$4b lift-off for MediShield Life

Singapore

THE government will commit nearly $4 billion in financial support over five years to the revamped national health insurance scheme that will offer lifelong coverage and better protection.

It said yesterday that it accepted the MediShield Life Review Committee's (MLRC) proposed design of the scheme, which aims to strike a balance between affordable premiums and enhanced benefits to help Singaporeans cope with big medical expenses.

Among the recommendations are higher claim limits, which means patients pay less while MediShield Life - which provides more protection against large hospital bills at the Class B2 and C levels - covers more.

These include raising daily claim limits for ward charges from $450 per day previously to $700, an increase in the claim limits for surgical procedures by 25-93 per cent, and lower co-insurance rates. In addition, the lifetime claim amount of $300,000 is being lifted, while the policy year claim limit will rise from $70,000 to $100,000.

But, as widely expected, premiums are set to increase in line with the wider and higher coverage when MediShield Life is rolled out by end-2015. To help Singaporeans cope with the higher premiums, the government will introduce transitional subsidies for the first four years totalling $830 million.

Meanwhile, permanent premium subsidies, ranging from 15-50 per cent, will be introduced to aid lower- to middle-income households based on factors like monthly per capita household income and age. Two- thirds of the population will qualify for these. Permanent residents (PRs) will receive half of the applicable premium subsidies for Singaporeans, but not the transitional subsidies.

Some 450,000 Singaporeans will receive special subsidies of 40-60 per cent under the Pioneer Generation Package, which was announced earlier this year. Everyone in this group will pay less for MediShield Life premiums compared to what they are paying today, while those aged 80 and above this year will have their premiums fully covered through subsidies and Medisave top-ups.

When the transitional subsidies are phased out in the fifth year of MediShield Life, lower-income and high-income citizens will pay a maximum increase of $11 and $30 per month in their premiums, respectively, vis-a-vis premiums today.

The various subsidies and the previously announced one percentage point increase in employer CPF contributions to Medisave from 2015 are expected to help most people fully cover the premiums via Medisave with no out-of-pocket expenses - a key concern raised when the committee was seeking public feedback in recent months.

"Over time, as costs change, as premiums change, we will make sure that it can be paid out of Medisave and therefore affordability should never be an issue," Prime Minister Lee Hsien Loong told reporters during a working trip to the United States.

The government has also promised additional support for the needy so that no one drops out of the scheme because of an inability to pay the premiums.

The committee has also suggested that premiums - which are unlikely to be further revised until 2019 - be distributed more evenly throughout one's lifetime, so that an individual pays more while working and premiums rise less sharply as one ages.

"We had to strike a balance between additional benefits and premium affordability," said Bobby Chin, chairman of the 11-member MLRC and a member of the Council of Presidential Advisers. For instance, while feedback showed some were in favour of reducing deductibles, the committee decided to keep them at current levels to keep premiums affordable.

The compulsory universal health insurance scheme will bring in the 7 per cent of Singaporeans currently not insured under MediShield (including those who may have dropped out along the way) and will also protect those with pre-existing conditions.

In the case of the latter, the government will bear 75 per cent of the cost of bringing in Singaporeans and PRs with pre-existing conditions, estimated at $850 million over the first five years. The balance 25 per cent will be shouldered between individuals with pre-existing conditions (who will pay an additional 30 per cent of the standard premium for the first 10 years) to take into account their higher risks, and all other Singaporeans who will pay 3 per cent more of existing MediShield premiums to support bringing everyone in

Life Insurance Association (LIA) Singapore president Khoo Kah Siang yesterday stressed policyholders would see "minimal impact" on the top-up portion of their Integrated Shield Plans (IP). Some 60 per cent of Singaporeans have signed up for IPs, which allow policyholders additional coverage for Class A/B1 wards or even private hospitals. "IP insurers will continue to monitor and manage the impact of medical inflation to ensure the IPs remain competitively priced," Dr Khoo added. LIA represents five IP insurers.

The committee recommended the government should work with the insurance industry to develop a standardised IP targeted at Class B1 level, giving the option of enhanced coverage on top of the basic MediShield Life plan, and that it should improve the existing regulatory and accountability framework for IP insurers. It also mooted the idea of enabling risk-loading for IPs, so IP insurers can manage those with pre-existing conditions differently.

Another recommendation is to offer enhanced incentives to firms willing to restructure their individual medical benefit schemes into portable schemes that ride on MediShield Life. Such government incentives would be "crucial" to help companies with the added costs, highlighted Singapore National Employers Federation executive director Koh Juan Kiat.