FINANCING OF HEALTH CARE

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FINANCING OF HEALTH CARE

• Kai-Lit Phua, PhD FLMI
• Associate Professor
• School of Medicine Health Sciences
• Monash University Malaysia

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Biographical Details

• Kai-Lit Phua received his BA (cum laude) in
  Public Health Population Studies from the
  University of Rochester and his PhD in Sociology
  (Medical Sociology) from Johns Hopkins
  University. He also holds professional
  qualifications from the insurance industry.
• Prior to joining academia, he worked as a
  research statistician for the Maryland Department
  of Health and Mental Hygiene and for the Managed
  Care Department of a leading insurance company in
  Singapore.
• He was awarded an Asian Public Intellectual
  Senior Fellowship by the Nippon Foundation in
  2003.

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Why should doctors be concerned with health
care financing?Rising health care costs in all
nations leading toGovernment cost control
measures e.g. regulation of pricesInsurance
company scrutiny ofactions of doctorsLoss of
clinical autonomy for doctors e.g. doctors cannot
prescribe expensive drugs or order expensive
procedures without getting permission from other
parties first
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Reasons for rising costs1. New technology
e.g. MRI, organ transplants, renal dialysis,
patented drugs to treat HIV/AIDS2. Population
ageing3. Epidemiological transition4.
Medicalisation of social problems5. Rising
expectations of the publice.g. expect better
hotel services in hospitals6. Systems of
health care financing without proper cost control
mechanisms7. Unwise spending by government e.g.
building more and more hospitals8. Inefficient
privatisation e.g. privatisation of Government
Medical Store in Malaysia
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How do we pay for health care?1.
Out-of-pocket i.e. patient and family pays 2.
Employer pays e.g. employer reimbursesthe
employee who sees the doctor3. Private insurance
scheme 4. Charity or PVOs (private voluntary
organisations) like National Kidney Foundation
5. Government i.e. through money raised from
taxes (Britains National Health Service) or
through a National Health Insurance scheme (South
Korea and Taiwan)6. Medical Savings Accounts
(Singapores Medisave)7. Foreign aid (important
in poor countries)
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How to control costs?New Technology1.
Control import and introduction of new technology
e.g. technology assessment law and certificate
of need law2. Get doctors to practise medicine
more cost-effectively e.g. prescribe generic
drugs, do not order expensive lab tests
unnecessarily3. Better planning and utilisation
of facilities e.g. whole of Australia has fewer
MRI machines than the Kuala Lumpur region! Reduce
the number of machines but utilise them more
fully.
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How to control costs?Population Ageing1.
Promote healthy lifestyles among the young as
well as the old2. Alternative ways of caring for
the aged e.g.care at home rather than in
institutions if possible3. Place aged in long
term care facilities rather than hospitalise
them4. Avoid heroic medicine if patient is a
terminal case
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How to control costs?Epidemiological
Transition1. Prevention and health promotion at
the individual level2. Spend more on
environmental health and occupational health
programmes3. Better regulation of food
industry(including the fast food industry and
the processed food industry)
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How to control costs?Medicalisation of Social
Problems1. Non-medical programmes to tackle
social problems such as smoking and drug/alcohol
abuse e.g. ban cigarette advertising, heavy taxes
on tobacco and alcohol products
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How to control costs?Rising expectations1.
In government hospitals, do not provide
unnecessary hotel services2. Patients should
be made to pay more if they want better hotel
services3. For chronic conditions, teach
patients and their families better self-care so
as to avoid expensive complications (teach
patients that not all diseases can be cured) 4.
Insurance companies should not pay for newer
drugs and medical procedures i.e. those that have
not been subjected to rigorous clinical trials
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How to control costs?Financing schemes
without proper cost control mechanisms 1. Pay
doctors and other health care providersthrough
capitation, salaries or negotiated fees. 2.
Lessen fee-for-service payments to reduce
supplier-induced demand 3. Utilisation
reviews to identify high cost doctors and
hospitals 4. More cost-sharing by patients e.g.
co-payments, deductibles and co-insurance(to
reduce unnecessary care-seeking, to promote more
appropriate care-seeking)
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How to control costs?Unwise spending by the
government1. Spend more on prevention and
health promotion e.g. spend more on prenatal care
rather than on neonatal intensive care2. Reduce
hospitalisation rates (i.e. wherever possible,
treat on an outpatient basis) and have quicker
discharges of hospitalised patients3. Utilise
lower cost health personnel to treat routine
medical problems e.g. use nurse practitioners,
medical assistants to do routine physical
examinations treat simple cases4. Dont build
so many hospitals
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How to control costs?Inefficient
privatisation1. Privatise only if this will
increase competition and result in greater
efficiency (lower prices, better service quality,
better access)2. Better laws and better
enforcement of existing laws regulating the
private sector e.g. one (controversial) proposal
would be to allow doctors and hospitals to
advertise and inform the public about their
charges for various procedures3. Where
privatisation is failing, the government should
take over from the private sector