From: Law Sin Ling
09 March 2006
Hoodwinked By Government Price-Fixing
Sg_Review
Following a series of shrill public complaints that some medicines
sold at government-run polyclinics are more expensive than similar
products sold at public hospitals, the Minister of Health Khaw Boon
Wan reluctantly admitted a horrible truth, and allowed Singaporeans a
sneak glance of yet another elaborate Made-In-Uniquely-Singapore
controversy.
The Minister confessed that drugs dispensed at polyclinics are sold at
a fixed price of $1.40 for one week's supply, regardless of how cheap
or expensive the drugs are. The bill of one patient showed that 6 out
of 9 of his medicines cost more at the polyclinic he visited than at a
public hospital (National University Hospital).
It is highly probable that the majority of polyclinics patients are
unknowingly paying more than necessary. An overall surplus is hence
expected from the sales of drugs alone.
The Minister faintly justified that the systematic fixing of price
allows 'profit' made from their sales to be channelled to help
patients who need more expensive drugs, by depressing the cost of such
drugs.
This form of "Robin Hood" scheme the Minister proclaimed and practised
is flawed and deceiving.
It is a sort of distribution of medical financial liability among the
people who patronise polyclinics, largely the middle and lower income
group. Patients in this group comprise the families of no less than
60% of Singapore income earners. The latter have incidentally
experienced little or negative average earning increment over the
years. They and their families are the ones most in need of State
assistance.
The scheme essentially translates to getting the poor to finance the poor.
Another problem is the inaccurate assumption the Minister makes on
payment proportion. If the excess amount paid for drugs (through
overcharging) is not exactly balanced by the amount of subsidy
(through undercharging), then one would have either a surplus from the
sales of drug, or a deficit.
In either scenario, the weakness of the scheme raises hard questions,
On one end of the outcome, it unfairly penalises those who take pain
to stay healthier, and potentially reward those who do not.
Furthermore, any net revenue (surplus, as the current situation would
produce) will need to be accountable, which is not the case currently.
This will also necessitate a review of the current fixed price.
At the other end of the outcome, a net shortfall will mean that
additional fund has to be sought from somewhere else if the price of
drugs to the patients is to remain affordably low. Critically, it also
indicates that despite the overpaying by the majority, the price of
drugs sold in polyclinics is distressingly high, or that popular but
expensive drugs are in high demand.
Generally, the scheme distorts the market principle which is applied
to the component of the medical bill not subsidised by the government.
Taking from those (among the economically challenged) who should be
paying less to help subsidise those who could be paying more is an act
that does not enshrine the nobleness of the Sherwood legend (It is
even more inappropriate for the Minister to compare his act to that of
the latter).
The scheme reduces the commitment of the government to provide
effective and cheap health care services to the masses who do not need
the more costly specialised treatments in hospitals. It passes the
responsibility of health care subsidy from the government to the
people, which in this case are the poorer 60% (by conservative estimate).
The scary aspect is not knowing where the 'profit' derived from those
who overpay are heading. The situation is exacerbated by how it took a
few sharp observers to ferret this irregularity while the government
kept silent on it for years.
Adding salt to insult is the Minister's boast about lowering overheads
on the purchase of drugs through its group purchasing office, without
adequately addressing the continual need to saddle the people with
devious cost-recovering technique.
Instead, the Minister advised the public to focus on overall savings
at polyclinics as compared to hospital. He even casually added that
"Otherwise, there will be no incentive for patients to move out of
expensive acute hospitals".
This argument is moronic and irrelevant.
Polyclinics and hospitals cater to different financial classes,
especially where common clinical ailments are concerned. Improving the
services in polyclinics (such as solving the long waiting time) will
also draw the patients back. More importantly, patients do not
patronise hospitals if cheaper and more effective alternatives are
available.
The gradual evolution in the priority of the government on public
health care service from one of essential public service to one of
economic and business imperative is disturbing.
In 2005, Khaw rejected the proposal to offer joint public-private
tenders to buy drug in bulk which would have reduce the cost overhead
of the private health-care sector, allowing the latter to become more
competitive to the point of potentially offering more cost-effective
health services than that in polyclinics.
In the same year, night clinic services at polyclinics were abruptly
terminated with the usual cursory explanation that "resources are
finite and (MOH) have to prioritise". Singaporeans fondly recalled
that the services were initially offered "for poor residents who
worked during the day." The size of this latter group is still increasing.
Polyclinics have effectively become government-run competitors to the
private sector clinics. As such, the government deems it sufficient to
offer a more competitive price by lowering overall bill for
polyclinics to ensnare clientele (patients).
This goes against the spirit of fair competition since the polyclinics
have the advantage of leveraging on government resources to economise
where it can. Besides, polyclinics were not established to compete
against the private sector, and much less the hospitals.
The government protectionism, erratic policies, and deliberate
pernicious price-fixing, leaves the health Minister's verbally
articulated good intentions to lower health care cost conclusively
untrustworthy.
(Mr) Law Sin Ling
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