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MEDISHIELD REVAMP

MediShield Life to be enhanced, but premiums set to rise

Holders of private Integrated Shield plans face higher premiums, too, as proposed changes include cut in proration for private hospitals

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A council set up to review the MediShield Life insurance plan has proposed a number of enhancements to ensure that a greater proportion of subsidised bills are covered.

Singapore

A COUNCIL set up to review the MediShield Life insurance plan has proposed a number of enhancements to ensure that a greater proportion of subsidised bills are covered.

Premiums, however, are set to rise; this will be the first adjustment since the scheme's launch in 2015. Over the past four years, MediShield Life paid out S$3.5 billion for 2.3 million claims. Payouts have risen by close to 40 per cent and the number of claimants by almost 30 per cent.

Fifteen per cent of the payouts were for around 350,000 claims from those previously uninsured in the past four years.

Market observers say policyholders of private Integrated Shield plans (IPs) - which complement MediShield Life - will have to brace themselves for higher premiums as well. This is because the proposed changes include a reduction in the proration factor for private hospitals from 35 to 25 per cent "to better reflect the actual charges and ensure greater parity in payouts between subsidised and private patients''. This will raise the IP insurers' share of claims.

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In a statement the Life Insurance Association said: "We note that some of these proposed changes, should they be implemented, may lead to the further escalation of claims costs for IPs and, consequently, IP premiums...

"IPs continue to experience significant claim cost increases which are putting upward pressure on IP premiums. Most IP insurers continue to make a net loss since the launch of MediShield Life in November 2015. This is despite numerous measures that have been implemented to manage health insurance costs in Singapore.''

The proposed premium increases take into account the improvements to MediShield Life between 2018 and 2020, in addition to the new set of enhancements.

To cushion the premium hike, the government has committed about S$2.2 billion for premium subsidies and support over the next three years. Health Minister Gan Kim Yong said in a recorded message: "I want to assure Singaporeans that the government will continue to help you with your premiums. No one will lose MediShield Life coverage because of financial difficulties.''

The net premium increase for Singapore citizens will be kept to about 10 per cent in the first year, thanks to government subsidies.

The support package comprises S$1.8 billion in subsidies for the lower to middle income and for Pioneer and Merdeka Generation policyholders, among others.

There is another one-off Covid-19 subsidy of about S$360 million over the next two years. This helps to subsidise 70 per cent of the net increase in premiums in the first year, followed by 30 per cent in the second year.

The MediShield Life Council is inviting public feedback to the proposals, which will close on Oct 20.

Jeremy Lim, co-director of global health at the NUS Saw Swee Hock School of Public Health, believes IP insurers will "almost certainly'' raise premiums. "The premium increases without government grants and support are substantial and we would expect even higher premium increases for the IP as private healthcare charges usually track higher than public sector. Many of the IP providers are also reporting losses and hence will take this opportunity to re-price.''

Dr Lim said while enhancements such as the inclusion of certain mental health conditions are helpful, MediShield Life could play a bigger role to negotiate for a fair price for healthcare.

"The scheme is not harnessing its power as the largest single payer of healthcare (besides the government) and in many other countries, the large payers negotiate with providers on pricing etc. The scheme also likely has an incredible amount of data on healthcare utilisation and pricing which can be used to help it negotiate more effectively.''

In a statement, the council said MediShield Life's design was based on two considerations - to provide better coverage for Singaporeans and to keep premiums affordable.

"These considerations must be balanced carefully as payouts are ultimately funded through premiums to ensure that MediShield Life remains sustainable."

The council said premiums need to be adjusted periodically to ensure they offer adequate protection in light of inflation and medical advancements. Claim limits, it said, should be refreshed to cover nine in 10 subsidised bills.

The proposed changes include raising the policy year claim limit from S$100,000 to S$150,000; and the introduction of treatment-specific claim limits for community hospital care and outpatient radiotherapy.

In terms of claim limits, the council recommended higher claim limits for daily ward and treatment charges for the first two days of acute hospital stay. This is because higher charges tend to be incurred in the first two days due to diagnostic tests and investigations.

It also recommended a lower deductible for day surgeries for older patients, so that they are not discouraged from choosing day surgery over inpatient stay.

The council also recommended the removal of the standard exclusions for treatments arising from attempted suicide, intentional self-injury, drug addiction and alcoholism, as treatment pays an increasingly important part of recovery.

Fang Ai Lian, chairman of the MediShield Life Council, said MediShield Life plays a key role in ensuring healthcare services remain affordable and gives Singaporeans greater peace of mind. "We have to periodically review and update the scheme benefits and premiums to keep pace with evolving medical practice, healthcare cost inflation and actual claims experience, so that it continues to provide assurance for Singaporeans while remaining sustainable."

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