$4 billion boost keeps MediShield Life affordable
For almost all S'poreans, premiums will be lower or they will rise a little
By Salma Khalik, The Straits Times, 28 Jun 2014
WHEN the new MediShield Life scheme is implemented next year, almost all Singaporeans should either pay lower premiums than today, or face a small increase of less than $100 a year.
And those who want to upgrade coverage using Integrated Shield Plans (IPs) should be able to opt for a standardised IP that will provide coverage at B1-class level. These are among the key recommendations of the MediShield Life Review Committee which submitted its full report to the Ministry of Health (MOH) yesterday.
Accepting the recommendations, MOH said the Government will spend $4 billion over the next five years on subsidies for MediShield Life.
The 11-member committee was asked last November to come up with recommendations for a national medical insurance plan that will cover everyone for life, with better benefits than the current MediShield while keeping premiums affordable.
Benefits for the new MediShield Life scheme, announced three weeks ago, include raising daily and annual caps and removing the lifetime claims limit. This will halve the number of subsidised patients who, after insurance, have hospital bills of $3,000 or more a year - from nine in 10 to four in 10.
Yesterday, the committee revealed the schedule of premiums that go with these higher benefits.
"Premiums will go up because of better protection and coverage for all, but the Government will provide support to keep premiums affordable," it said.
* MediShield Life Premium Calculator
Prime Minister Lee Hsien Loong also emphasised this in an interview with journalists in the United States, saying that "affordability should never be an issue".
This support will come in the form of permanent subsidies of between 15 and 50 per cent for those with a monthly per capita income of up to $2,600 - covering two-thirds of the population. The rest face higher premiums, but there will be transitional subsidies over four years to ease them into it.
MOH also promised to ensure that Medisave withdrawal limits can continue to fully cover MediShield Life premiums. It noted that the additional 1 percentage point employer Medisave contribution from next year will be sufficient to cover the increases in premiums for most households.
This means that almost all households will not need to dip into their Medisave reserves.
Yesterday, committee chairman Bobby Chin also pledged that the new premiums will not change for the first five years.
The committee also decided to look into IPs although this was not part of its mandate. It suggested that the Government improve the "existing regulatory and accountability framework" and mooted the idea of a standardised IP with uniform premiums pegged at the B1-class ward, with premiums fully payable with Medisave.
Mrs Hauw Soo Hoon, who headed the IP sub-committee, said: "We see runaway medical inflation, sometimes over-consumption, sometimes over-provision, and that is why the premiums keep going up."
Commenting on the committee's report, Dr Chia Shi-Lu, head of the Government Parliamentary Committee (GPC) for Health, said that it should give assurances to patients. "Our GPC will be engaging the public to see what they feel about the new premiums. However, the figures seem within the acceptable zone suggested by diverse segments of the public during our engagements," he added.
The Government will table the report in Parliament as a White Paper for debate next month.
Post by Ministry of Health.
MediShield Life panel details premiums, assures affordability
Younger Singaporeans will pay as much as three times the amount they are paying now
By Kok Xing Hui, TODAY, 28 Jun 2014
The MediShield Life Review Committee has revealed, in its final report, details of the increased premiums Singaporeans will have to pay under the Republic’s new mandatory national insurance scheme, with the committee assuring that premiums will be “affordable” with the help of government subsidies.
Younger Singaporeans are set to pay almost three times as much in premiums as they do now, in line with the committee’s recommendations to distribute premiums such that people pay more during their working age and premiums rise less in their old age.
This means a lower-middle-income Singaporean aged 31 to 40 who currently pays S$105 a year for MediShield will pay S$310 a year, before permanent and transitional subsidies to be provided by the Government to the tune of S$4 billion over five years. With the permanent and transitional subsidies, the said person will pay S$134 in the first year of MediShield Life.
Older Singaporeans will see premiums rise by a smaller scale. For example, a Singaporean aged 66 to 70 who currently pays S$540 a year in premiums will pay S$815.
If he is in the lower-middle income group, his premium in the first year will be S$546.
The premiums, which were determined by the committee and the Ministry of Health and its actuarial adviser, take into account enhanced protection and benefits — announced earlier this month — and the cost of bringing everyone onto MediShield Life, which will be implemented at the end of next year.
The permanent premium subsidies — available to two-thirds of Singapore households — will be available for both Singaporeans and permanent residents, with PRs to get 50 per cent of the subsidy rates for Singaporeans. Transitional subsidies, which will ease the shift to higher premiums over four years, are available to Singaporeans only, regardless of their income.
Earlier this month, the committee announced its recommendation for enhancing MediShield Life benefits, with increased claim limits for hospital stays and various treatments, and coverage extended to those aged above 90 or with pre-existing conditions.
Yesterday, the Ministry of Health (MOH) said the Government had accepted all the committee’s recommendations on the design of the scheme and would debate it in Parliament next month. In an interview with the Singapore media on his trip to the United States, Prime Minister Lee Hsien Loong commended the committee for its work on the “complex proposal”.
The premiums, he noted, are affordable and payable by Medisave. “I think that is a design feature that we will maintain so, over time, as costs change, as premiums change, we will make sure it can be paid out of Medisave and, therefore, affordability should never be an issue,” he said.
The MOH said it would ensure Medisave withdrawal limits could continue to cover the premiums, while the additional 1 per cent employer’s Medisave contribution that will take effect from next year is expected to cover increases for most households.
Premiums, which are subject to further hikes due to factors such as healthcare inflation costs, are also expected to remain unchanged for at least five years, the committee said yesterday at a media briefing. Currently, they are reviewed every three to five years.
Mr Bobby Chin, chairman of the committee, noted that for the pioneer generation, premiums would actually be lower than what they pay now. The expected higher claims arising from those with pre-existing conditions and the enhanced benefits and raised claim limits would “logically” lead to a higher loss ratio — the ratio of claims to premiums — than that currently, he said.
The current MediShield scheme has reserves of more than a billion dollars and a medical loss ratio of 63 per cent, which some have said should be higher to assume more healthcare costs.
Even with the higher ratio, Mr Chin said the scheme would still be sustainable as all parameters had been given to the actuarialist and the ministry for calculation of the premiums. The committee noted that MediShield Life would also need to set aside reserves and other provisions to meet its current and future expected liabilities.
With the scheme now mandatory, the Government should consider “suitable” enforcement measures and penalties for those who “wilfully default” on premiums, the committee said, adding that other nations with universal insurance schemes have such frameworks.
PM: Govt will ensure scheme stays affordable
By Fiona Chan, The Straits Times, 28 Jun 2014
WHILE Singaporeans will have to pay higher insurance premiums under the new universal health-care plan MediShield Life, the Government will ensure that "affordability should never be an issue", Prime Minister Lee Hsien Loong said on Thursday.
The premiums payable for the health-care plan, which will cover all Singaporeans and offer better protection against large medical bills, will be kept within each person's Medisave contributions, Mr Lee said in an interview towards the end of his week-long visit to the United States.
"That's a design feature which we will maintain. So over time, as costs change, as premiums change, we will make sure that (the premiums) can be paid out of Medisave and therefore affordability should never be an issue."
Mr Lee was speaking to reporters in New York ahead of the release of the full report on MediShield Life yesterday.
He also praised the MediShield Life Review Committee for doing "a good job" in coming up with its "very complex proposal".
"It's a major step forward in enhancing our social safety nets, in assuring Singaporeans that they will have better protection against big medical bills," he said.
"We have to get the details right, we have to make sure that the premiums are affordable, we must make sure that there is support for the groups which need the support," Mr Lee added.
"I think that the committee has done its best to look into all these aspects and to make sure that the scheme we have is a good one."
Subsidies, top-ups will cushion premium rise
For low and lower middle income groups, premiums will be lower
By Salma Khalik, The Straits Times, 28 Jun 2014
PREMIUM increases for the better benefits of MediShield Life will be less than $360 a year, and most or all of them will be absorbed by various subsidies and top-ups for the majority in the first year.
The MediShield Life Review Committee yesterday released its full report, which included details of premiums, benefits, subsidies and the suggestion that the Government work with insurers to set up a standard higher plan pegged at the private, B1-class ward.
Given the significant increase in benefits - such as the removal of the lifetime limit and higher daily and annual claims - and the inclusion of the old and the sick, people had feared premiums would rise so much that they would not be affordable to many.
But the biggest rise in premiums before subsidies will be $355 a year for people aged 75-77 years - from $775 to $1,130.
In fact, for the low-income and lower middle income groups in this age band, the revised premiums will actually be lower with the government subsidy.
Their MediShield Life premiums will be $678 and $735 a year respectively if they do not qualify as pioneers - such as permanent residents and those who became citizens only after 1987 - and $517 if they do qualify as pioneers. The pioneer generation refers to those who were citizens before 1987 and are 65 years and older this year.
High-income people in this age band who are non-pioneers will get transitional subsidies for four years. They will pay $846 in the first year, and the full $1,130 in the fifth year, after the subsidies run out.
A transitional subsidy of 80 per cent will be given to anyone whose premiums have gone up after the permanent subsidies have kicked in. The transitional subsidy will be reduced to 60 per cent, 40 per cent and 20 per cent in subsequent years. The low premiums are possible with the Government underwriting more than 40 per cent of MediShield Life premiums for the first five years.
Past that, the 15 per cent to 50 per cent premium subsidy for two in three people will continue as a permanent feature. This subsidy now costs $230 million a year, but is expected to increase beyond the initial five-year period.
In a statement yesterday, the Ministry of Health (MOH) said: "With the substantial government subsidies and support, premiums will be more affordable for most Singaporean households."
It added that all pioneers will pay less in premiums than they do today, with those aged 80 years and older not having to come up with any money as their premiums will be fully covered between the subsidies and the Medisave top-ups they will receive.
This is regardless of how rich or poor they are.
The committee has decided to follow the current MediShield practice of each age band paying for itself - so inevitably, premiums will rise with age.
To cushion the impact, it has recommended significantly higher "advance" premiums to be paid by working adults, which will reduce what they need to pay when they get older.
So someone aged 30-39 will have his premium almost tripling - from $105 to $310 a year.
However, this would still be affordable, especially with the 1 per cent increase in employer Medisave contributions from next year.
This same person will start getting an annual premium rebate from the age of 66 - instead of the current 71. The rebate increases with age and the amount depends on the age the person joined MediShield.
The maximum rebate, given when a person is 86 years and older, goes up from $449 a year today, to $537 with MediShield Life.
More benefits for lower premiums
By Kash Cheong, The Straits Times, 28 Jun 2014
RETIRED Inland Revenue Authority of Singapore officer George Chiang and his wife will pay lower premiums and get enhanced benefits when MediShield Life kicks in.
If both were under standard MediShield plans, they would pay monthly premiums of about $54 each. But under MediShield Life, he and wife Chung Perng, both of whom will be 74 next year when the policy kicks in, will pay only $41 each.
This amount factors in generous Pioneer Generation subsidies which will help to ease the burden of increased premiums by almost half. The Government will also provide further Medisave top-ups to offset premiums.
"Cheaper insurance premiums would help me save some money," said Mr Chiang, who has spent the bulk of his savings on his wife's medical bills. She suffers from diabetes, high blood pressure and vascular dementia, which developed only after she was covered by MediShield.
Currently, Mr Chiang pays about $3,000 in annual premiums for Integrated Shield Plans (IPs) for both of them.
But with enhanced cover under MediShield Life, the four-room flat dweller has considered quitting his IP to save money. "I am okay with staying in a B2 ward," he said. If he really needs B1 care, he can top up the difference.
But he may still subscribe to an IP for his wife. "I want to give her a comfortable stay so she recovers quicker," he said. Mr Chiang said he backed the proposed standardised B1 IP. "It's better to standardise and make things simple," he said.
MediShield Life Review Committee proposes standard integrated plan
By Wong Wei Han, TODAY, 28 Jun 2014
Private insurers may have to offer a more streamlined and standardised Integrated Shield Plan (IP) targeted for treatment at B1 wards if the MediShield Life Review Committee has its way.
It has recommended that the Government work with the insurance industry to do so and allow private insurers to offer risk-loaded policies to those with pre-existing conditions, among other recommendations made in its final report issued yesterday.
Introduced in 2005, IPs comprise the basic MediShield scheme and a top-up portion that provides enhanced coverage for B1 and A-class wards in public or private hospitals.
The propose “standardised, affordable and easily understood” IP should be provided as an option to new and existing IP policyholders, including those who want to downgrade, the committee said. The Government will set the benefits, and the plan should be cheaper than those targeted for treatment at private hospitals.
Mrs Hauw Soo Hoon, chairman of the integrated plan sub-committee, said: “By recommending this, the policyholders now have a way to evaluate what they have currently and, if they want to have B1 coverage, it’ll be easier to make that decision …
“It’s easier for them to understand what they’re buying into. At the moment, you might not know what all the bells and whistles mean.”
About 60 per cent of Singaporeans have bought IPs, but there is a lack of understanding around benefits and the premium structure, said Mrs Hauw. Up to 70 per cent of IP holders who have been previously hospitalised opted to stay in wards of lower classes, while only about 10 per cent chose to go to a private hospital, the report showed. Many IP policyholders have also complained that they found out about exclusions for pre-existing conditions only when they were unable to make a claim upon hospitalisation.
The premiums for the proposed standard IP should form the basis for setting Medisave withdrawal limits for IPs, the committee said. While a rise in IP premiums due to the introduction of MediShield Life has been a cause of concern among policyholders, the Ministry of Health has reiterated that the overall increase in premiums resulting from this is expected to be the same as, if not lower than, the rise in MediShield Life premiums.
The committee also recommended that the existing regulatory and accountability framework for IPs be improved.
Healthcare policy expert Phua Kai Hong of the Lee Kuan Yew School of Public Policy noted that all developed countries, “including our Asian competitors, have developed regulatory and pricing controls for universal health insurance”.
“Even private insurance and healthcare industries share data and conform on rules regarding pricing and approved lists of drugs/technologies,” he said.
“Singapore’s private health insurance is relatively unregulated and should gear itself up for further public controls in the future.”
The Life Insurance Association of Singapore (LIA) — which represents the five IP providers — AIA, Great Eastern, Prudential, Aviva and NTUC — said the involved insurers are “aligned” on the recommendations and that consumers can expect limited impact on their IP premiums once MediShield Life kicks in.
“We would like to assure policyholders that there will be minimal impact on the top-up portion of your IP and issuers will also continue to monitor and manage the impact of medical inflation to ensure IPs remain competitively priced,” said LIA president Khoo Kah Siang, who is also the chief executive of Great Eastern Singapore.
However, it remains to be seen how private insurers would price and design their products, PwC’s insurance partner Woo Shea Leen said.
“One big uncertainty is how they will deal with pre-existing conditions. They may also have to worry about greater selling costs because they need to have more people on the ground to explain and sell these products, which are certainly quite complex and not well understood by consumers,” she added.
However, the recommendations are a step in the right direction, she said, adding: “They will open up the market a bit more, allowing insurers to tap consumers with pre-existing conditions. The introduction of the Standard Integrated Plan will also provide more options and address a gap between basic and premier insurance.”
The Singapore National Employers Federation called the recommendations a “major breakthrough” that would help more employers restructure their medical benefits into portable schemes.
Consumers TODAY spoke to appeared unconcerned about uncertainties surrounding the IPs.
Ms Chris Lim, a 31-year-old accountant, bought an integrated plan in 2006 and pays S$341 a year in premiums.
“I will definitely hold on to my plan — which paid for my $20,000 key-hole surgery at a private hospital last year,” she said. “The premium might increase, but it’ll be worth the money.”
Allow private 'risk-loaded' policies
By Linette Lai, The Straits Times, 28 Jun 2014
LET private insurers manage people with pre-existing conditions separately from healthy ones.
This proposal by the MediShield Life Review Committee yesterday allows for "risk-loading" - that is, charging such people higher premiums, but also insuring their pre-existing conditions. Doing so would cost more but assure people that their conditions are adequately covered, it said.
The committee also suggested that the Government require insurers to inform clients of how estimates of their risk-loaded premiums compare with standard policies, to help them make informed choices.
However, it warned against making it compulsory for private insurers to cover pre-existing conditions, in the interest of long-term financial sustainability.
Public feedback sessions showed many were unhappy at how private insurers handled pre-existing conditions under Integrated Shield Plans (IPs).
For instance, they would exclude mild conditions from coverage, or apply exclusions on a broad scale. "They wanted insurers to be more discerning and flexible in underwriting and imposing exclusions," said the committee.
Currently, private insurers can only exclude pre-existing conditions from coverage or deny applications from this group altogether. They cannot offer risk-loaded policies.
The committee also mooted the idea of a standardised IP targeted at the B1-ward class level. This would provide better coverage than the basic MediShield Life, which covers only B2 and C wards.
It is still unclear, however, whether this standard plan will also be available to those with pre-existing conditions.
"There is a possibility," said Mrs Hauw Soo Hoon, who chaired the IPs sub-committee. She added that the Government will probably have to work this out with private insurers.
One person looking forward to a private risk-loaded plan is Ms Pearl Tan, whose husband's high blood pressure would be excluded under any IP.
"Let them charge us more for higher premiums," said Ms Tan, 65.
"To be fair to them, they have to make money. We are paying for peace of mind."
When MediShield Life kicks in next year, those with pre-existing conditions not covered by basic MediShield must pay 30 per cent higher premiums for the first 10 years to cover their higher risks.
Bringing those with pre-existing conditions under MediShield Life will cost an estimated $1.1 billion over the first five years.
The Government is bearing 75 per cent of this, while those with pre-existing conditions will bear 10 per cent, and the rest of the population, 15 per cent.
The Yew family, for instance, will have to pay more, as two-year-old Yva has a kidney condition which currently excludes her from MediShield coverage.
Mrs Lili Yew said she would also consider signing her daughter up for a risk-loaded policy, adding: "I would see if the rates are competitive."
Employers, unions told to consider portable scheme
By Kash Cheong, The Straits Times, 28 Jun 2014
EMPLOYERS and unions should work together to introduce portable medical benefits for their employees, the MediShield Life Review Committee said yesterday.
It also recommended more tax incentives and grants to help companies take on the scheme.
The committee said portable medical insurance is beneficial as it will reduce the duplication of coverage between employer medical benefits and the compulsory MediShield Life when it begins.
A portable medical insurance scheme stays with an employee for life, unlike company medical benefits which cover a person only while he is working for the firm.
Firms can take the money budgeted for company medical benefits and give it to workers individually instead.
This could be in the form of Central Provident Fund contributions, to enable staff to pay for MediShield Life premiums. It could also come in cash, allowing workers to upgrade to private Integrated Shield Plans that offer coverage in higher-grade wards.
The committee said: "The Government can consider improving corporate tax incentives or providing grants to encourage more companies to switch."
The call is in line with recommendations from the National Wages Council, National Trades Union Congress (NTUC) and Singapore National Employers Federation. "We are heartened that the committee has heeded our call to review the potential duplication of medical insurance benefits," the NTUC said in a statement. Incentives could be tiered to reward those who put more staff on portable medical insurance, it added.
Today, fewer than one out of 20 employers offers portable medical benefits, though there are tax incentives for firms that do so.
The Civil Service, Singapore's largest employer with 80,000 employees, introduced a form of portable medical plan in 1994.
Employees who joined after April 1994 get an extra 1 per cent of their monthly salary paid into their Medisave account, which they can use to buy private hospitalisation plans. Eight out of 10 civil servants are now covered under the scheme.
But there are obstacles in persuading employers to adopt portable medical insurance.
The committee found that benefits under group hospitalisation and in-patient plans offered by private insurers currently prove more attractive than those provided by current MediShield and Integrated Shield Plans. The former offer a higher perceived value to employees, yet at relatively low cost to employers - especially if employees are young and healthy.
But these schemes provide only short-term coverage and are not guaranteed to be renewed by insurers.
However, the Life Insurance Association Singapore said portable medical benefits may be more complex to manage for companies with foreign workers. They will have to juggle between a scheme for foreign staff and portable benefits for Singapore citizens and permanent residents.
Incentives must be "attractive enough" for companies to switch to portable insurance, said Ms Woo Shea Leen, financial services insurance partner at PricewaterhouseCoopers Singapore.
If firms want to switch to portable schemes, they should do so as soon as possible, the committee said. "Some older Singaporeans shared that they recognised the need for portable health insurance coverage too late," its report said.
"By the time they were in their 50s or 60s and preparing for retirement, they were unable to get full coverage under Integrated Shield Plans because of pre-existing conditions."
Mr Low Cheong Kee, managing director of hardware store Home Fix, said: "Most (of our) staff can claim against group benefits or their own insurance, so it is wasteful to pay two premiums. We'll have more to consider when we look at details of group insurance and portable benefits closely."
Next on the agenda: Rein in rising costs of health care
By Salma Khalik, The Straits Times, 28 Jun 2014
THE MediShield Life Review Committee has done a good job in coming up with a national insurance scheme to cover everyone, with higher benefits than now, yet maintaining premiums at an affordable level.
And the Government has to be lauded too, for loosening its purse strings to the tune of $4 billion over the first five years, and for giving the assurance that the premium subsidies for two in three people will be a permanent feature.
Taken together, they will certainly give Singaporeans greater assurance that they will be able to afford medical care till the end of their lives, even as costs continue to rise, fuelled by inflation and new medical treatments.
You might think that policymakers should be entitled to some rest now, given that they have put in the complex structure for such a major shift in health-care financing.
But they really should not, for the immediate next goal must be to rein in rising health-care costs.
"Insurance inevitably causes both patients and medical providers to become less cost-conscious, and to use more medical services than they really should," warned the committee in its report. "We have to accept this."
But should we really?
Health-care costs here have been going up by 10 per cent annually over the past five years.
If the introduction of MediShield Life were to push costs up further, then surely the affordability of the new scheme would be at risk in years to come.
This is especially as Singapore is also facing a rapidly ageing population which would already put a heavier burden on medical care.
As Mrs Hauw Soo Hoon, one of the 11 members of the committee, said yesterday, insurance claims come from a pot which is filled by premiums from everyone.
She said: "So actually it's everybody's responsibility to watch that this pot of money is being utilised in a responsible way."
This will take public education.
People must learn to be responsible and not let the "buffet syndrome" - where some diners will pile their plates high with food they cannot finish eating simply because there is no extra charge - destroy a promising medical insurance that covers everyone.
Health-care providers, too, must guard against being "kiasu" and ordering an unnecessary battery of tests just to have all bases covered. This will do society no service.
But perhaps the biggest impact on health-care costs comes from keeping the population healthy and out of hospital.
It involves the healthy staying that way.
Perhaps even more important is to catch diseases at as early a stage as possible, and keep it in check.
A lot of this is already being done, with subsidised screening and chronic care for the less well-off.
It should be ramped up. Not only will it help put a lid on costs, but it will also improve the quality of life of Singaporeans.
While it will involve a lot of effort, and will not come cheap, it will certainly be cheaper than having to care for the same people in hospital.</spa