Saturday 28 June 2014

MediShield Life premiums unveiled on 27 June 2014

$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.

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.

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 Lee: 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."

Definition of Upper-income for Eligibility of MSHL Premium Subsidies
REACH, 30 Jun 2014

On premium subsidy eligibility, some have the misconception that household incomes of $2,601 and above are categorised as ‘upper income’, and thus will not be entitled to the premium subsidies for two-thirds of the population.


The criteria of up to $2,600 for the premium subsidies refers to the monthly Per Capita Household Income. It is the total amount of income earned by a family staying under one roof, divided by the number of members of that family. For example, if the total income earned by family members is $10,000, and there are four members in the family, then the Per Capita Household Income is $2,500, and the family would qualify for subsidies.

By providing subsidies for Singaporeans up to $2,600 Per Capita Household Income, two-thirds of the population will receive help.

This is a fairer way of calculating the need for subsidies, because a family with more members may need more support, even if the total income they make is quite high. This is because the amount they can spend on each family member will be lower if there are more family members.

Families in a lower per capita household income category will get a higher subsidy rate. In this way, we give more help to those who have less resources and need more help. This is part of being a compassionate and inclusive society.

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.”

Make standard B1 coverage available for all Singaporeans
Adding B1 layer to MediShield Life insurance will cater to rising expectations
By Chua Mui Hoong, The Sunday Times, 29 Jun 2014

Last December, I spent a Saturday afternoon closeted in a room with about 30 other Singaporeans talking about a subject very close to our hearts and wallets: health-care cost.

In particular, the review of MediShield Life, the improved national health insurance plan that offers coverage to all, including those with pre-existing medical conditions, and for life.

I cover such discussions on public issues all the time as a journalist. But this time, I signed up as a citizen because I wanted to give views on a specific area: allowing people with pre-existing medical conditions to be covered under higher ward class plans.

The proposed new MediShield Life offers universal coverage - but for B2 and C class wards only.

Those of us with pre-existing medical conditions cannot buy insurance cover for B1 or A class wards, since insurers have every right to reject us.

As it turned out, I didn't even have to raise the topic in my small-group discussion.

A woman in my group brought it up. I've since learnt that it was actually a common concern among the 1,200 participants in focus groups who gave views to the committee.

One group concerned about this are those already on private Integrated Shield Plans (IPs). They say insurers are jacking up premiums as they get older (some premiums doubled last year) and they feel at the mercy of these commercial providers.

If they can't afford the premiums, they end up back on basic MediShield Life, and will have to go to Class B2 and C wards: no air-conditioning, no choice of doctor, and access to a more restricted and cheaper range of drugs and treatment options.

Their call: Could the Government step in to offer a MediShield Life option that lets people get treatment at B1 wards? Premiums can be higher than for B2 or C class wards, of course.

For this group, the concern is over-insurance. About 60 per cent of Singaporeans buy IPs. But many don't utilise their benefits fully. Of those with plans meant for A class wards in public hospitals, seven in 10 chose to stay in lower ward classes when hospitalised. For those with plans meant for private hospitals, six in 10 chose lower class wards.

In other words, many people are paying premiums for benefits they don't need or want. Many told the committee they would like to downgrade to B1 coverage but aren't sure how this would affect their benefits. Health Ministry data also shows that premiums for B1 plans have seen sharp hikes from 2008 to 2013.

Another group of Singaporeans is concerned with under-insurance.

I belong to this category.

We will be covered by basic MediShield Life, which excludes no one.

But because of our medical conditions, private insurers will not cover us under private Integrated Shield Plans. They don't offer coverage at higher premiums. They simply turn us down flat.

The result is that many of us with pre-existing medical conditions are under-insured.

I am fortunate now to be employed by Singapore Press Holdings, which has generous medical benefits by Singapore standards. But the day I quit is the day I will fall into the category of the under-insured.

Those with savings can self-insure, meaning we make sure we have enough for our needs if we want to go to private wards. Those without employer benefits and with scant savings, depend on family or friends. Or they just choose B2 or C wards.

If they do the latter, they risk clogging up already crowded subsidised wards.

This was an issue on which the over-insured and the under-insured could agree on: Add on a B1 tier under MediShield Life.

After all, expectations are rising. Class C and B2 wards may have been fine 20 years ago, but may have become a less than optimal choice today.

When my parents were hospitalised, in the 1990s and 2000s, Class C was the preferred ward for many elderly people - and not always because of the cost. They belonged to a generation who disliked air-conditioning and found single rooms deathly quiet. That made Class B2 or C wards, with fans and open windows, and rows of cubicle beds per ward, the optimal choice.

For those of us in our 40s, perhaps the optimal choice is B1: with air-conditioning and a few people around for company, but not too many. And we can choose our doctor, and have access to the new drugs or treatment our Internet searches tell us are promising for our ailment.

Yet, the MediShield Life default remains at the B2 and C classes. To be sure, keeping premiums low and affordable is paramount, and this is probably the main reason the committee has not recommended adding on a B1 layer to MediShield Life.

Even then, committee chairman Bobby Chin and his colleagues must be credited for taking the IP bull by its horns and trying to wrestle with it. IPs now offer a daunting range of plans and benefits.

The committee wants the Government to work with private insurers to come up with a standardised B1 Integrated Shield Plan that will be available to all. Those with higher-class plans can downgrade to this. Those on basic MediShield Life plans can choose to add on this B1 tier as a private insurance plan.

For those with pre-existing medical conditions, the committee says private insurers should be allowed to treat them differently and add "risk loading" - which means charging higher premiums to compensate for their potentially high claims.

So far, the Government has been careful in its response.

The Ministry of Health press release issued on Friday said the Government "accepts all the recommendations" on the design of the MediShield Life scheme. But it merely "welcomes" the recommendations on IPs and other related issues, "and will study how best to implement them".

I wish the committee had been bolder and taken a firm position. Top choice would be if it had said MediShield Life should offer a B1 plan run by the Government. If that's too difficult to administer, it could have stated categorically that every Singaporean should be assured of coverage under its standard B1 plan. This would put the onus on insurers and the Government to work together to come up with premium tables that make sense actuarially and also ethically.

Without that assurance, private insurers can simply risk-load to unconscionable levels. This means that those of us who developed medical conditions later in life remain second-class citizens in the much-vaunted MediShield Life new world.

Yes, we get coverage under B2 and C class wards like everyone else.

But unlike our healthier peers who can buy health insurance for B1 and higher class wards - and have a choice of doctors and more options for treatment - we can't.

The new MediShield Life umbrella covers us all equally but when it pours - really pours - the healthy stay dry in a waxed raincoat while those already sick get soaked.

Standard B1 plan: Health Ministry replies

OPINION editor Chua Mui Hoong advocated the addition of a B1 tier to MediShield Life ("Make standard B1 coverage available for all S'poreans"; Sunday).

MediShield Life, like the current MediShield, will be a basic health insurance scheme. When it is implemented in end-2015, it will provide coverage for all Singaporeans for life, for large hospitalisation expenses and regardless of which class ward they choose.

The level of benefits under MediShield/MediShield Life is based on expenses in B2/C class wards in public hospitals. Today, two-thirds of all admissions in Singapore are to B2/C class wards.

Patients will get the same level of benefits, pegged to the estimated B2/C class expenses, if they choose to stay in a A/B1 class ward or in a private hospital.

However, given that there are lower or no government subsidies for A/B1 class wards or private hospitals, their bills are much higher than in B2/C class wards. Hence, the MediShield Life payout will be smaller when compared to the overall size of the bill.

You can sign up for an Integrated Shield Plan, managed by a private insurer, if you want additional coverage of bills in these higher class of wards or in private hospitals.

This comprises two parts: MediShield (or MediShield Life after it is introduced), and an enhanced portion providing additional coverage for the additional expenses in those wards.

However, premiums will be higher, so do consider your choice of ward class carefully and the premiums over the lifetime, and plan your insurance coverage accordingly.

We note that many Singaporeans have expressed confusion about the range of Integrated Shield Plans available and the cost of premiums, and wish for something that is more standardised, easily understood and affordable.

Hence, the Government will take up the MediShield Life Review Committee's recommendation to work in consultation with the industry to develop key features of a standard plan based on B1 ward rates, to address this need.

Lim Bee Khim (Ms)
Director, Corporate Communications
Ministry of Health
ST Forum, 2 Jul 2014

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.

This is not something the Government can do alone.

People must do their part - and heed the frequent mantra of eating healthy, exercising often, not smoking, and going for regular screening.

For those who have chronic ailments such as diabetes, it will be important to follow their doctors' orders, for this will mean the difference between a high quality of life - or none at all.

Yes, MediShield Life gives the assurance that big hospital bills will be taken care of.

But my sincere wish is for people to happily keep paying premiums - and never needing to claim for any bills at all.

Beware escalating costs in universal coverage
By Phua Kai Hong, Published The Straits Times, 28 Jun 2014

YESTERDAY, the MediShield Life Review Committee released its final report on Singapore's new national health insurance mechanism, giving specific recommendations regarding premiums.

As expected, premiums will rise to cover the much extended coverage, although The Straits Times website described the premium rises as "much lower than feared". But while there are bouquets all round for the generous benefits offered, many trade-offs have to be struck to achieve a balance between affordability and coverage.

The experiences of other developed places reveal issues that need to be addressed when implementing universal health insurance. One of these involves the integration of myriad voluntary insurance schemes. In South Korea, the process took almost 12 years and Taiwan over three years before its national health insurance scheme could be rolled out, and yet many bugbears in these systems are still being resolved.

A one-size-fits-all approach, like a single-payer system where one party, usually the state, is the one that pays for health-care costs, usually ends up with a multitude of problems. But so sometimes do heterogeneous methods

Already, in Singapore, there is anxiety over how much premiums will rise for private plans offering Integrated Shield coverage. Those with pre-existing illness ask if these Integrated Shield plans offering higher-class ward coverage are also available to them, now that MediShield Life promises coverage for pre-existing conditions.

No health financing system is free from the risk of becoming unsustainable. Singapore has been prudent in broadening its financing. It inherited a tax-based system where health-care costs were borne by the state.

In 1984, Medisave introduced individual health savings accounts funded by employer and employee mandatory savings. In 1990, MediShield introduced insurance to the mix, with a low-cost health insurance plan for catastrophic illnesses or prolonged illness for which Medisave wasn't enough.

Medifund, designed to help needy Singaporeans who are unable to pay for their medical expenses, followed in 1993. This fund acts as a safety net for those who cannot afford the subsidised charges despite Medisave and MediShield coverage.

MediShield Life is the filler needed to plug the remaining health insurance gaps and stretch the social safety net for universal health coverage of the population.

One might be tempted to think that such a diverse mix of financing - savings, insurance, taxation - puts Singapore in excellent financial condition to finance its health-care needs.

But there are danger points.

A rapidly ageing population, coupled with rising expectations of health-care treatment, can fuel sharp cost increases.

Tax revenues will still be needed to provide public health services, including subsidies for the poor and other necessary activities such as health education, training and regulation. The challenges of maintaining the quality of public services for the poor and reducing long waiting lists will continue - indeed, may even intensify, with MediShield Life, since more people are being brought under the health insurance umbrella.

There is also the risk that more generous coverage may spur demand and supply, since better coverage translates into lower out-of-pocket costs for patients, giving the illusion of "free" or cheaper services at the point of delivery.

The generous Pioneer Generation Package of medical subsidies for those aged 65 and above, funded out of tax revenue, has already set a precedent, with younger cohorts possibly clamouring for similar consideration in future.

Politically, there could be more demands for tax-funded health financing. To be sure, every prudent government will always try to prevent escalating costs of health care. Taxation-based financing is also subject to budget processes and controls.

Still, taken together, the effects of the mix of demography, expectations and political pressure should not be underestimated.If societal behaviour does not change fast enough, or people are reluctant to stomach higher premiums to pay for the old and sick, they may instead revert to over- reliance on government financing - to the detriment of the public purse at a time when revenues are shrinking due to a lower tax base.

So amid the accolades for the MediShield Life package, it's timely to sound a note of caution: Yes, Singapore is on a strong foundation with its health-care bill funded by a robust mix of taxation, savings and insurance. But beware the inherent risks of public demands for more tax-funded care.

In reality, the two financing models - one in which the state pays either through taxation or social health insurance, and the other in which citizens fund their own health care through compulsory savings - are converging in all developed countries as populations age. Both models are basically pay-as-you-go systems, because risks are pooled for the whole population by community rating instead of risk-rating by age bands.

But as populations age, and more people enter the high-risk, high-premium category, costs will escalate. It makes sense, therefore, for people to build up savings and "front-load" premiums. This means paying more when they are young and have a steady income so that they do not have to pay high premiums when they are old and the risks borne by the insurer are greater.

That said, no amount of increased financing can really be enough without managing costs on the supply side, usually by altering the incentives of health- care workers to provide cost-effective services. Whether through taxes, insurance premiums or savings, all parties will eventually have to pay more for better health care. In the process, it will be important to maintain a fair and equitable balance between the public and private sectors, while integrating the different sources of financing.

The writer is a health economist at the Lee Kuan Yew School of Public Policy, National University of Singapore.

Three-legged stool for peace of mind
By Carol Tan, Published The Straits Times, 5 Jul 2014

COVERING people for life and including pre- existing conditions under the proposed MediShield Life are welcome moves. So far, much of the controversy and debate has centred on affordability of premiums.

But should the focus be on this?

Premiums are a means to ensure that any insurance scheme does not go bankrupt. Insurers help make sure enough money is collected through premiums to pay out when policyholders get sick and claim.

Yes, expanding coverage for those already sick - and for the very old - means more claims are expected and therefore premiums have to go up. It is good that the Government will subsidise premium increases, to ensure they are affordable for the old and lower- income group.

But that should not be the main focus. Certainly the fear of premiums rising to become unaffordable is a real one. But premiums are a means to an end. What we want is peace of mind.

And peace of mind over health-care costs rests not just on premiums, but a three-legged stool. Insurance is only one leg of that stool. The second leg is propped up by health-care providers be they doctors, administrators or pharmaceutical firms. The third leg is policyholders or patients. Each of these groups needs to change the way it acts.


FOR insurance firms, it cannot be business as usual. Strategies such as excluding pre-existing conditions may no longer be possible. Local insurers need to look overseas for best practices to manage claims while keeping premiums affordable. One way is investing in the health of their policyholders by creating incentives for them to take part in active ageing programmes; these include appropriate screening and follow-up, health coaching, immunisation, exercise and lifestyle change.

The Government also plays a part in strengthening the regulatory framework for insurers, to safeguard policyholders' interests.

Health-care providers

HEALTH-CARE providers must change the way we provide care. We need to help our patients remain healthy, make the right choices and access the right care at the right cost.

Take one example: a total knee replacement operation costs about $25,000. But a more cost- effective health system might focus on enrolling a patient in an exercise, weight loss and pain management programme at a fraction of the cost, reducing the need for surgery.

As doctors, we need to guide our patients to make the right choices. But much of what goes into a hospital bill is often beyond the control of doctors. Drug costs, administrative and facility fees, rents, tests, equipment - they all add to health-care costs. Hospital administrators and pharmaceutical companies all play important roles in ensuring we all have peace of mind.


POLICYHOLDERS, or patients, themselves are key to keeping costs down to maintain their peace of mind. For chronic diseases, the most important intervention is taken by the patient himself.

I always tell my patients: "I cannot give you a magic pill to help you exercise and eat healthily. You must want it yourself. And don't just spend when you get sick. Invest in your health. Buy a blood pressure measuring set and check your blood pressure. Join a programme and learn how to manage your condition.

"Not all high blood pressure patients go on to get a heart attack. Not all diabetics end up with kidney failure. Learn how to reduce the risk of this happening. Not just for yourself but for your family, and all of us as a country, a people, a community."

In saying that "we" as a community and country want peace of mind offered by universal coverage, "we" must also realise that there is much we can all do as individuals, insurance providers, doctors, administrators, pharmaceutical companies to ensure that what "we" want remains sustainable.

We need to understand the key drivers to rising health-care costs and do our part to keep them down.

Policyholders need to keep healthy. Doctors and other health providers need to keep costs down. One way to drive down costs is to develop open and transparent pricing for common high cost conditions. This requires sharing of data on cost of facilities, treatment and medication.

With transparent pricing, insurance providers can calculate premiums better, and the Government can better assess affordability and adjust subsidies accordingly.

It isn't the premiums that will make or break MediShield Life.

What is vital is the paradigm shift in thinking required, for each of us to shift from thinking as an individual to a group, from thinking about how "I" will benefit, to thinking of our collective responsibility and collaboration.

MediShield Life is a common pool into which we put our premiums and from which we dip to take what we need. To paraphrase a common saying, ask not what MediShield Life can do for you, ask what you can do to help keep MediShield Life costs and premiums low for all.

The writer is a geriatrician in private practice and chairman of The Good Life Co-operative that aims to help members age well and manage heath-care costs.

Approaches to managing health-care costs in Singapore
By Christopher Gee And Yap Mui Teng, Published The Straits Times, 5 Jul 2014

THERE is a case for a more permanent and expanded role for a body such as the MediShield Life Review Committee in Singapore's revamped health-care sector.

Singapore has rapidly changing demographics and a very dynamic health-care sector with new technology and treatments.

It also faces the prospect of cost inflation being significantly higher than wage growth.

All these require a standing committee to continually review both the demand and supply aspects of health care in the future.

What would such a standing committee's terms of reference be?

They could:
- Conduct regular reviews of benefits and premium affordability in the light of changing health-care costs, new medical technologies and Singaporeans' expectations, and make recommendations for adjustments as necessary;
- Act as an independent body to assess the actuarial fairness of basic MediShield Life premiums as well as any private plans that are established;
- Collect medical bill records at all hospitals and consolidate into a centralised database, monitor bill sizes for consistency and review outlier suppliers and bills;
- The committee should recommend further regulatory action (by the Ministry of Health or the Singapore Medical Council) in the event of any irregularities.
The committee could also make such data publicly available.

Undertake evidence-based cost-benefit analyses on new medical technologies and assess their suitability for coverage under MediShield Life and for payment using Medisave.

The committee's recommendations would be published and serve as guidelines to assist both health-care professionals and patients in making decisions about appropriate medical care.

An example of what such a standing committee would look like can be found in Britain's National Institute for Health and Care Excellence (Nice).

The first writer is a Research Fellow and the second writer is a Senior Research Fellow at the Institute of Policy Studies. This article is excerpted from a longer one available at the Institute of Policy Studies website.

MediShield Life premiums to stay the same for 5 years

MOH will guard against rising premiums: Gan
But for costs to be sustainable, informed decisions and a resolve to stay healthy are key
By Salma Khalik, The Sunday Times, 29 Jun 2014

The Ministry of Health (MOH) will keep a close eye on hospital costs to make sure that having universal insurance coverage with better benefits does not lead to spiralling premiums.

Speaking to the media for the first time since receiving the MediShield Life Review Committee's report last Friday, Health Minister Gan Kim Yong said: "With enhanced insurance, it's important to ensure overall health-care cost is managed properly."

The report had indicated that it expects health-care costs - and eventually premiums - to go up as a result of its recommendations for the national insurance scheme which will cover everyone, sick or healthy, for the rest of their lives.

Mr Gan said retaining the deductible - the amount a person pays when he is admitted for treatment before insurance kicks in - and co-payment, his contribution to the rest of the bill, "will encourage patients to make wise decisions".

"But this is not enough," he added. "We also need our health-care providers to continue to remain cost-effective in providing quality care."

To achieve this, the MOH will step up efforts to monitor claims. Any unusual ones will be looked into, to ensure that appropriate care has been given. The ministry will also share information with hospitals so that they can learn from one another's experiences. But again, he said, this will not be enough to keep a lid on health-care costs.

"We need society to come together to stay healthy, to make informed decisions on their health-care needs so that we can manage costs and ensure MediShield Life is sustainable for years to come."

Mr Gan confirmed that premiums will not change for the first five years of the scheme, adding that the projected increase in claims in that period was taken into account when premiums were set. He said: "We have no intention of varying the premiums over the next five years. But we cannot preclude catastrophic changes to the health-care landscape."

Two out of three people with Integrated Shield Plans (IPs) can expect premium increases due to the introduction of MediShield Life. But Mr Gan said these should not be higher than the increase in the premiums for the basic scheme and, in some cases, might even be lower.

Speaking to the media at a palliative care conference, Mr Gan backed the suggestion by the committee for a standardised plan by all insurers pegged at B1-ward class.

"It is a very important starting point, so that policyholders will have a basis to compare," he said.

Currently, IPs come in three categories - B1 class, A class and private hospitals - and offer different benefits, sometimes at highly different premiums.

The report said this plan should "be provided as an option to all new and existing IP policyholders, including those who want to downgrade from their Class A/private plans to a more affordable option".

Today, four of the five IP insurers offer B1 plans, which cover about 500,000 people.

Mr Gan said the features of the plan will be standard, but insurers might charge different premiums because their cost structures vary - however, the variation in premiums "should not be very large".

Currently, B1 plans for people in the same age band can vary by more than $1,000 a year.

MediShield Life: What’s your view? Tell REACH
Official feedback channel launches website to solicit opinions and questions on the insurance scheme, to be followed by dialogue sessions and Facebook Chats.
Channel NewsAsia, 27 Jun 2014

Government feedback channel REACH has launched a microsite for Singaporeans to provide feedback on MediShield Life.

A review committee on Friday (June 27) released a full report of its recommendations for the insurance scheme. The scheme will be implemented by the end of 2015.

Members of the public can lodge their queries and discuss their views with other Singaporeans at the REACH MediShield Life microsite, which will include resources such as answers to frequently asked questions and videos and media articles on the scheme. 

REACH will also be organising face-to-face dialogue sessions, Facebook Chats and establishing “Listening Points” to gather feedback on MediShield Life, it said

Said Senior Minister of State for Health and Manpower and REACH Chairman Dr Amy Khor: “The Review Committee has released its full report and recommendations today (and) the Government has accepted all the recommendations of the Committee on the design of the scheme.

“But the process does not stop here. We want to continue to engage the public and hear their views. I hope that Singaporeans will join the discussion on the recommendations and continue to share their feedback through the REACH MediShield Life microsite as this would help us in our policy implementation.”

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