Thursday, 31 May 2018
Good read, an letter written to Star
I SUPPORT Dr Steven Chow’s views on the medical middlemen, “Cut out the middlemen for better GP care” (The Star, May 25).
The HMOs grew rapidly by controlling the funding and capital of medical care. Together with traditional insurers, they achieved virtual monopoly of the market, reaped profits and grew faster than any other business.
The next phase of corporate mergers and acquisitions pushed the market value (capital cost for newcomers) ever higher and the cost of medical care spiralled out of proportion to the market inflation rate. The golden age of medicine in the US from the late ‘70s to the mid-90s resulted in mind-boggling profits and stupendous salaries for HMO executives. “Hundreds of times better than KFC,” proudly declared one executive.
Meanwhile, the earlier idealistic non-profit organisations that endeavoured to enhance healthcare for patients while controlling costs were lost. In their place emerged the infamous “medical-industrial complex” of a plethora of insurers and MCOs and groups of medical practitioners all seeking a higher profit share.
By 2017, healthcare cost in the US had exceeded US$2.2tril or nearly 22% of GDP while quality of care ranked between 25 and 30 among the 35 Organisation for Economic Co-operation and Development (OECD) countries. A large portion of this “most expensive medicine in the world, double the payment, half the quality” was due to the forces of this pseudo-free market.
The medical profession had become a maleficent threat to people’s life and wellbeing. Yet President Donald Trump’s first executive order was to abolish the Obama Affordable Healthcare Act, which endeavoured to control the insurance and MCO industries.
In Malaysia, private medical care is fast heading towards the US route. From independence to the early 1980s, the medical professionals were a happy lot. Although they were “conscripted workers” (compulsory service under the Essential Powers Act) with the lowest hourly pay rate in the civil service, their spirit of constructive cooperation built up the entire medical service such that within 20 years, Malaysia had become a role model in the developing world.
There was an extensive network of general practitioners (GP) across the country but not one GP became a multi-millionaire by medical practice alone.
In 1996, the government introduced personal tax relief for purchase of health insurance, and there was also a proposal to allow EPF withdrawals for this purpose. The following year, Bank Negara also loosened the restriction on life insurers selling health insurance.
The insurance association started the Sihat Malaysia scheme products managed by certain MCOs, and the market was opened for the entry of private insurers and MCOs into healthcare. From 2009 to 2014, total private health insurance (PHI) premiums increased at an annual rate of 12.5%. By 2015, PHI had covered approximately one-third of the Malaysian population and accounted for 23.6% of total expenditure (National Health and Morbidity Survey data).
Corporate mergers and acquisitions soon resulted in private hospitals and insurance market acquisitions. In the last 10 years, two private hospital groups have gone on to control over 80% of private hospital beds and the top three insurers are now accounting for more than 50% of the healthcare premium collection. Besides this high capital expenditure of market games, there is also the high operating expenditure of 20%-25% of gross revenues.
Read more at https://www.thestar.com.my/opinion/letters/2018/05/31/wrestling-with-managed-healthcare/#pb6rm01r6yahT1e2.99