Health insurance must remain affordable and sustainable

THE recent launch of MediShield Life, a universal health plan that covers pre-existing illnesses, is a welcome development. It is a long awaited enhancement to the basic insurance tier of Singapore's health care financing framework.

It covers 3.9 million Singaporeans, including thousands who previously either had no cover or had to suffer exclusions. Not surprisingly, its launch has raised questions among the public on how much more their plans will cost, and whether they should continue to maintain their private Integrated Shield Plans (IPs) under the CPF umbrella. IPs give a degree of flexibility for those who want treatment in Class A wards or private hospitals - at premiums that can be very substantial at older ages. Quite apart from issues relating to personal preferences, concern about costs and affordability over the long term is something that cannot be ignored.

The last major premium hike among insurers in the private Integrated Shield scheme was in 2013, when premiums for some age bands more than doubled. This was blamed on insurers' poor claims experience. For now, insurers in the Shield scheme have undertaken to freeze premiums for a year following the launch of MediShield Life. But policyholders have to brace themselves. Premiums will rise - one can only hope that they remain affordable. Industry data shows that claims for public hospitals' class B1 and A wards have risen by an average of about 12 per cent a year over the past few years. Claims for private hospitals have risen at an even faster clip at 17 per cent.