Friday, February 17, 2012

All citizens share cost of falling ill

IF YOU fall ill, your fellow citizens will help you.

That is the philosophy behind social health insurance, as practised in countries such as France and Germany.
Such schemes are usually compulsory. They work by risk-pooling, which is where individual risks are borne by a group of people - in this case, citizens.
Everyone contributes to a central health insurance fund, which will pay out to specific individuals when needed.
Without risk-pooling, an individual bears all the financial risks of illness. With it, all citizens share the potential costs.
How much you contribute depends on how much you earn, and how much you benefit depends on whether you fall ill.
In effect, rich citizens subsidise poor ones, and the healthy subsidise the ill.
Why have it?
SINGAPORE has two public health insurance schemes: MediShield, for catastrophic illness, and ElderShield, for severe disability.
Both allow citizens to opt out. The pool of those who share the risks thus shrinks - and often in the least desirable way.
'Those who opt out tend to be the young or the high-income,' notes Dr Phua Kai Hong of the National University of Singapore's Lee Kuan Yew School of Public Policy.
'So you get the old, poor people reinsuring themselves.'
Opt-out rates for ElderShield are especially high, he adds, citing its low payout of $400 as a reason for its unpopularity.
Singapore's ageing population makes the potential inadequacy of public health insurance especially worrying.
The demand for long-term care, which is not covered by MediShield, will only increase as Singapore ages.
'Even middle-class families could face medical financial difficulties, especially when confronted with higher frequency chronic and long-term care problems that are not easily insurable under MediShield,' says Mr Yeoh Lam Keong, vice-president of the Economic Society of Singapore.
What are the worries?
SOCIAL health insurance ensures that the weakest members of society will not have to face illness alone.
But it rests on a crucial assumption: that citizens embrace such solidarity.
Singaporeans might not accept the idea that their earnings are paying for someone else's health care, acknowledges Dr Phua.
The cost to citizens is not just a cause for complaint. It could also become a real financial burden.
An ageing population does not only increase health-care demands, it also means that there are fewer workers to support each elderly person.
Citizen contributions to social health insurance will thus have to increase over time.