Now that the 1999 general elections have been "safely if not satisfactorily" concluded, healthcare reform has re-emerged as a reportable issue in the mainstream media.
On January 18, 2000, the Star's front-page headlines announced that the Employees' Provident Fund (EPF) had entered into an agreement with the Life Insurers Association of Malaysia (LIAM) which would allow for "the estimated five million active EPF members [to] use their savings to sign up for a health insurance scheme [beginning] this June. Under [this] scheme, contributors can authorise EPF to pay the premiums from their Account III (health) annually...
"Members can opt for a low-premium scheme covering 13 critical illnesses - major organ transplants, coronary bypass surgery, heart valve replacement, surgery to aorta, stroke, coma, cancer and benign brain tumour, serious injuries due to accidents, congenital heart diseases, congestive cardiac failure, chronic renal failure, meningitis and encephalitis - or for one covering 36 major illnesses at a higher premium."
The premiums payable, ranging from RM30 annually (RM10,000 pay-out upon diagnosis, age 35 years and below) to RM20,034 annually (RM100,000 pay-out upon diagnosis, expanded coverage, age 65-70 years) are to be charged in accordance with an age-gradient. Female EPF members would furthermore be given a 30% discount in premiums to reflect a lower overall incidence of the designated illnesses, relative to males.
It is unclear whether this initiative in healthcare financing will in time be markedly expanded to become a major component (financing mechanism) of the healthcare reforms that the government is quietly putting into place.
Quite apart from the adequacy of the pay-outs (even as supplements), for meeting the treatment costs of these major illnesses, the Citizens' Health Initiative (CHI) has serious reservations about this scheme as a potential, major vehicle for healthcare financing.
The CHI re-iterates its opposition to the involvement of for-profit commercial insurance in a national health financing scheme, a stand we have enunciated in our founding document, the Citizens' Health Manifesto http://www.malaysia.net/aliran .
An insurance scheme is a profoundly social undertaking. Whether in the form of a publicly managed scheme, a co-op arrangement, or a commercially purchased policy, it is in essence a mechanism for pooling the risk of catastrophic events faced by individuals who band together in a collective enterprise.
It is necessarily a group undertaking (familiar to those who participate in tontines) because it is based on the recognition that the unfortunate, random individual, relying just on his or her resources, would be overwhelmed and unable to cope with the catastrophe. Cross-subsidy is
therefore the heart and soul of insurance, the well subsidising the ill, with the important proviso that there is little prior indication as to who might suffer the catastrophic event. Such is the logic and rationale which drives the system.
The logic of private enterprise however is to maximise profit. In the field of insurance this means discriminating between risk categories, fragmenting the market into those considered at higher risk of illness, and those at lower risk. This is why your insurance premiums increase when you cross the risk threshold at age 40, and skyrockets when you enter your 60s and beyond (as is the case with the EPF-LIAM scheme).
Family history of heritable illness, in time to be replaced by DNA screening, will attempt even finer discrimination between risk categories, notwithstanding the cautions of molecular geneticists, epidemiologists and ethicists most familiar with the limitations of the emerging technology. Or more simply, just ask anyone with pre-existing chronic illness, or HIV seropositivity, who has attempted to enroll in a typical insurance scheme.
All this is understandable given the imperative of the commercial sector to turn a profit. But what has happened here? An acknowledged and necessarily social undertaking is being subverted by a process of fragmentation and individualization of risk whose logical end-point is its own antithesis : the sick to bear their own cost-burden of illness, the healthy to rejoice in their good fortune (or "good genes"?).
Is this the kind of health care system we want? Or the kind of society we feel comfortable living in? What has happened to our Asian values and ethics, which put the priority of our collective welfare above that of individualist concerns? Is insurance, a quintessentially social undertaking, compatible with the dictates of private enterprise?
These are not alarmist fantasies. Other countries have taken heed of these socially-corrosive, anti-communitarian tendencies. In Australia, there are legislated bans on risk rating, in favor of uniform community rating. Partial solutions will not work as evidenced by the experience of Blue Cross/Blue Shield in the USA, who saw their younger, healthier subscribers desert to the for-profits such as Aetna when they offered lower premiums to this low-risk group. Blue Cross/Blue Shield was left carrying the baby, or more accurately, the elderly, who are intensive users of medical resources.
To no one's surprise, the Blues eventually introduced their own risk rating just to remain viable. The lesson therefore is quite clear - selective opting-out by low-risk individuals, encouraged by profit-oriented underwriting, will thoroughly undermine the implicit compact and cross-subsidy that is the essence and raison d'etre of social insurance.
The EPF-LIAM scheme as presently structured is an astute gambit by the health insurance industry to create market openings. It seems to be cobbled together to avoid strong resistance from powerful interests. Healthcare providers (doctors, hospitals, pharmaceutical and supportive services) would be comfortable with the present arrangement for re-imbursement - "sum assured" upon diagnosis, payable direct to the policyholder, rather than itemised billing based on treatment modality and incidentals. Most importantly, the third-party payer (insurer) does not intrude itself as an intermediary between the patient-subscriber and the provider, thus avoiding for the moment a perceived threat of imminent managed care.
The insurers, we can assume, are more concerned with market building at this stage, with below-market premiums, so as to habituate a larger public to the practice of buying commercial health insurance. The price increases (and managed care?) can come later, as long as the key element of differential risk-rating (unavoidable with unregulated, profit-driven underwriting) is institutionalised.
In short, consumers and providers may perceive that they don't have much to grumble about for the moment (if you accept the argument that the most sick-prone should pay the most, i.e. those who need healthcare most would be least able to afford it), but the thin end of the wedge would be in.
It is particularly regrettable that EPF, as an employee (social) security fund is being used as a Trojan Horse to institutionalise risk-profiling as a basis for differential, discriminatory premiums for the aged and high-risk subscribers (perfectly normal in for-profit underwriting but completely at odds with principles of uniform risk-rating and solidarity in social insurance).
It is for this reason that CHI has called for a ban on profit-oriented insurers from health insurance, or at the very least a tight regulation of commercial insurers, to set premiums and to disallow discriminatory risk-rating.
Short of a UK-style national health service, CHI much prefers a National Health Fund - a payroll-based scheme (employer/employee contributions) with supplementary contributions from progressive taxation to extend its benefits to all citizens and legal residents. It would be operated as a non-profit statutory institution with effective and credible citizen participation.
We consider this a realistic, immediate-term goal on the assumption of a continuing mix of public-private providers. A single-payer publicly-operated healthcare fund would be able to lean more effectively on private sector healthcare providers (for cost control) while ensuring that mandated standards in clinical care and institutional upkeep are not compromised; in other words, cost-efficient care which is in line with norms of medical necessity.
Dr CHAN CHEE KHOON is an epidemiologist teaching at the School of Social Sciences, Universiti Sains Malaysia. He is a co-founder and co-ordinator of the Citizens' Health Initiative
