HEAD O - MINISTRY OF HEALTH

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_

Head O - Ministry of Health: _

The Chairman: Head O - Ministry of Health. Mdm Halimah. Eight minutes.

Healthcare Policy

Mdm Halimah Yacob: Sir, I beg to move,

That the total sum to be allocated for Head O of the Estimates be reduced by $100.

Sir, the Ministry of Health has recently introduced many useful changes to our healthcare system. The recent MediShield review is one such example. However, revamping MediShield is but one facet of controlling healthcare costs in Singapore.

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Singaporeans, particularly the elderly, continue to be concerned over whether healthcare will remain affordable. There is also a concern whether the Government is spending enough on healthcare. According to the WHO's 2004 report, Singapore's per capita Government expenditure on health at average exchange rate has been falling gradually from US$365 in 1997 to US$274 in 2001. In general, Government expenditure on health, as a percentage of total expenditure on health, also fell gradually from 39% in 1997 to 33.5% in 2001.

The other concern, Sir, is that only the services covered under the Basic Medical Package will attract subsidies, and this is determined by the Ministry of Health. Even medicines are subject to restrictions, as not all medicines are covered under the Basic Medical Package. So, if the criteria of what is covered under the Basic Medical Package are stringently prescribed, then less healthcare service will be subsidised. And the concern is not only with in-patient cost but also with outpatient treatment since, although consultation fees at polyclinics are low, the medicines prescribed can be expensive because they are non-standard and, therefore, not subsidised.

Sir, more should be done to contain healthcare costs and, as the elderly need healthcare the most and financially they are the weakest, subsidies will continue to play a significant role in our healthcare financing. I hope that the Minister for Health will address these concerns and ensure that healthcare remains affordable.

[Mr Deputy Speaker (Mr S Iswaran) in the Chair]

4.48 pm

Sir, let me now come to hospital funding. The MOH has announced its decision to move funding based on piece

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rate reimbursement to block grants for the two clusters. The intention is that block grants will encourage hospitals to cut waste and look closer at whether a patient needs to be warded as an outpatient or sent to a polyclinic or a family doctor. Singaporeans are concerned that this may have a reverse effect. Hospitals may under-treat patients or allow queues unnecessarily long or push them to the outpatient clinics when they actually need hospitalisation. This is because the fewer patients the hospital treats, the more funds they get to keep, and this will affect the quality of healthcare. MOH has said that, to prevent this from happening, it will put in place an auditing system. Can the Ministry give details of this auditing system? Will it be published before the new funding system starts? How can Singaporeans access this auditing system, and what steps would be taken to educate them on it? Who will be monitoring the system? I hope not the hospitals, Sir.

My third point, Sir, is on the delivery of healthcare services. One way in which the MOH hopes to contain healthcare costs is through right siting of healthcare services, so as not to overload the hospitals providing tertiary care and allow primary care doctors to do more. While the objective is good, the concern is that the polyclinics and the private GPs may not be adequately prepared for this change. Polyclinics might not have the full range of specialist services that are provided in the hospitals or the outpatient specialist clinics, and not all GPs have specialist or sub-specialist knowledge and they do not have the economies of scale of the polyclinics and therefore cannot match the latter's relatively cheaper medication or have paramedical facilities like X-rays and services like podiatry, dietetic advice and the rest.

So, the concern, Sir, is that we should not put the cart before the horse. Also,

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now that the MOH wants better right siting of healthcare services, there are some who feel that a more efficient structure compared to the existing one, where there are two hospital clusters with their own network of polyclinics, is useful. One suggestion is to have all the polyclinics under one integrated system. This makes sense, as it will ensure a better vertical and horizontal integration in the provision of healthcare services.

Sir, I would like to ask the Minister for Health to address these concerns about right siting. This is necessary in order to generate greater public confidence, as right now the confidence level is not so high that polyclinics and the GPs can replace the services of the hospitals. Also, will the Ministry consider merging all the polyclinics under one structure for a more efficient delivery of services and in line with the Ministry of Health's policy on right siting.

Sir, my fourth point is on preventive medicine. There are two aspects to this. The first is on the management of infectious diseases, and the second concerns the management of chronic diseases. Worldwide incidence of chronic diseases, including HIV/AIDS, has increased. A most important strategy in dealing with infectious diseases is prevention. This means that more resources will have to be invested in preventive measures, including public education. However, the number of experts dealing with infectious diseases is not sufficient to deal with the growing problem. According to one report, there are only 11 experts at the Communicable Disease Centre dealing with all the different kinds of diseases. Also, the amount allocated to the Health Promotion Board has gone down for FY2005 when more should be put in to educate the public.

Sir, let me now turn to the issue of management of chronic diseases where

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we need a holistic approach. This is where integration between the tertiary, secondary and primary care providers, as well as the VWOs, is important and is seen as lacking today. For example, if a person who suffers from stroke is discharged from the hospital and subsequently visits the polyclinic or his own GP, it is not clear whether there is sufficient information or follow-up on his case so that there is seamless service provided and the quality of care is not compromised. A lot more can also be done to educate sufferers of such chronic diseases and their families on how to better manage the disease on their own. This is where the Health Promotion Board can do a lot more, and cutting its budget will not help.

I would like to ask the Ministry to address these concerns so as to strengthen the practice of preventive medicine in Singapore. Will the Ministry also put in place a more integrated holistic system for the management of chronic diseases by adopting a patient-centric perspective? Will the Ministry allocate more resources to public education, a very important strategy in dealing with prevention?

On HIV, Sir, the numbers are increasing. Between 1985 and 2004, a total of 2,232 Singaporeans were diagnosed as being infected with HIV. As at June last year, 62% of women with HIV in Singapore were married and widely believed to have caught the disease from their husbands. This points to the need to have better protection for married women. Will the MOH consider legislation to make it compulsory for spouses of HIV patients to be informed? While we want to protect the confidentiality of AIDS patients, we need to balance this against the interests of spouses who may unnecessarily expose themselves to risks if their husbands refuse to tell them about

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this condition. Will more be done to promote HIV/AIDS education at the workplace?

One final point, Sir, on means testing. I would like to urge the Ministry, if means testing is to be introduced, please do it in a sensitive and humane manner and consider a sliding scale instead of just one income limit which cuts across one income level. Means testing, if not properly done, Sir, can result in high administrative cost and cause a lot of angst.

Dr Michael Lim Chun Leng (Pasir Ris-Punggol): Sir, I wish to declare my interest as a medical practitioner.

When I reviewed the eight key priorities of the Ministry of Health, it was difficult to find any major flaw with the policies stated. After trying really hard, I have managed a few points.

(1) Managing patients holistically. It is not uncommon today for patients to be managed by multiple specialists. Today's medicine is very much like "kueh lapis" medicine, where the patient's body is segmented into different segments and managed by different specialists. This can only increase healthcare cost. Part of the problem is the way the public sector has organised itself into super-specialities. How can the Ministry re-organise its services to reduce this "kueh lapis" medicine?

(2) Manpower planning. One of the things I never understood was why the Ministry had night clinics in our polyclinics. It is certainly not a meaningful deployment of valuable manpower resources. It just does not make sense to compete with the general practitioners in the neighbourhoods. Is the average number of sick patients seen nightly in a town so overwhelming for the GPs that it

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justifies the additional deployment of medical manpower to meet the demand? Feedback from the GPs does not appear to be so. It is time to review it.

(3) Affordable healthcare. Better healthcare means a longer life. Advances in medical therapy will make it difficult for people to die of two major chronic illnesses of old age, namely, heart disease and cancer.

If you think that blocked heart arteries will kill a person easily, think again. Drug eluting or coated stents keep your heart arteries open for longer periods of time at an average cost of more than $10,000 to more than $20,000 per procedure. If you think that doctors are going to let your heart stop beating, you are wrong again. Some doctors are suggesting that if there is suggestion that your heart rhythm is abnormal and there is risk of a life-threatening abnormal heart rhythm occurring, you should carry a $40,000 device under your skin that will give your heart an electrical shock whenever needed. Armed with an entire range of drugs and devices, doctors are not going to allow your heart to stop working.

Cancer today is no more the dreaded word it used to be. New chemotherapy agents will set you back a few thousand dollars a week or a month. The latest radiation techniques and an entire range of scanning machines ensure that it adds several thousands to your health bill. Your cancer specialist is not going to give up easily. He has access to new therapies, such as bone marrow transplant and stem cell therapies that will cost tens of thousands of dollars.

For Singaporeans, the good news is that it is going to be difficult to

die. The bad news is that it is going to be even more difficult to live. The disease may not kill you, but the healthcare bill may.

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5.00 pm

We will need to address the rising cost of managing chronic illnesses. Clinical practice guidelines ask doctors to follow what is optimal in treatment without consideration for the real cost of healthcare. The biggest dilemma for our public hospitals is to decide where to draw the line between optimal treatment and affordable healthcare.

To fix healthcare cost, the Ministry of Health will need to go beyond just raising the premiums for insurance schemes. It will need not adjust clinical practice guidelines for doctors to follow, it will also need affordable healthcare guidelines.

Clinical practice guidelines help doctors to manage patients in the most optimal way. They do not help doctors manage patients in a most cost-effective manner. Ultimately, most Singaporeans want to have the cake and eat it. Let us not raise the expectations too high. Let us keep healthcare bills in the public sector affordable.

The Chairman: Mdm Halimah, could you take your two cuts together?

Medisave

Mdm Halimah Yacob: Sir, currently, once Medisave has reached a certain limit, any amount exceeding that will be transferred to the Ordinary Account. With the increase in healthcare cost and the increase in the premiums and the deductibles, it is better for people to save as much as possible in their Medisave accounts. Also, as MediShield covers only the bigger hospital bills, the small and medium-sized bills will have to be paid through Medisave or by cash. We will therefore need a lot more money in our Medisave account to pay for these bills.

I would like to ask MOH whether it would review the existing policy. Instead

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of transferring the amount in excess of the limit to the Ordinary Account, consider retaining the full amount of the monthly Medisave contribution in the Medisave account.

Secondly, Sir, I would like to ask MOH to review the outpatient treatments for which Medisave can be used. Currently, most employers pay for the medical benefits of their employees, but this is not extended to the spouse and children. Hence, the out-of-pocket payments can be high and if they do not have enough savings, it can cause hardship. In particular, I would like to ask that MOH consider including the treatment of chronic diseases as one of the illnesses for which Medisave can be used.

If there is a worry that the Medisave fund will be depleted, MOH can consider imposing a maximum withdrawal limit for this purpose. This is important because chronic diseases accounted for 60% of deaths in 2003 in Singapore. It is critical, Sir, that those suffering from chronic illnesses attend regular check-ups and undergo treatments. If giving access to Medisave will achieve this purpose, then we would, in fact, be saving costs and saving lives too.

MediShield

Firstly, Sir, I note that there is nothing in the current MediShield scheme to incentivise people to stay healthy. If we believe that everyone must take personal responsibility for his own health, then we should incentivise people to stay healthy. I would therefore like to suggest that the Ministry of Health consider giving discounts on the MediShield premiums for those who stay healthy and have not made any claims from MediShield for a certain period. This is very much like the no-claim bonuses of insurance companies, like insurance for cars and other kinds of insurance. Although human bodies are not like cars, for those who attempt to

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make it as good as cars and keep them in good shape, I think at least some incentive is due to them in terms of discounts on their premiums.

Secondly, Sir, Basic MediShield is pegged to "B2" and "C" class. If means testing is introduced and there are no subsidies for the middle-income, there will be an impact on them as it may result in under-insurance for them. If they were to purchase a rider at that point of time when the means testing comes in, they will be subject to underwriting and this may cause hardship to them. I would therefore like to ask MOH to look into the concerns of this group of Singaporeans.

Thirdly, Sir, there is also a lot of misunderstanding and ignorance about MediShield and how it works. Many people remember about the increase in the premiums and the deductibles but they forget about the increase in the coverage and how this will help to reduce their burden on big hospital bills. Many more do not understand the role of MediShield, which is to cover catastrophic illnesses. They think that MediShield will cover all hospital bills and they get quite shocked when they find that when they get hospitalised, MediShield does not cover them.

I think there is a need to embark on a public education programme to educate people on what is covered, how to make their claims and how it benefits them. This is also to avoid confusion as to how the scheme works. I urge the Ministry to look into this.

Mr Andy Gan Lai Chiang: Sir, presently, only day surgery procedures, for example, surgical removal of wisdom teeth can be covered by Medisave. Other non-surgical outpatient dental treatment procedures are currently not covered by the scheme.

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Children and adults may require specialist treatment from orthodontists to correct their mouth alignment of the teeth and jaws. The common treatments are to correct their growth of irregular teeth, jut-out teeth, open bite, teeth bite, cross bite and space between the teeth. These procedures are not merely cosmetic in nature. A straight set of teeth that support the lips well is important to create a beautiful smile which, in turn, boosts a child's consciousness and enhances self-esteem.

Many of the treatments are not only surgical in nature but will require the placement of braces or dental equipment, for example, dentures. These treatments may also be long-term in nature. MediShield should not only be applied to other forms of illnesses that may lead to hospitalisation. Dental health is as important to a person's total well-being as having to operate and mend a broken arm or leg.

Must a bad tooth lead to a situation when medical treatment is required to nurse a patient back to health at hospital before he can be considered a medical illness? Medical insurance should be comprehensive and not just be selective in treatment. While the Health Ministry is reviewing the deductible level of claims under MediShield, a relook at the extent of coverage to include dental treatment will be timely.

More are conscious about their dental health today as they are to other organs of their body. The earlier we acknowledge the trend, the easier it will be for people to meet their medical expenses. Given that these treatments may be costly, MOH can consider allowing patients to meet these expenses through Medisave and MediShield.

Dr Chong Weng Chiew (Tanjong Pagar): Sir, this year, the thorough review of our MediShield scheme is welcomed by many.

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Those who study it in detail will understand the benefits. However, some Singaporeans may not comprehend the changes and the corresponding benefits fully. Words like deductibles, claim limits, are Greek to many. However, they seem to be very clear about having to pay higher premiums and thus many are unhappy with that.

Therefore, I hope the Ministry will conduct a very comprehensive public education exercise to help our people understand the changes fully. We can have road shows in all four official languages and even in dialects to ensure that everyone, the young, and particularly the middle-aged and the old, have a good understanding of the MediShield coverage. Hopefully, with a better understanding, fewer will opt out and remain under the protection of the MediShield. This will go a very long way for Singaporeans to contain their medical cost.

Secondly, I would also like to suggest that MOH work very closely with CDCs to identify those who will opt out of the scheme and to check with them if they fully understand the consequences of which they are having genuine difficulties in paying the premium. For those with obvious genuine problems with paying the premium, maybe the CDCs could look into assisting such poor families.

Mr Low Thia Khiang (Hougang): Mr Chairman, Sir, the Workers' Party has long believed that Medisave is inadequate to cater to the healthcare needs of Singaporeans. We believe a national health insurance scheme, through a wider risk-pooling, is the key to meet the healthcare needs of a nation. I therefore welcome in principle the reform of MediShield by enlarging the risk pool and providing better coverage for catastrosphic illness.

Currently, the MediShield premium has been based on age. As it stands, the

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principle behind the pricing of this premium seems to be that the older you get, the more sick you get and the more you pay. Whilst this might be correct on a strictly commercial basis, MediShield is not a commercial entity. It is both basic and national.

I understand that MediShield currently has a membership base of 1.3 million for Basic MediShield and a total pay-out of $65.3 million for 2003. I would like to ask the Minister what will be the effect on premiums for charging a flat rate across all age groups. I would also request the Minister, in the interest of transparency, to provide a detailed breakdown of the premiums collected and the pay-outs for each age group for the current Basic MediShield and the Enhanced MediShield for the last five years. This will help the public understand better the rationale behind the current MediShield redesign. In the same spirit, I would like the Minister to provide the projected loss, pay-out ratio for the new redesigned Basic MediShield in view of its more comprehensive risk-pool.

The Minister has proposed allowing private insurers the right to manage the Enhanced MediShield scheme. For members currently on the enhanced scheme, would they or their insurers be allowed access to either the surpluses or the investment income generated from the surpluses created by their past contribution to the MediShield surplus?

Sir, Basic MediShield covers "B2" and "C" class wards. I understand that currently, there are some treatments not available in "C" class wards. Would the Minister confirm this? If it is indeed the case, would the Minister explain the rationale for such a distinction? Would there be treatments also not available to "B2" class wards as well?

With regard to the comprehensiveness of the coverage, I would like to know who

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determines which and what manner of treatments can or should be allowed under MediShield coverage. I would also like to ask the Minister whether the new lifetime claim limit of $200,000 is sufficient for large medical bills, and if so, for how long, in view of the escalating healthcare cost. On the lifetime claim limit, there is a yearly claim limit of $50,000. I wonder if an annual claim limit is justifiable if some serious illnesses do not require you to be sick in yearly intervals.

Finally, Sir, with the recalculation of deductibles by 2010, when deductibles for "B2" class are increased to around $2,300 as projected, would we have enough Medisave savings by then to cope with the increases?

Mr Steve Chia Kiah Hong: Mr Chairman, Sir, like some speakers before me, I feel that the recent announcement in the increases in the premiums and deductibles for MediShield are giving CPF MediShield members a "worse off" package deal than before.

With the increase in deductibles, most normal patients, except the most severe ones, are having to incur a larger medical expenses bill due to the higher deductibles that they have to pay. This is most disturbing to many people.

The feedback that I have been receiving is that CPF members are comfortable or they may be willing to pay a slightly higher premium, but not the corresponding increase in the deductibles payable by cash. I hope the Ministry can re-look at its figures and work out a more satisfactory package that does not ask patients to fork out more cash to cover these higher deductibles despite higher premiums. There must be ways to channel and keep medical cost down without resorting to increases in insurance

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premiums and co-payment deductibles at the same time.

Assoc. Prof. Ong Soh Khim: Many Members have touched on deductibles and premiums. So I would only focus on MediShield Plus outsourcing.

In the MediShield reform, the MediShield Plus scheme will be sold through an open competitive tender to a private insurer which offers the lowest premiums. The MediShield Plus plan actually gives greater coverage than the MediShield Basic plan, although at a higher cost. There are currently 350,000 policy holders under the Plus plan. And the Ministry has stated that the company that wins the bid will have to guarantee the premium rates will not be raised for at least three years. This is to prevent a company winning the tender with a low premium bid and then immediately hiking rates once it has secured it.

Sir, I wish to ask the Minister the following questions. First, the existing MediShield arrangement allows flexibility among the Plus plan and the Basic plan. So a person who is doing well might opt for the Plus plan but when affected by economic restructuring, this person can opt to downgrade to a Basic plan and with the flexibility to move back when his financial situation improves. Once this Plus plan has been outsourced, how does this class of people with changing fortune downgrade? Sir, many current Plus plan policyholders are actually middle-income Singaporeans.

Second, how can the existing Basic plan policyholders opt for the Plus plan in the future? If they are healthy, they will be accepted by private insurers. However, if they are not, the CPF Board will again be saddled with these leftovers.

Third, what are the steps that will be taken to ensure that the interest of the current Plus plan policyholders will be

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fully protected once it has been outsourced to a private insurer?

5.15 pm

Fourth, how would the Ministry ensure that the increases in premium after the three years by the private insurers are within reasonable limit? And what is this definition of "reasonable limit"?

Fifth, would the private insurer have to consult the Ministry to obtain approval for every increase in the premium rates in the Plus plan?

Sixth, would the Ministry set a series of criteria for the private insurer to satisfy when proposing increase in premium rates? And, if yes, what are these criteria?

And the last question, during the transition period of the MediShield reform, would the current Plus plan policyholders be given the option to continue as Basic plan holders, instead of being sold to a private insurer? Many of these Plus plan policyholders have actually been very loyal and faithful customers of this MediShield plan, so it would not be really right to sell them away just like that.

Accuracy of Medical Record

Mr Low Thia Khiang: Sir, one of my constituents went for a blood test at Kelantan Clinic. The result of the HIV test on her was negative, but was entered as positive in her medical record. My constituent returned to the clinic a week later and was told that she was HIV-positive. She was further advised to get her husband in to test for HIV. The whole family became very worried, and their lives were miserable.

The adult son who accompanied the mother to the clinic for follow-up was told by the medical staff there that the HIV test results were correct and he was even

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counselled on how to accept the results as correct and to deal with the situation. The error was only discovered when my constituent subsequently went to the Communicable Disease Centre.

Sir, the question is: how does the Ministry ensure the accuracy of its medical records and whether this is a concern for the Minister for Health when he considers the new law to ensure that spouses of HIV patients are told if their spouses have the disease. The last thing we want, Sir, is for poor medical record keeping to tarnish the innocent and to break up families.

The Chairman: Dr Wang is not speaking. Mr Gan.

Healthcare Cost

Mr Gan Kim Yong (Holland-Bukit Panjang): Sir, healthcare cost has been one of the main concerns of Singaporeans. The Ministry has put in tremendous efforts to contain cost increases. However, it continues to rise year after year. This may be inevitable as the quality of healthcare services improves with advances in technology.

Recently, I went to shop for a new notebook computer. It costs close to $4,000, more than the old one I have. I protested to the vendor and told him the computer prices everywhere have been declining. He said, "Yes, but this new one has many new features which the old one did not have - wireless connection, blue tooth technology - you name it they have it." Adding insult to injury, he said, "If you want the old model, I can sell you at half the price." So I decided to keep the old computer instead.

As the quality of healthcare services increases, the cost must naturally go up. But healthcare is unlike notebook computers. I could go back to the old

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notebook computer and it still works, but we could not expect our people to accept healthcare service qualities of the past. The expectation has also increased over time. We have to manage Singaporeans' expectation. To ensure healthcare remains affordable, I would like to urge the Ministry to focus on three areas:

First, to review the two restructured hospital groups to see whether competition is effective and whether there is room for cost-savings by merging them instead.

Second, expand the primary care partnership scheme to those in the lower income group and the handicapped.

Third, enhance the Medifund to help those who really need help. The Government has increased the fund, but I hope the qualifying criteria could be reviewed to benefit more patients.

In the final analysis, the most effective way to reduce the burden of medical cost is not to get sick. Therefore, the promotion of healthy living must continue to be the primary thrust of our healthcare policy.

Mdm Cynthia Phua: Sir, as I have said before, I believe in this Minister for Health and is confident of his influence in the work in the Health Ministry. Within a short stint, he has shelled out the right remedies for the high healthcare cost.

Firstly, he has allowed a direct comparison of medical costs of the various medical procedures. Medical costs automatically came down. Secondly, he has again hit on the nail. We know that he loves opera shows but I did not know that he is a tai chi expert. By deciding on a different funding structure and allocating resources to the hospital, he has again invisibly lowered

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the ward charges, reduced the stay-in days and lowered admission cost. Because of this invisible force, I would like to appeal to the Minister to look into two more areas, that is, the medicine cost, as well as the investigative test costs in the hospital bill.

Based on the hospital bill that I have cited earlier, the medicine cost is high, about one-fifth of the total bill, which was $43,000 and a mere $3,000 subsidy only.

Next, the high investigative test expenses. Again, for this case itself, it was $73,000, one-third of the bill. Many patients once warded have to go through many investigative tests and, again, a layman like us, is unable to assess whether the tests carried out are necessary and essential.

Finally, I wish to thank the Minister for Health for the review of the MediShield and its coverage, so that health cost will not be a huge burden to our family when we are sick. Enhance it with a portable medical scheme as jobs are now not long term and people are most vulnerable between jobs.

Means Testing

Mr Andy Gan Lai Chiang: This system of subjecting the public to different classes of hospital ward through means testing and to decide for them how much they should be paying, irrespective of the class of hospital ward that they are in, may not be fair to the public.

I would like the Minister to perhaps look at the way hospitals do their accounting and see whether a new and fairer method of costing could be achieved, that would allow patients to choose, rather than having to be told that they have no choice but to pay according to the class allocated for them.

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The different options of fees payable under the new scheme should not, at all times, compromise the standard of medical care delivered. A fairer system of hospital billings, without having to subject a patient to means testing, is to, first of all, set a method of standard costing for all classes of wards. Fixed costs would be determined on the type of medical attention needed, and variable cost would be on the types of beds chosen. This means that everyone, irrespective of their level of income or wealth, would pay the same amount of subsidised medical fee.

Next, the variable cost will come in when the patients decide on the different class of hospital bed that they are willing to pay for. The total medical bill that the patient will be paying for, eventually, will then be determined by the type of room chosen, and not on the level of medical services that he or she should receive. Thus, the patient will pay less because he chooses to stay in a multiple bedroom, which he could afford, and still being assured of the same medical attention at subsidised rate as a one-bedroom patient.

This method of costing is based on the premise that everyone, irrespective of his level of wealth in society, deserves to be treated equally, medically. The difference in hospital fees will come in only from the choice of class of beds. So all taxpayers and non-taxpayers are given the same medical attention at the subsidised rate applicable according to the different medical conditions that the patient is in. At the same time, they are free to decide how much more they are willing to pay for their choice of beds.

For the case of the less fortunate, further subsidy could kick in from Medifund, if necessary.

Dr Chong Weng Chiew: Sir, last year, I spoke on the necessity to implement means testing to maximise the use of subsidy dollars for truly needy patients.

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Once again, I would like to reiterate the need for us to implement this in all public hospitals when we are ready.

Currently, patients in community hospitals and nursing homes are means tested. However, this is not the case in our public acute hospitals and partly contributing to crowded "C" class wards in these acute hospitals. Thus, we should align the disbursement of healthcare subsidies. In addition, if we are going to implement means testing to all, all the health facilities should use the same template for means testing. An example of potential inconsistency will be using per capita income to determine the subsidy at acute hospitals, but household income to determine subsidy at step-down care facilities.

We have now close to three years of experience and, I must say, success in implementing means testing in community hospitals and nursing homes. The processes and tools involved, however, though could be improved. Messy paperwork and long waits for family members to submit income documents have led to lots of delays. Therefore, may I propose that the Ministry fine-tune and come up with better processes that save time and manpower cost and, at the same time, to have a graded scale, as mentioned by Mdm Halimah earlier on, if we are going to extend the implementation of means testing to acute hospitals.

Dr Tan Cheng Bock (Ayer Rajah): Sir, means testing will be introduced soon. Many Singaporeans wait patiently for this scheme because it is going to affect their medical bills. They want to know how it is going to be implemented. Would there be two sets of means test - one for hospitalisation and the other for outpatient services?

Because of its complex nature and its implications on the individual's medical

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cost, I move this cut to find out from the Minister what has been done so far. What criteria are they using for their assessment of who should be in "A", "B" and "C" classes? I am sure they must have turned up many ideas as to how they are going to implement this scheme. However, let me share some of my thoughts.

I could think of four options. We could assess them through flat sizes, payable income, individual income and household income. We consider the flat size. This is the usual way the Government has been giving out rebates based on flat sizes. In other words, if one is living in a 3-room, one gets a higher rebate, 5-room gets a lower rebate. I am not so sure whether this is fair because the size of the flats does not reflect the earning power of the individual, especially in today's context, unlike before. Today, many choose to live in 3-room flats, even though they could really afford bigger flats. I think many of them is because of practical reasons. Some of these people who opt for 3-room flats are actually professionals. Some of them are even doctors. Some, of course, are small families and why should they opt for big flats. A small flat will do. They have a lot of disposable income. So we have to think very carefully. Some of them living in 5-room flats or even Executive flats have lost their jobs or retrenched. How are we going to classify them? They are actually quite poor then. It is an easy administrative move, but I am not so sure whether it is fair.

Payable income is another option. But this means that automatically 75% who are not paying income tax will be classified as "C", and I am not so sure that the Ministry is prepared to accept such a big number.

How about individual income? Individual income, I think, is an interesting

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option. Under this option, everyone will carry a tag. Those who have no income will be automatically classified as "C" class. Of course, this will include children, grandparents, housewives - all not working. Those who are working will also carry a tag according to the income they earn. So the lower income earners will still be in "C" class, and the rest accordingly.

Upgrading, of course, should be allowed. If one carries a "C" class tag and he has lost his job, he still remains in "C" class. But if one of the relatives carries a "C" class tag, for example, the wife who is not working, and he wants to upgrade her, go ahead, he can upgrade. We can give them that option to upgrade. So there is option for upgrading. Of course, if one is tagged as "B" class, and one loses his job and gets retrenched, let him downgrade and he becomes "C" class.

The snag here is that it covers high earner families also. In other words, high earners with non-working spouses and children are tagged "C". So they all have access to "C" class hospitalisation. However, the argument is, so what? These people actually pay high income taxes. They have actually contributed a lot to the country's coffers. Why should they not use it too? But I believe this particular group will probably upgrade their spouses to a higher class ward. So we have to be very careful in this area. Honestly, I am thinking deeply into this. But as I have said, I believe the majority will opt for upgrading.

The last option, of course, is based on household income. Here, the combined salaries of the working individuals in the family are taken into account. It tracks the family. It tracks the whole group, not individuals. As I said, unlike the individual income option, this is on a group basis and so it tracks the whole group. In such an option, unemployed members of the

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family, including spouses and children, share the same tag as the working members, unlike the option based on individual income. Which is better and which is fair, I think we have to examine all the options, and I am sure the Ministry must have also many options for us to consider and I look forward to the Minister's reply.

5.30 pm

Dr Michael Lim Chun Leng: Sir, the pitfalls of means testing are just too numerous. I fail to be convinced that it is a necessity at this point in time.

MOH has said that it will implement means testing. Will the cost of setting up such a system end up being more than the potential savings of implementing such a system? What model of means testing will the Ministry be using that is both practical and yet will not lead to higher manpower cost and higher infrastructure cost? What criteria will be used for means testing? Criteria used must be both transparent and simple.

When we implement means testing, will it be implemented only for C class wards? My view is that the Ministry should consider starting with baby steps and perhaps start only with potential C class patients, instead of having a system that cuts across all the different spectra of the healthcare services. And what does it mean when a patient fails the means test? Does it mean that he will remain in the same class of ward but he will be given lower subsidies? Or does it mean that he will have to upgrade to the next higher grade of ward? And if he is allowed to remain in the same class of ward, will it be a fixed reduction in subsidies or will it be tiered towards his level of income or whatever criterion is used in terms of assessing it?

Finally, perhaps the Ministry could also let us know when it intends to implement means testing.

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The Minister for Health (Mr Khaw Boon Wan): Sir, I felt mutilated by so many cuts! Fortunately, I got a soothing one from Mdm Cynthia Phua that helped. I will try to respond to all the cuts right now, except for five which I intend to do so tomorrow together with similar cuts which are already listed - one of them from Mdm Halimah about clusters which Mr Gan Kim Yong also raised, which I will answer tomorrow - one on preventive infectious diseases, another on HIV and another about holistic care for the chronically ill, which if Members do not object, I will answer tomorrow.

Mdm Halimah Yacob and many others voiced their concerns about healthcare cost. If there is any consolation, public concern over healthcare cost is global, from China to the United States. Last month, Harvard University published a study which estimated that medical bills forced two million Americans into bankruptcy every year. The study leader had this to say: "Our study is frightening. Unless you are Bill Gates [that means the whole US population, less one], you are just one serious illness away from bankruptcy."

Last month, an East Asian Institute's report on healthcare in urban China drew these conclusions: "health care costs are soaring", "health care providers are concerned with making money", and "the inaccessibility to health care for the poor is widespread". I met an American scientist last week who is familiar with China's healthcare scene. He made a shrewd observation. He said that China now carries out more Lasik surgery than cataract surgery. In other words, the doctors there, at least in the cities, are carrying out more elective surgeries for those who can afford it, neglecting the basic medical needs of the masses.

In Singapore, our healthcare system is not perfect, and I will be the first one to

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acknowledge that, but I think, objectively, it is not bad. Singaporeans enjoy a high standard of healthcare. Our health status is among the best in the world. It is not that I said it but WHO said so. Our fees are not low but, for the vast majority of Singaporeans, they are affordable.

Medical treatment is not cheap, especially in the hospitals. But most people do not require frequent admissions. If we contribute regularly to our Medisave, we should have enough to pay for at least class B2/C hospital bills. The average Medisave balance now exceeds $11,000, and this is an average of both active and inactive accounts, because many are housewives who have stopped work. When I look at the active accounts, the average exceeds $17,000. But even at $11,000, it is enough for more than a dozen class C hospitalisations. And this average is growing year by year.

I have read the Feedback Report which Dr Wang Kai Yuen mentioned in a previous sitting. The self-employed are significantly represented among those who have expressed concern about healthcare cost. If a self-employed person does not contribute regularly to Medisave, he ought to be concerned. Without Medisave, any hospital bill size may be unaffordable. I think we must get our self-employed to contribute regularly to their Medisave.

This is very important. Because without Medisave, we cannot help Singaporeans deal with the issue of healthcare costs. With Medisave, and after we have fixed MediShield, practically all Singaporeans should have no problems with hospital bills. Medifund will take care of those who drop through the Medisave/MediShield net.

This model, which I call SMs (Subsidy,

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Medisave, MediShield, Medifund), of funding hospital cost delivers better results with less abuses. Our unique model has been noted by others. The World Healthcare Congress, an international forum for global best practices in healthcare financing, is holding a meeting next month in France. They have invited us to share our Medisave experience with them.

The US studied our Medisave and MediShield. Last year, President Bush established tax-free Health Saving Accounts (HSA) for individuals. Their HSA is very similar to our Medisave, except that it is not compulsory, and neither is it nation-wide.

Our SMs model actually comprises two parts: SM and MM. Sorry, I do not mean our two political leaders. Government provides "S" and "M": subsidy and Medifund. Singaporeans must deliver "M" and "M": contribute to Medisave and join MediShield. If we both play our parts, nobody should have to worry about basic hospitalisation cost being unaffordable.

The more we have in Medisave, the stronger our system becomes. That is why I support Mdm Halimah's suggestion that we lift the Medisave contribution ceiling, instead of letting the excess overflow to the Ordinary Account. But some CPF members may prefer the current system as it allows them to use the excess monies for housing, investment, or education needs. In any case, the CPF Board will, on a case-by-case basis, allow members to reverse the Medisave overflow, when they incur very large hospital bills.

Mdm Halimah argued for Medisave to cover outpatient treatment. But Medisave is intended primarily for inpatient care. Nevertheless, we have allowed Medisave for day surgeries, as pointed out by Mr

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Andy Gan, and certain expensive outpatient treatments, like chemotherapy, dialysis and many others. We review the list of approved outpatient treatments regularly, and we will add new treatments when appropriate.

Several Members have commented on means testing. Dr Chong Weng Chiew wanted it done as soon as possible, but Mr Andy Gan and Dr Michael Lim had their reservations.

The purpose of means testing is to better target our subsidies at those who need them most. The principle is simple, the implementation not so. If we are clumsy, as Mdm Halimah put it, we can cause "a lot of angst without achieving our objective".

I am not in a hurry to implement means testing. So Dr Tan Cheng Bock was quite wrong to say that it will be implemented soon. I have taken the advice of Dr Lily Neo when she spoke on this last year to do means testing after the MediShield reform. She explained that the impact of the MediShield reform ought to be assessed first, before we introduce means testing. Meanwhile, I have noted the many suggestions made, especially the very detailed ones by Dr Tan Cheng Bock, Mdm Halimah and Dr Chong Weng Chiew. We will consider them at the appropriate time.

Let me now turn to MediShield. Mr Steve Chia - unfortunately, he has left - claimed that Singaporeans are worse-off with the MediShield reform. Really? He believes that? Does he subscribe to MediShield? Is he planning to opt out? He has either misunderstood the facts or chosen to disregard the benefits of the reform. I think it would be very unfair to mislead Singaporeans.

The reform is not cost-free, yes. But I have minimised the cost to Singaporeans. The fact is that with only a modest

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increase in premiums, policyholders will enjoy substantially higher payouts if confronted with large hospital bills.

I am sorry to hear of the death of Mdm Cynthia Phua's former classmate. Her family is now left with a very large hospital bill, nearly $90,000, despite our subsidy. Her classmate had MediShield but the payout was not as much as the family had hoped for. Such cases of major illness and large hospital bills are not common, but they do occur. I want to help these poor patients cope with very large hospital bills, and MediShield reform is the answer. I cannot think of any better solution.

That is why I am baffled by Mr Steve Chia's observation. The increase in deductible is necessary. Why? Because MediShield is a catastrophic medical insurance. What is MediShield for? It is to protect against large hospital bills, not small bills. If the deductible stays unchanged, then MediShield must end up covering more and more small bills, leaving patients with very large bills, like Mdm Cynthia Phua's former classmate, insufficiently protected. Then it is no longer a catastrophic medical insurance.

When MediShield started 15 years ago, it covered only about 5% of hospital admissions, the very large bills. Today it covers 50% - one in two! If you want MediShield to cover both small and large bills, then it is no longer a catastrophic medical insurance, it is a comprehensive medical insurance, and the premiums will have to be very much higher.

Actually, my preference is for an even higher deductible so that I can reduce the effective co-payment for large bills from the current 60% to about 20%. This will then give greater payouts to such patients who need help. But unionists talked me out of it. I have therefore settled on the current package as the most optimal trade-off that we can achieve. The key

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question is whether Medisave is sufficient to cover the increased deductible. Here, the answer is a definitive yes.

Mr Steve Chia talked about out-of-pocket cash to pay the deductible. Why should it be so? If you contribute to Medisave, Medisave will cover that extra $500. Of course, if he is talking about the self-employed who choose not to contribute to Medisave, then they would need to use cash. We should put the pressure on the self-employed to contribute to Medisave. For the sake of your family, contribute to Medisave. Mr Steve Chia is a self-employed, I think. I hope he contributes regularly to Medisave for the sake of his family.

5.45 pm

Mr Low Thia Khiang supported, I think, the catastrophic medical insurance. He saw value in it. He asked for greater transparency. I totally agree. In fact, later on, as I mentioned, we will be tendering out the MediShield Plus and we are working out the tender documents. I intend to put as much information into the tender documents as possible so that the tenderers do not have to second guess. Then they can bid according to fairly certain information. And my intent, in fact, part of the objective of this MediShield reform is to raise the level of transparency and disclosure so that when consumers want to shop around for the various "Shields", they can make better informed choices.

Mr Low was wondering whether we could have an average premium rate that applies to all age groups so that you do not have the young paying less, and the old paying higher. It is a possible option. But, then, the premiums for the young will have to go up very high. Currently, premiums range from about $30 to over $500 per year. So the average may be

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about $300-$400, which means the premium of the young will have to go up by more than 10 times. I do not know whether the young would be happy to do so. What if there is an exodus of the young from MediShield, then there will be very few left to carry the cross subsidy, and then the premiums will have to go up further. It may trigger another round of exodus. So I do not think it is a very workable solution.

Mdm Halimah and Dr Chong asked for greater publicity and explanations on MediShield reforms. I totally agree. As one insurer put it, insurance is a complicated subject. But medical insurance is among the most complicated insurance products, and we will continue to engage the public, right through the July implementation and, also, after 1st July.

Dr Chong suggested that we work with CDCs to reach out to those who have difficulties paying their MediShield premiums. I think we should. And I certainly hope that the Mayors and community leaders will help us in this effort to get all Singaporeans "Shielded".

Mr Andy Gan asked for MediShield to cover long-term cosmetic dental care. The differentiation is not between medical or dental. The issue is inpatient versus outpatient treatment. MediShield, and for that matter Medisave, is primarily for inpatient care. So it does cover some dental treatment which requires hospitalisation. But I personally would advise against MediShield covering cosmetic dentistry, expensive orthodontics, for the simple reason that greater coverage must mean higher premium. For the Basic MediShield policy, my preference is to keep it really basic and essential so that the premiums can be as low as possible.

Mdm Halimah asked that we use MediShield to encourage healthy lifestyles

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among Singaporeans. I support it in spirit. Specifically, she asked that we incorporate a no-claim bonus (NCB) in MediShield. Dr John Chen first raised this suggestion to me when I did my walkabout in Dr Amy Khor's constituency. And I thought it was a brilliant idea. But when I discussed it with the experts in the insurance industry, they all voiced concerns. Experience elsewhere has shown that an NCB, no-claim bonus, could lead to perverse outcomes. At the end of the insurance period, say, usually year end, the NCB may lead to some patients who have not been claiming during the year to postpone medical treatment in order to cross over to the next calendar year so as not to lose their NCB for that year. Unlike motorcar insurance, postponing motorcar repairs may not cause irreparable damage. But, sometimes, for some patients, if you postpone even by a few days, it may prove detrimental. So I am persuaded by the insurers.

On the other hand, there may be a case to load a higher premium on policyholders who insist on continuing with unhealthy habits, like smokers. In life insurance, smokers attract a higher premium. So I think a case can be made for higher insurance premiums for chain smokers or heavy drinkers. But implementation may not be straightforward. How would insurers verify the extent of smoking or drinking?

It is therefore better that we keep MediShield simple, as plain vanilla, with the lowest administrative cost at the lowest premiums. But I would welcome it if some private insurers decide to offer niche products with NCB features, or enhanced insurance plans with premium discounts for those with proven healthy lifestyle.

In this way, we have a Basic MediShield to meet the essential needs of all Singaporeans, and then a very dynamic

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private insurance market on top, offering a wide range of choices for Singaporeans who want and can afford better coverage.

To speed up the development of this private insurance market, CPF Board will tender off this MediShield Plus portfolio to a private insurer. Prof. Ong Soh Khim, although she has left, was worried that the tender could lead to more healthy lives leaving the Basic MediShield Scheme. Let me assure her that it would not be so. In fact, the key part of my reform is to precisely remove cherry picking. From 1st July, all private Shields will include the Basic MediShield. Their policyholders will all be covered by MediShield at the basic level.

Prof. Ong stressed that we should protect the interest of existing MediShield Plus policyholders. I totally agree. So the tender terms will require the successful tenderer to fulfil certain obligations, for example, the insurer cannot unilaterally withdraw coverage on grounds of pre-existing illness. Any downgrading to the Basic MediShield scheme will remain possible. We will also require the successful insurer to guarantee premiums for, at least, three years.

Mdm Halimah asked if we would regulate the premiums of the private insurers. I think we should not. We do not regulate the price of rice. But we make sure that the prices of rice are transparent. We also have NTUC FairPrice to help make sure the market play fair. So, likewise, we should make sure that the insurance market is transparent. Hence, my great interest to raise the whole level of transparency, so that consumers can make better choices. Of course, I am very comforted by the presence of NTUC Income.

Mdm Halimah shared a perception that "the Government is trying to reduce its share of the healthcare cost". How could it be? In fact, with progressive ageing,

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we know that we have to do more. Our healthcare subsidies have been increasing steadily, from $850 million in financial year 2000 to $1.26 billion last year, and now, this year, $1.32 billion. And this covers immediate consumption each year. But over the same period, Government has topped up Medisave, Medifund and Eldershield by a total of $1.8 billion. This sum will provide our future healthcare consumption. It is our way of collectively saving for future needs. Better make hay while there is sunshine, for we cannot be certain of budget surpluses in the future.

But it is not just how much we spend that counts, but how we spend it. As Mdm Halimah and Dr Michael Lim noted, healthcare is more than about financing. Money is not everything. A strong healthcare system has to deal with two other important aspects: the healthcare delivery system itself and the role played by patients.

First, the healthcare delivery system. In other words, how are services delivered? Do providers have the incentives to optimise their services, to do more with less? Sadly, there is no perfect healthcare system in the world. We all say that prevention is better than cure, that early intervention can reduce more costly treatment in the future. But how many doctors, clinics and hospitals in the world are proactively and consistently practising this regime?

We all say that chronically-ill patients are better-off being treated by GPs, community hospitals, or nursing homes, instead of expensive acute hospitals. Again, how many of the chronically-ill are actually so treated?

We all say that healthcare providers should treat patients holistically as a team, share information about the

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patients, partner one another to bring care to the patients, without duplicating efforts and repeating the tests. But, again, how many patients in the world consistently receive medical care in this manner? Question: why is it so difficult to get all doctors, patients, insurers to do the right things, all the time?

Market competition has worked in almost every sector of the economy. It has improved the airlines, banking, telecommunications, computer and other industries. Products and services improve, while costs come down. Yet, the conventional wisdom is that for healthcare, there is "market failure". My view is that although healthcare has certain intrinsic differences with other industries, the market does not necessarily fail. It fails only if we allow it to fail. It fails when we create distortions in pricing, reimbursement, and remuneration systems. It fails when we create the wrong incentives, leading to wrong behaviour. It fails when we limit the supply of critical resources, like specialists, creating long queues of patients and, yet, somehow we expect the doctors to charge less out of the kindness of their hearts. It fails when we keep cost and outcome information away from patients and their referring GPs, thereby further worsening the "unequal powers" of providers and patients.

I believe we can make markets work better in healthcare. I am optimistic because we know there are some healthcare activities where the market does not fail. Our obstetrics market is highly competitive. Obstetricians compete robustly. As a result, one obstetrician, a friend of mine, lamented to me once, that over the last 10 years, his antenatal charges remain stagnant. And as there is a physical limit to how many babies he can deliver, that means, over the last 10 years, his income in real terms has been going down. Quietly, I felt happy for our pregnant mothers. The Lasik surgery

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market does not fail. Members may recall that few months ago, when I published the Lasik surgery fees, the prices in some centres dropped by a big margin.

So what is the lesson here? Healthcare is subject to the law of economics too. But for economics and markets to work, we must make sure that the conditions for market competition exist. That is why I published the bill sizes for the common medical treatments. My objective is for more of these medical treatments to be more like obstetrics, more like Lasik surgery, where patients can make informed choices. When competition is brought to bear on these services, we will then have the right incentives for the healthcare providers to do the right thing all the time, to raise standards even as they reduce cost.

I will continue to push out more relevant information on prices and outcomes to the public. Just last month, a friend of mine emailed me to say that she discovered that our Magnetic Resonance Imaging (MRI) fees in the public hospitals seem to be more expensive than the rates she found in Orchard Road. So I sniffed around and discovered that, indeed, there is a wide price range. For comparable products, the MRI fees range from about $500 to $900, almost double. And the public hospitals' MRI fees are not the cheapest. I wonder why. So I am continuing my market research. And when I am ready, maybe a couple of months' time, I will publish them. Since we are in the debate on casino, I bet that it would have an impact on MRI fees in Singapore.

6.00 pm

Likewise, if hospitals have the wrong incentives, they may pursue wrong objectives.

That is why I am refining our subvention formula to include some elements of block budgeting. As Mdm Halimah pointed out, if hospitals are given

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piece-rate incentives, of course they would pursue volume, leading to over-servicing and higher healthcare cost. And as Dr Michael Lim noted, night polyclinics are a reflection of this. I agree with him that it is not a meaningful deployment of very expensive and limited resources.

But subventing hospitals at a fixed block is also not the panacea. Hospitals may pocket the block budget and do the minimum, pushing patients to one another to shift their costs, resulting in longer queues and under-treatment. In my younger days, public hospitals were all on block budget. So, the Ministry of Health changed to piece-rates, not without good reasons.

Actually, I am not completely discarding piece-rates for block budget. I go for both. As always, I go for the middle path. Where outcomes are well-defined, it would make sense to continue with piece-rate subvention. We have identified 70 medical conditions which form the bulk of our patient-load, our bread-and-butter work. We should now go more deeply into the costing of these 70 medical conditions and subvent hospitals based on their volumes for these 70 conditions.

As for the rest of the medical conditions, subvention will come under a block budget. I think this is a better way to align our interests. The clusters can then seek to coordinate care more effectively. They will hopefully then "right-site" their patients by treating them at the most appropriate and lowest cost setting.

On right-siting, Mdm Halimah reminded me not to "put the cart before the horse". Let me assure her that I am no "bull in a china shop". All my current initiatives, ie, right-siting, disease management, healthy lifestyle, transforming primary healthcare, are long-term strategic initiatives. They will take many

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years to complete, as mindset change is a crucial part of this transformation. We have to be patient. But if we stay focused, then, step by step, we will make progress.

GPs and polyclinic doctors have to upgrade themselves. Good family physicians can provide better care for the chronically-ill than a team of specialists in the hospitals. There is a role for " kueh lapis ", if I may use Dr Michael Lim's jargon. He himself provides an excellent layer of our Singapore " kueh lapis ". I agree with him that, for chronic illnesses, over-specialisation may not be good. And for chronic illnesses, care is often better given in family physician clinics. But this cannot happen overnight. We will start some experiments, pilot some Family Physician Clinics at the polyclinics, and then we will make progress from there.

But no amount of tinkering with subvention or preaching by MOH can work as effectively as the power of market competition in driving productivity and innovation. That is why we will continue to monitor quality indicators and publish them. This will provide the comparative benchmarks for all to drive for greater efficiency gains.

When we compare with other globally-competitive activities like manufacturing, we know that healthcare is rather inefficient. There are wastes, duplication, and delays. Decades of protection and market distortions have caused this. But it means opportunities for us to do what is right and to clean up the inefficiencies. But we have to make the effort and learn from world-class organisations, especially those outside of the healthcare sector. Let me just give two examples to illustrate the possibilities.

Members may note that last week I published the waiting times at our A&E

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Departments. Alexandra Hospital (AH) came up tops. It is easy to dismiss this finding by saying that, "Oh, it is the least busy hospital; so, of course, waiting time has to be low". But that would be very unfair to the hospital staff.

Over the last 12 months, the Alexandra Hospital team has been learning from Toyota , visiting their Toyota factory in Japan , visiting Toyota workshops in Singapore , talking to the Toyota managers. I know, like Mdm Halimah, cars are not human beings. But there are important lessons to be learnt from Toyota . In fact, the Toyota Production System (TPS) is now a closely studied subject in many management schools.

Prior to introducing TPS, AH's median waiting time at A&E was 25 minutes, not unlike the other hospitals. Their waiting time is now half, ie, 14 minutes, despite treating many more patients than before. Let me quote Dr Francis Lee, their A&E Head. He said, "The key is to engage every staff to focus on delivering value and eliminating waste every day. Patients come to us for diagnosis, treatment and advice. We focus on doing just that and removing all the unnecessary work. No magic bullet. Just a culture of continuous experimentation, daily grind work to simplify processes, standardise work and remove bottlenecks. It is step by step, minute by minute." He is sounding like Mr Toyota!

They are now going to extend TPS to other departments. The intent is to re-engineer the entire hospital operation, so that when they move to Northern General Hospital by 2010, it will be a new hospital with a completely new operating system. I am watching the Toyota experiment in AH with great expectations.

As we learn from Toyota , we are also learning from Microsoft. Last year, Microsoft's CEO, Steve Ballmer, visited us in Singapore . I spent quite some time

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with him, sharing with him my vision of a hassle-free hospital, with IT fully exploited to make the lives of patients easier. Members may recall that I raised this topic during the Budget debate last year.

I suggested to Steve Ballmer that the current system of running hospitals, whether in the US or anywhere in the world, is not sustainable. But if we can transform the current system, I think we would have made a major contribution to the world. He was excited by the prospect and the opportunity. We decided to use Alexandra Hospital - the entire hospital - as the test site for such a major experiment, or what the Americans call "skunk works". We are involving other partners, including Nanyang Polytechnic. Principal Lin Cheng Tong offered to help. His academic staff and students came forward, worked very closely with Alexandra Hospital, Microsoft, IDA and others. They wrote most of the computer software on trial at the A&E Department that allowed the staff to change and modify their processes, which enabled them to bring down the waiting time from 25 minutes to 14 minutes.

This has been a most productive engagement. Students got to work on cutting-edge projects in a real environment, while hospital patients benefit from faster improvement. Microsoft has a work discipline which demands progress every 90 days. Our Nanyang Polytechnic students do not disappoint. Many worked past midnight and through the Chinese New Year holidays to deliver within 90 days. I have no doubt the outstanding ones will find jobs with Microsoft.

As I said, we are extending these skunk works to other parts of AH. Let me share with you my IT vision for healthcare. It is "One Singaporean, One Electronic Medical Record (EMR)" which is constantly updated, real-time and shared,

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privacy protected by all the healthcare providers. This vision will take time to realise, but initial steps have already been taken, benefiting patients in our emergency departments.

Mr Low Thia Khiang is worried that electronic medical records may cause big problems if they are wrongly recorded and then the damage is magnified. He mentioned the case of his constituent who was wrongly recorded as HIV-positive. I need specific details to find out what caused the error. But there is no excuse for human errors. All hospitals have a duty to keep medical records accurate, current, complete and confidential.

That said however, let us not throw out the baby with the bath water. In fact, the change from paper-based systems to electronic ones has improved the accuracy of medical records. For example, in most emergency departments, recent records are no longer handwritten, with all its problems, and laboratory test results are now transmitted directly in electronic forms to the doctors. We have safeguards in place to ensure accuracy and integrity and for sensitive information, like HIV, there are additional safeguards.

My message is this. We should not be afraid of IT. In fact, healthcare is inefficient partly because it is such a laggard in the exploitation of IT. I am determined to change that. Our pilot skunk works can potentially transform the way we run hospitals, bringing new benefits to patients. We do not underestimate the challenges but, if we are creative and determined, some of these skunk works may succeed.

Finally, let me touch on the other important aspect in any healthcare system, and that is the role played by patients. This has traditionally been neglected. We all say that people value good health. But how many really take

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this to heart, and proactively work with their doctors to preserve their health? Many patients are passive. When well, they take their health for granted. When sick, they ask their doctors: "Doctor, what can you do for me?"

But healthcare is a partnership between the carer and the patient. There is no such thing as "a pill for every ill". To stay healthy and to recover from an illness, the patient has to play an active part.

Let me give you my personal example. I am genetically predisposed to high cholesterol, higher than normal. Years ago, my doctor spelt out the protocol for me: diet, exercise, statins and periodic assessments. And my friends know that I am strict on my diet, consistent with my exercises, and totally compliant with my statins. Without this personal involvement, there is a limit to what my doctor can do to effect a change in my health status. Without this consistent exercise regime, I would not be able to take the punches from Ms Indranee Rajah!

I am optimistic that more and more patients will be proactive. Doctors are increasingly being challenged by their patients, who come with printouts of articles that they read on the Internet. I welcome this development. However, let me caution that being proactive does not mean trying to play doctor and demanding every new drug advertised on the Internet. Your doctor will have to assess your needs and prescribe accordingly. That is their job. As always, there are trade-offs to be made. There are now so many new drugs - very expensive, marginal benefits.

For subsidised patients, we have to make the choice on behalf of them. That is why we have standard versus non-standard drugs, which Mdm Halimah and

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Mdm Cynthia Phua brought up. As trustees of limited public funds, it is our job to spend it in a way that brings maximum benefits to all. If we merrily incorporate all new drugs into our standard drug list, we will quickly run out of money. Then we will not be able to fulfill our responsibilities to the

very poor who really require some of those basic hospitalisations.

6.15 pm

Dr Michael Lim gave vivid examples of how technology can postpone death and bankrupt the whole society along with it, often with little quality of life for the patients. He wisely advised our medical community to ensure that our clinical practice guidelines incorporate cost-effective care. I cannot agree more.

Politicians have a role to play here. So as Mr Gan Kim Yong quite wisely advised us, we must help to moderate the expectations of Singaporeans. Certainly, we must not fan unnecessary expectations. We just cannot afford it.

Meanwhile, let us try to make the market work better for us. The healthcare market will never be perfectly competitive. But it is so imperfect that any incremental improvement will mean big progress. If each year we make it less imperfect than before, we would have made a meaningful contribution.

Singaporeans can then continue to enjoy a high standard of healthcare services, a world-class health status, at a cost which our society can afford.

Mr Chairman, I would be happy to take any clarifications from the Members.

Mr Low Thia Khiang: Sir, I have a few clarifications on MediShield. In my speech, I have asked the Minister: what is the Ministry's projection of pay-out ratio for the newly redesigned basic

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MediShield, in view of the more comprehensive risk-pooling?

Second, I also asked in my speech about the coverage of the basic MediShield - are there some treatments that are not available in "C" class wards as well as "B2" wards?

Third, I also asked: what is the justification, and how useful is it to have an annual claim limit on the MediShield of $50,000? Because if you are seriously ill, you may need more than that within a year. You do not get a serious illness every year.

I also requested for details of the premiums and pay-outs per age group of the MediShield for the last five years.

Mr Khaw Boon Wan: There are four queries. Let me take them through.

On premiums and pay-outs of MediShield after reform, those are data that we would publish in due course. I do not carry those data with me. I have explained probably in this House or some other occasions that part of the reason for the MediShield reform, is that for basic MediShield it is operationally in deficit. In fact, the revenue collected, ie, the premium contributions, are not sufficient to cover the pay-outs. So it is negative. But with the reform, we would restore it to the black again. There are standard indicators in the industry - what is called loss ratio. Loss ratio is a ratio of your premiums compared to your pay-outs. That will measure how much profit margin or efficiency of the market. When I talk about greater transparency in the industry, my intent is to begin to publish those loss ratio figures, not just for MediShield, but also for other "Shields" in due course. I do not carry all those data on my head but, at some stage, they would all be made public.

There was another point about whether there are services which class "C"

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patients do not get and which other classes get. For basic hospitalisation, no. What we have to ensure is that all Singaporeans, irregardless of classes, basic hospital needs would always be provided. If you talk about non-basic items, which would involve things like non-standard drugs - I spent a few minutes talking about why the need for standard versus non-standard drugs - clearly, I cannot offer Rolls Royce services, for example, to all classes of patients. That is not possible.

On the claim limits, that is prudence. If you buy a motorcar insurance, no insurer will sell you an insurance policy that says irregardless of your claims, we would pay up. There is always an upperbound, so that they know what is the maximum risk exposure for the insurance. I think that is fair. In the case of medical insurance, claim limits come in various forms. One is an annual claim limit. So each year, so many thousand dollars. Currently, for basic MediShield, I think it is about $30,000. But I am raising it almost double, to $50,000. So that would help a lot. MediShield is for class "B2" and "C" - I think we should bear that point in mind. We are talking about class "B2" and "C" bills.

When I looked at the feedback survey results, amongst those people who expressed concern were the self-employed. This is one major group where I have given the reasons. If they do not have Medisave, they ought to be concerned. I do notice that over-represented in that group are also the middle class, people who have fairly high income, and I suspect part of the reason is because these are the people who are more likely to go to the class "A" or private hospitals. If they are not adequately insured, and they cannot treat MediShield as adequate insurance, because basic MediShield is just for class "B2" and "C", they better make sure that

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they are properly insured with higher insurance plans. Come July 1st, with the MediShield reform, everybody would be assured of this basic coverage. But those who are more likely to use higher classes - the middle class, higher income group - they ought to insure themselves with better plans.

To answer the Member's point about claim limits, I have raised the annual limit from $30,000 to $50,000, and there is also a lifetime limit. A lifetime limit is very useful for chronic cases, eg, kidney dialysis. I cannot remember what is the current lifetime limit, but I would be raising this limit. Some of these kidney dialysis patients who continue to be on dialysis and if they have been on MediShield, they would be able to benefit from this raising of limits. But I cannot not have a limit. There must be some limit to it. If you want a higher limit, fine, then something has to give way, and that something would have to be premiums. For this round, the adjustments I have made are as much as I can do at this stage.

Mdm Halimah Yacob: Sir, just a couple of clarifications that I would like to seek from the Minister. Firstly, could the Minister inform this House, in terms of the availability of "B2" and "C" class beds, what is the percentage now? What is the assessment with regard to whether they are sufficient to cater to the needs of people who demand these class "C" and "B2" wards? What is the policy of the Ministry on this?

Secondly, when I spoke about opening the use of Medisave, I specifically mentioned about allowing Medisave to be used for treatment of chronic illnesses. Use of Medisave for chronic illnesses is different from outpatient use of Medisave for common cold, cough and fever. Chronic cases are those who suffer from

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long-term illnesses such as diabetes, high blood pressure, etc. I have come across quite a number of cases where people cannot afford to go through these treatments. Of course, the response would be that we can rely on Medifund. But there are those who are not within that category as well because of their salary and other reasons, and they really find that the regular treatment is expensive. Their concern is that they would drain their Medisave funds. There can be a limit imposed, but they need the treatment and they need to go for regular check-ups, tests, and so on.

My third clarification is this. The Minister mentioned about the fact that the reimbursement system would also be retained side by side with the block grant system in the method of subvention for the public hospitals. My request for clarification is that the Ministry has stated, in conjunction with the introduction of the block grant system, that there would be an audit system that would be put in place, to ensure that people's concern would be allayed that they would not be getting treatment. Would there be such an audit system?

Mr Khaw Boon Wan: There are three queries. Let me go to the last one first. On audit, one of our duties as regulator is to audit our hospitals and all clinics, both public and private. That is our professional job. We audit them, share those data with the providers and, where appropriate, we publish them. My attitude is to publish as much as is comprehensible to the public. Because if you put out too much, after a while, people may get put off too, then, it is not effective.

If you understood my message just now, the best auditing system and the best auditor, eventually, are patients themselves. What I wanted to work towards is a system whereby we can have more and more informed patients -

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people who know. Just like when we want to buy shampoo, a car, rice, petrol or whatever, we try to shop around. For healthcare, we are far from that outcome. The vision is, let us move as much as possible towards that kind of a marketplace. "Informed" does not necessarily mean the patient himself being able to handle that kind of information; in fact, most cannot. And that is why it is so crucial that every Singaporean has a good family physician, whether it is from the public or private sector. It pays off. It is very important. Make sure every family has a good family GP who knows you and your family well, who can then advise you, and he is in a better position to assimilate all these data which I will be churning out, and which I will be continuing churning out to the public domain. He can then advise the patient accordingly.

On the availability of class "B2" and "C" wards, the bulk of our beds are class "B2" and "C". That dominates the whole public sector. The class "A" and "B1" are minority beds. What is the correct number? I take a totally flexible attitude. It depends on demand. When demand is there, we will meet it. The fact of the matter is, today, if you look at the hospital beds, overall in the whole country, there is a surplus. In fact, occupancy rate is, on a nation-wide basis, rather low. We should not be piling onto the surplus by building more beds, whether it is "B2" or "C". I take a certain approach whereby in the public hospitals, if at any particular point in time, there is a mismatch of supply and demand, where there are more class "B2" and "C" patients than the beds available in that hospital, what we do is, based on the idea of cooperation amongst the hospitals, we would channel the patients to where there are empty beds. If necessary, and we have done it quite often, admit the patients to higher classes but charge them at the lower rates. That, to me, is still cheaper than having to go and spend

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money again and create class "B2" and "C" beds. Then, we are stuck in that kind of rigidity in the wards.

On allowing the use of Medisave, the distinction is not between chronic or non-chronic cases. As I have said just now, the distinction is not between dental or medical. The distinction is between inpatient or outpatient. Medisave, when we designed it, was meant for inpatient care. Therefore, that must be the primary emphasis. For many chronic patients, who occasionally require hospitalisation, of course, they can use Medisave. But where they do not require hospitalisation, ie, as an outpatient, then Medisave does not cover.

My worry about Medisave is this. Yes, we are building up quite a sizeable fund. Although we will try very hard to control medical inflation, the global experience is not a very optimistic one. Practically, in every country, medical inflation is exceeding general CPI index, and that is very worrisome. We have done not too badly, but whether we are able to consistently buck the trend, I do not know; it is untested. So the need for huge savings to look after expensive hospitalisation is real.

I just read one article in New York Times a few days ago. They were talking about how they were trying to reform employer's medical benefits. So they quoted one huge MNC company. They were very proud. They said that after changing the system,

what they do is they employed doctors - in-house doctors, in-house hospitals. Could you imagine that? The company is now forced by the huge expensive healthcare system in the US to take on healthcare responsibilities by employing their own doctors, run their own clinics, in order to keep the healthcare cost down. But, apparently, it was successful, relative to those who do not, and they quoted a figure which shocked me. They said,

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having done all these, they congratulated themselves, and they have brought down the average cost to US$500 per month per employee. That is the cost for a system that has been reformed, let alone those that have not been reformed, and that is how expensive healthcare has become in the US.

6.30 pm

Thinking people in the US knew that they could not afford it. If Uncle Sam could not afford it, we could not afford it, definitely. Better not to march and walk into that trap.

The Chairman: We have used up a significant amount of time allotted for clarification. So I request Members to keep their clarification and questions crisp.

Mdm Cynthia Phua: Sir, two points of clarification. The Minister has explained the standard and non-standard drugs. Could he clarify the level of subsidy for these drugs? The second point of clarification is: as the investigative test cost is high, does the hospital have a procedure to inform the patients of the cost before the test is being done?

Mr Khaw Boon Wan: For standard drugs, the level of subsidy will depend on the class of ward. So, of course, class "C" has higher subsidy, class "B2" less, outpatients, a certain subsidy versus in-patients. For non-standard drugs, unfortunately, there is no subsidy, because it is non-standard.

Who determines standard drugs versus non-standard drugs? Not me, because I am no doctor. But we have a panel of experts, depending on their specialty. They have to decide among the peers themselves. For example, cardiology, "this list of drugs is needed and they are

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standard. But the other list, they are frills." One could not say that they have no benefits, but the cost is so high that it may not be cost beneficial. I think that kind of judgment is needed.

Part of the problem in the US today is that they do not have a standard drug list. They do not have the concept of a standard drug list. They should learn from us. Actually, they know, but politically they could not do it. So one sees President Bush's prescription drug measures which probably helped him win some election votes last year. It was to expand the prescription drug list so that the elderly will vote for him. But it would further compound the financial and upcoming insolvency of Medicare and Medicaid. I just read an article before coming here in the latest issue of the Economist , about how Medicaid is going to bankrupt them in a few years' time. When Medicare and Medicaid started in the United States, I think in 1965, the percentage of healthcare expenditure contributed by the government was only 25% - one in four dollars. Today, after so many years of politicisation, Medicare and Medicaid now amounted to half of their huge total healthcare expenditure. That is the sort of system we should not walk into.

On the second point on counselling, I certainly think that it is a good standard operating procedure that before one starts any treatment on a patient, it is wise, fair and courteous to inform the patient and the relatives that, "I am not sure of the precise hospital bill, but roughly it will cost $500, $1,000 or $2,000." It is absolutely important, whether it is a subsidised ward, class "C" ward or private hospital. I think this is necessary. Unfortunately, I have occasionally found anecdotes of patients who have complained that they have no idea. In fact, one of our Members here, who is still present, told me just not too long ago that she went for some expensive dental

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treatment which requires a series of sessions and she was clueless about how much the total expenditure would be. I was pretty upset when I heard about that. So a few emails followed and we hope to rectify that error. But it is always good practice for all doctors, public or private, to be fair to the patients. Let them have some expectation of how much the bill will likely be.

Mr Low Thia Khiang: Sir, on medical records, I wonder what the Minister has in mind to ensure integrity and accuracy of medical records. I would also like to tell him that in the case of the constituent I cited, it was a computerised record. They entered it into the computer system and it was wrong.

Mr Khaw Boon Wan: I learned how to use the computer many, many years ago as a student. At that time we already heard this expression, "garbage in, garbage out", GIGO. As I said, there is no excuse for human error. We apologise for that, but I do not know what exactly caused it, who was the one who made the error. But once you record it wrongly then, of course, it is stuck there. But the computer has nothing to do with this. The poor computer is just an innocent inanimate thing.

Mr Low Thia Khiang: What about paper-based?

Mr Khaw Boon Wan: Even on paper-based, how do you ensure? I cannot guarantee there will be zero human error, although we should try. As a provider of whatever service, healthcare, public or whatever, our job is to make sure we do a proper job. There is always the supervisory system and so on. If anything, with computers, it is easier for me to surface some errors, at least on a system-wide basis. There is a possibility. With paper-based, it is stuck there in the file, somewhere. If there is an error, who knows? Nobody knows. But with the

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approach I am taking, we want to share out as much information as possible, among the healthcare providers. For sensitive information like HIV, yes, people will be alerted, "Are you sure it is HIV?" Because for HIV, we have to do a few other things. For example, if one is HIV-positive, we have to do counselling. If it is electronic, and for some healthcare worker who happens to see this patient in front of him or her, at least that would alert him to say, "It was recorded as HIV-positive. Have you gone through CDC counselling?" At least the patient will have the chance to say, "Who said I am HIV-positive?" Then we could discover the error. But, if it is paper-based, stuck somewhere in another hospital, which is not shared, this error may never surface.

The Chairman: We have one minute of clarification time left.

Dr Tan Cheng Bock: I want to seek a point of clarification from the Minister. He said that MediShield covers only "B2" and "C" classes. If somebody has a catastrophic illness and he chooses to go to "B1", must he downgrade, if he has MediShield cover to enjoy the MediShield payment?

Mr Khaw Boon Wan: Sir, the choice of ward is a decision that the patient has to make, but payout from MediShield will only be at "B2" or "C" level. In fact, the same patient could have gone to a private hospital but, of course, the claim rates would have to be at "B2" or "C" class.

The Chairman: We have used up clarification time. Dr Lee.