance of the 1 Care Scheme.

Meanwhile and until it is acceptable to the public, minor tweaks or reforms could be made to the pre-existing healthcare system to make its function far superior than at present:

1. The symbiotic relationship between health care provider and patients is strongly encouraged in the hopes that patients themselves could be an active participant (and agents of cost reduction) in the system;

2. The reduction in over-reliance of services provided by the privatization of healthcare, thus curbing progressive increase in market prices by decreasing the percentage of the population who seek inexpensive medical treatment (due to insurance premiums and lower out-of-pocket payments), which could be prove to be economic vicious cycle;

3. Corporatisation of health care services (rather than a full change in the health care system) permits better operations management and greater accountability of a highly complex organization such as the primary health care system;

4. Careful and gradual integration of new information technology advancements to the pre existing service delivery system (e-mail consultation for example) which could ultimately reduce cost and lead times.