Tuesday, 15 April 2014

Big decision ahead for MediShield Life

By Salma Khalik, The Straits Times, 14 Apr 2014

IS MEDISHIELD Life the best way ahead for Singapore health care?

MediShield, the current national health insurance scheme, stops covering people when they turn 90.

That means more than 10,000 people aged 90 and older have no medical insurance, even though the older you are, the more health care you need.

Coupled with the fact that Singaporeans are living longer, the Government will end up supporting a rising number of elderly folk who have run out of money to pay for their health-care costs.

Some countries do just that, but the rising burden eats heavily into government expenditure and that usually results in higher taxes for the working population.

Singapore has decided to go a different route with MediShield Life, which will be launched next year. It will cover everyone, even those with pre-existing diseases, for the rest of their lives.

By doing this, the burden is shared among society as a whole as well as the individual patient.

The Government provides heavy hospital subsidies, society pays the bulk of the remaining bill through insurance premiums while the individual patient is responsible for the deductible and co-payment.

The deductible is the initial amount of a bill the patient has to pay before insurance kicks in. Under the basic MediShield plan, patients also have to pay a portion of the bill - currently between 10 and 20 per cent - beyond the deductible.

How is having compulsory insurance for all different from levying heavier taxes to pay for health care? With taxes, only the working population and richer individuals pay. With insurance, everyone contributes.

The Government uses taxes to provide subsidies that cover as much as 80 per cent of a hospital bill, after which the bulk of the remaining cost is spread among the population. This is very much like the goods and services tax which each person pays when he buys something, rather than income tax which is paid according to how much a person earns.

Patients still have to pay part of the bill, and this makes it fairer. The person needing treatment pays a larger part of the tab in the form of the deductible and co-payment. Those who keep healthy and out of hospital pay only the annual premiums.

Another reason for introducing MediShield Life is that more than 90 per cent of Singaporeans are already covered by MediShield. So it is practical to expand the existing system rather than launch a totally new scheme.

But covering the other 8 per cent of the population will not be easy. This group includes those who are at higher risk of severe illness requiring hospitalisation or the elderly who might need frequent hospitalisation.

People who have been doing the right thing by signing onto the insurance scheme while they are young and healthy, and paying premiums for many years without making any claims, should not end up being the ones paying for this 8 per cent.

Still, the elderly and those who already are sick cannot be made to pay so much that it will prove too big a burden or make little sense for these latecomers.

A Review Committee, which is looking into how MediShield Life should be structured, will need to decide if everyone should pay a standard premium or if it should vary depending on whether the person has pre-existing illnesses.

It will be a tough choice.

Grouping the healthy with the unhealthy would be unfair to those who are well. But penalising those who are already sick will also be difficult, especially since they will have various illnesses with very different health risks.

Trying to separate those who are less sick from their more sick counterparts will be a massive exercise which could be more costly than beneficial.

However, once all that is ironed out, the scheme should be fairly robust. Younger people will pay more, with the money offsetting the expected higher premiums as they age.

The hope is that each generation will pay for itself, and not pass the cost to others.

Three levels of help from the Government
By Salma Khalik, The Straits Times, 14 Apr 2014

ALL SINGAPOREANS will get a generous helping hand when the country launches the compulsory MediShield Life insurance scheme next year.

Without this help in the shape of government subsidies, the scheme might not take off at all.

That is because not everyone will be able to afford to pay the annual premiums, which are expected to be significantly higher than premiums for the basic MediShield, which is the current national health insurance scheme.

Most seniors will also find it tough to pay the higher cost.

Today, the highest MediShield premium is $1,190 for people aged 89 years.

For those who are over 90 years old, the premiums could easily be double that, or even more.

The Government has promised three levels of help:
- The Pioneer Generation Package for Singaporeans aged 65 years and older, which includes the Government picking up 40 to 60 per cent of annual MediShield Life premiums.
- Some subsidy for everyone for the first few years, to give them time to build up their Medisave accounts which can be used to pay the premiums.
- Medisave contributions will go up by one percentage point, so people will have more savings for their health-care needs.
The Government will pay for those who still cannot afford the premiums. This group can also turn to Medifund, the health-care safety net, for their share of medical bills, including for outpatient visits.

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