A better way to pool risk for the health of B40 households

Being a policy researcher, often I study government's policy (especially public health-related) and try to improve them through policy analysis and recommendation. This is one I am currently working on. Together with my colleage Kenneth Cheng, we propose to 'reform' the current Selangor model of Skim Peduli Sihat programme to one which is much beneficial to the B40 families in Malaysia.

Happy Malaysia Day!

Below is the article I wrote on the topic, published in The Malaysia Insight.

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Original title: A better way to pool risk for the health of B40 households

How affordable is it for a household with a monthly income of under RM3,000 to visit a private clinic? According to the 2015 National Health and Morbidity Survey, B40 household respondents forked out an average of RM41.45 per visit for a minor health problem, amounting to around 1.4% of their monthly income.

A healthcare welfare programme called Skim Peduli Sihat (SPS), introduced by the Selangor government in 2017, caters to B40 households.

This programme currently provides an annual limit of RM500 per household for private clinic visits, with a cap of RM50 per visit. Qualified individuals with incomes amounting to less than RM1,500 would get an annual limit of RM200.

Given its limited jurisdiction over health and financial resources, the Selangor government should be commended for having good intentions with regard to looking after residents’ health – especially of those in lower household-income brackets.

However, the issue with the existing SPS model lies in its limited coverage – it does not extend to tertiary care. Expenditure on more severe health issues could easily cripple B40 households.

Furthermore, government health clinics under the Health Ministry are already providing primary care services to those who cannot afford private services.

Among its manifesto promises, Pakatan Harapan pledged to introduce SPS nationally, based on the Selangor model.

This implementation will require a budgetary allocation of no less than RM1 billion. Meanwhile, questions have been raised about the need and wisdom investing such a large sum in the SPS programme and divert patients towards seeking care at private healthcare facilities, instead of investing to develop and increase the capacity of public healthcare facilities.

There are also doubts as to whether the programme will eventually lead to revival of the abandoned 1Care national health insurance plan.

While these are likely valid concerns, I do not intend to dwell on them in this article. My aim is to provide an alternative takaful model of a more impactful SPS programme, which, coincidentally, is in line with the present direction of the Health Ministry.

Health Minister Dr Dzulkefly Ahmad replied in Parliament on July 23 that the ministry will adopt an alternative approach. The aim is to implement a healthcare scheme which differs from the Selangor model, focusing more on takaful concepts of health protection, including day care, inpatient care, health screening, preventive care and health promotion.

Deputy Health Minister of Dr Lee Boon Chye said on another occasion that the alternative SPS plan will be announced in Budget 2019 in November.

Furthermore, Dr Lee hinted at a health insurance scheme with a minimum of RM10,000 to RM20,000 per year, provided to B40 households, for medical treatment expenses when admitted to a hospital ward.

I certainly welcome the modifications to the original SPS model – a bill of under RM50 per private clinic visit should already be affordable, even to most B40 households.

Continuing the policy based on the Selangor model could be interpreted as a populist measure but one that is unlikely to offer meaningful help to many, especially those who need financial coverage for more serious health issues.

When it comes to private healthcare, financial obstacles tend to be a major access barrier for a majority of B40 households. In 2015, it was found that B40 individuals were thrice as likely to go for government outpatient facilities, and only 10% were admitted to private hospitals.

Let us imagine a situation where the allocated budget (more than RM1 billion) could be risk-pooled to provide B40 households access to private hospital services as an alternative to government hospitals, can the government feasibly afford such a programme using the estimated budget allocated for the original Selangor model?

Based on the prevalence of inpatient admission, perceived treatment charge and utilisation rate of B40 household residents for major health treatment and major surgery in private healthcare facilities, my colleague Kenneth Cheng Chee Kin and I have calculated that if the maximum claim allowed for inpatient services is RM10,000 per household per annum, and assuming a claim rate of 100%, it will likely only cost the government 56.6% of the maximum SPS budget.

A maximum claim limit of RM20,000 is also feasible, provided that the claim rate is 88% or less. This, however, may not be feasible if the government also includes private outpatient services. Such an arrangement would use 98.7% of the maximum SPS budget in 2020, and likely run into deficit thereafter.

Still, this does not take into consideration changes in the behaviour of B40 individuals as a result of access to the SPS government subsidy. It is reasonable to predict that this policy will result in more frequent use of private healthcare services.

For example, about 40% of T20 individuals chose private hospitals for major surgery in 2015. If the B40 individuals emulate the behaviour pattern of the T20 individuals, the SPS programme would go bust and require a further financial injection of 115.2% of the original budget allocation.

In theory, no one likes to fall sick and “abuse” the healthcare subsidy. However, due to asymmetrical or insufficient knowledge of medical information, the average Malaysian may not make the most efficient and effective decisions when it comes to seeking medical advice and treatment.

For example, a minor medical condition, such as a skin rash, which may not yet require specialist attention, may nevertheless worry the affected individual who has insufficient knowledge, such that he or she jumps straight to consulting a dermatologist in a private hospital. Actions of this variety inevitably drive up healthcare costs almost unnecessarily.

To prevent such incidents from happening, doctors in government clinics must act as “gatekeepers” and B40 patients should only use SPS subsidies after referrals are made. Besides, patients should also be paying co-payment equivalent to the rates currently imposed in government hospitals, to prevent preferential treatment to patients seeking care either at public or private hospitals.

The edited article titled 'Extending healthcare to B40'' is published here at The Malaysian Insight, Voices, Sept 11, 2018.