Consider health-care 'performance warranties'

SINGAPORE - I agree with Mr Jeremy Lim's observations on MediShield Life ("Making MediShield Life even more robust"; last Tuesday). Society should not allow the insurance industry to raise prices without justification, and it should demand "performance warranties" from the profitable health-care industry.

Mr Lim is right that MediShield Life might accumulate large reserves in the coming years.

During a debate in Parliament, it was stated that the loss ratio on MediShield averaged just 63 per cent from 2001 to 2012 ("Clash over MediShield premiums v payouts"; May 28), meaning just 63 per cent of the premiums collected was paid out to those insured.

Reserves are important but we should be pragmatic with a compulsory health insurance scheme with historically low medical loss ratios.

The $4 billion the Government is spending on subsidies for MediShield Life over the next five years should spur the authorities to avoid pegging overly high "rate bands" between the higher-risk elderly and the lower-risk young people.

We must focus on cost control. Why should the health-care industry automatically raise prices substantially every year when the typical worker's salary sees no such growth?

The industry should be responsible to patients and abide by fair business practices in providing warranties for satisfactory "workmanship", like what the manufacturing industry does.

MediShield Life should require the health-care industry to practise evidence-based medicine that works best for patients and provide performance warranties to rein in rising costs.

We should take a leaf from the book of Geisinger Health System in the United States, whose Provencare model charges a flat fee and effectively offers a warranty for heart surgery.

Geisinger chief executive Glenn Steele believes that "we shouldn't get paid if we don't do the right thing".

That should be the mantra of MediShield Life.

Paul Chan Poh Hoi

This article was first published on July 8, 2014.
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