Solutions for sustainable healthcare financing in Asean

Monday, March 9, 2020 - 15:04
3 -min read
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Despite a 250 per cent increase in healthcare expenditure across the Asean region, outcome measures such as life expectancy and Universal Health Coverage (UHC) index scores remain lower across the region than those of many developed nations.

In fact, countries can achieve the same level of life expectancy at 30 per cent of current healthcare expenditures according to KPMG Singapore's research. 

These were some of the figures shared at the launch of the "Sustainable Financing Framework" for Asean healthcare, an initiative by the EU-Asean Business Council, KPMG in Singapore, and SANOFI. 

This report is a sub-paper to an overarching paper published by the EU-Asean Business Council's Healthcare Committee which was published in 2019. About 30 public/private stakeholders across the ecosystem were interviewed to better understand what can eb done to achieve the vision of sustainable healthcare financing for the region. 

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The issues uncovered can be bucketed under three main themes: 

1. Unprecedented demand on healthcare: Within 20 years, all Asean countries will officially be “aged” societies, and the region continues to lose 9 million people annually to lifestyle-related disease while also representing 27 per cent of total global parasitic cases. The majority of the big six Asean countries spend less than 5 per cent of their GDP on healthcare, while UHC index scores remain around 70 out of 100. 

2. Whole system inefficiencies: Typically, less than 10 per cent of healthcare budgets are being allocated toward disease prevention programmes. The model of healthcare services purchasing encourages volume-based activities, and medical technology purchasing fails to properly value innovation. On top of all is the lack of human capital available throughout the system.

3. Unsustainable financing base:  There is low tax collection (well below the 15 per cent tax-to-GDP target set by the IMF) combined with large proportions of informal workers who do not contribute to national health insurance schemes. In addition, ineffective risk pooling fails to maximise the funds and instead creates fragmentation.

In response to the current situation, the report offered two sets of recommendations. The first, to resolve inefficiencies in the existing system, offered suggestions including: 

- Establish a more regular routine for driving healthcare across ministries 

- Bring prevention concepts into reality and apply sticks but also carrots for healthy lifestyle choices. 

- Leverage human capital and incorporate task-shifting into healthcare system planning such as augmenting the roles of nurses and pharmacists (like in the UK) 

At the panel discussion during the launch, many panellists referred to how the public and private sectors in Singapore have come together to encourage people to adopt preventive measures. This ranges from the government ensuring that educational material is specifically tailored to different societal groups, to subsidies to encourage a more active lifestyle. The panellists also noted that companies have started rolling out well-being initiatives for employees to encourage them to embrace a more active lifestyle. 

The second set of recommendations revolved around revisiting the core financing model to upgrade the system. Suggestions include: 

- Raise the role of private insurance to build the future of healthcare coverage together. For example, encourage citizens to take action by offering a tax relief for private insurance protection (like in Malaysia).

- Look beyond traditional financing – social impact bonds, individual health savings accounts, e-payments, crowdfunding, earmarked schemes (e.g. elderly, cancer). Utilise the variety of novel contracting models available (e.g. outcomes-based).

- Review population risk pooling to ensure there is maximisation of the available funding, not fragmentation and waste. One method is to consolidate schemes into a universal basic package that is supplemented by flexible, need-specific plans.


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