Healthcare subsidies: Do we need more or less of these?

20170109060000, Alicia Zheng
Patients, especially the elderly and those from low-income families, are those who directly benefit from healthcare subsidies. This showcases how important subsidies are in helping every individual attain healthcare when they need it, regardless of their socioeconomic status. Though patients tend to think that the more subsidies there are, the better it is, there is actually a very fine line between having too many subsidies and having too few of them. What are the effects of too many subsidies, or too few, on the healthcare system?

Too few subsidies reduce the quality of a healthcare system

In some developing countries, there is little budget for healthcare and thus little subsidies available for healthcare providers. Due to the lower amount of budget allocated to the sector, the healthcare industry is also not appealing to many jobseekers. The lack of manpower in the hospitals in these developing countries is evident, where they can barely handle the load of patients coming in on a daily basis.

With little choice, the sector would be forced to lowered their standards, thus more often than not many of the nurses and doctors that enter the industry tend to be poorly trained or barely-qualified. In such an environment, subsidies for the patients are also limited, and meant that those who needed healthcare services might not be able to afford them.

Too many subsidies slow down processing of the healthcare system

However, too many subsidies can also cause the healthcare system and ultimately the patient to suffer. The most well-known example would be the UK’s NHS healthcare system where healthcare is basically free. Free healthcare sounds wonderful, until the patient has to experience it. 

Even for a simple consultation, the appointment can take weeks to set and walk-ins are nigh impossible due to the sheer number of people already waiting in front of the patient. Prescriptions and diagnosis are also hastily given simply because the healthcare providers are not incentivised into giving a more detailed checkup. Private clinics can, therefore, be attractive to patients, due to shortage appointment time and more comprehensive checkups, and can thus become overpriced. In this instance, only two extremes on a spectrum are prevalent in the healthcare system: the free and the overpriced.

While this example is extreme, it does show that too many subsidies can also jam the system when demand is too high to match the supply, and the healthcare pipeline becomes clogged with patients.

Increasing budget for healthcare a necessary evil

Looking at Asia, where there are also several developing countries, some patients might not have much faith in their countries’ healthcare system. Subsidies, in this case, can potentially be a good thing - a demand for better healthcare, coupled with available subsidies, could incentivise these patients to seek medical help within their own country. With a new intake of doctors and nurses to meet demand, supply would also be ensured.

Thus, when budget ceilings are tested, and organisations are forced to upgrade to accommodate the rising demand, it actually improves the quality of healthcare and the population’s overall health. An increase in the budget for healthcare, which means more subsidies for patients, can, therefore, be considered as a necessary evil for developing countries.

The fine line between too many or too little subsidies

To reiterate, there is a very fine line between having too much or too little subsidies. Either one of these can cause the healthcare industry and system to start on a downward spiral. What is done becomes difficult to be undone. Thus it is important to note how subsidies can help or harm the system – for example, subsidies in a developing nation could potentially be a good thing, whereas subsidies in a developed nation could potentially do more harm than good for the economy.

It is also worth noting that healthcare professionals’ performances depend on this system as well, and a flaw in one aspect of this chain can cause a domino effect on these professionals’ performances and time spent on each patient. Ultimately, it will be the patients who suffer from the reduced quality of healthcare provided, so it is crucial for any government to carefully consider the implication of healthcare subsidies before implementation. MIMS

Read more:
Singapore healthcare subsidies: Lots more room to improve, as compared to Asian Tiger counterparts
A look at healthcare systems across Asia
Top 10 countries with the best healthcare system
Can elderly Malaysians afford to retire with the increasing costs of healthcare?

Sources:
1) “Constraints on healthcare budgets can drive quality”. https://hbr.org/2013/11/constraints-on- health-care-budgets-can-drive-quality
2) “The effects of medical tourism: Thailand’s experience”. http://www.who.int/bulletin/volumes/ 89/5/09-072249/en/