Thursday, 1 October 2020

MediShield Life to offer Singaporeans more coverage and benefits under proposed changes to be implemented in early 2021

Government to provide about $2.2 billion to help Singaporeans with Medishield Life premium adjustments
MediShield Life Council recommendations includes higher annual claim limit of $150,000; premiums set to rise by up to 35%
By Salma Khalik, Senior Health Correspondent, The Straits Times, 30 Sep 2020

The compulsory national health insurance scheme is set to get a massive revamp next year, with wider benefits proposed so it can cover more and larger hospital bills.

The proposal includes raising the yearly claim limit under MediShield Life from $100,000 to $150,000.

To pay for these benefits and rising healthcare costs, premiums are expected to go up next year by as much as 35 per cent.

This will be the first increase in MediShield Life premiums since the scheme was launched five years ago.

At the upper end, the proposed hike will exceed $500 a year.

But given the difficult times Singaporeans are facing now, Health Minister Gan Kim Yong said the Government will soften the impact of the premium increase with a special COVID-19 subsidy for the first two years.

In the first year, all Singaporeans will get a 70 per cent subsidy on the increase. This goes down to 30 per cent in the second year. This will cost the Government $360 million.

This is on top of the existing subsidies of 15 per cent to 50 per cent given to middle-and lower-income groups, and 40 per cent to 60 per cent for the Pioneer Generation.

The Merdeka Generation receives additional age-based subsidies of 5 per cent to 10 per cent.

In all, subsidies for the next three years will amount to $2.2 billion.

The proposal will allow for wider benefits, including:

• Higher coverage for sub-acute care at community hospitals - such as for someone recovering from a heart attack - as this is 20 per cent more expensive than normal rehabilitative care.

• Higher annual claim limit of $150,000, from the current $100,000.

• Higher claim limits for some charges, such as for intensive care, which will be raised from $1,200 a day to $2,200 a day, dialysis and psychiatric care

.• An additional $200 a day claim for daily ward charges for the first two days of hospitalisation, when most tests and investigations are done. 

• MediShield Life will in future also cover treatment for attempted suicide, self-injury, substance abuse and alcoholism.

• Lower deductible of $2,000 (down from $3,000) for people 80 years and older for day surgery. This brings it in line with their deductible amount in a C-class ward, so patients will not need to be hospitalised just to qualify for insurance cover.

However, the cap on claims for people treated at private hospitals will be reduced from 35 per cent of the bill to 25 per cent.

Based on recent bills, 35 per cent of private hospital care amounts to far higher sums than bills incurred by subsidised patients.

The new claim limits should bring MediShield Life back in line with its original mandate to cover 90 per cent of subsidised bills beyond the initial deductible.

It was revealed last year that only 80 per cent of subsidised bills were fully covered.

These changes are expected to get rolling some time in the first quarter of next year.

MediShield Life Council chairman Fang Ai Lian said: "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."

From now, reviews will be carried out every three years.

Dr Tan Wu Meng, head of the Government Parliamentary Committee for Health, supports the changes, although he said some of the premium increases are "significant".

He told The Straits Times: "The revised policy year claim limit and the ICU claim limits are consistent with supporting Singaporeans through catastrophic illness."

As for the removal of some exclusions, he said: "This would also be a key statement about inclusivity and the tone we want in our society."

Special COVID-19 subsidies for first 2 years to offset MediShield Life premium hike
70% subsidy on hike in MediShield Life premiums in first year, 30% in second year
By Salma Khalik, Senior Health Correspondent, The Straits Times, 30 Sep 2020

UP to 50 per cent of MediShield Life premiums will continue to be subsidised for about half the population, in addition to the subsidies the Pioneer and Merdeka generations get.

These are permanent premium subsidies that provide help to at least half the population.

On top of that, the Government will give two years of COVID-19 subsidies to Singaporeans to reduce the burden of premium hikes. These amount to a subsidy of 70 per cent of the net increase in the first year and 30 per cent in the second year.

To illustrate, someone in the 51-60 age bracket on his next birthday now pays $630 a year in premiums for MediShield Life.

With the change, his premium will go up to $800 a year.

If he is Singaporean with a monthly per capita household income of $1,200 or less, he gets a 30 per cent premium subsidy.

He pays $441 annually now.

The amount of subsidy a person gets depends on per capita household income, age and the annual value of the home they live in.

The COVID-19 subsidy kicks in after the premium subsidy.

So in real terms, the premium he needs to pay next year will be $477, or $36 more - although the premium for that age group goes up by $170.

The COVID-19 subsidy is only for Singaporeans and does not apply to the more than half a million permanent residents (PRs).

However, PRs who qualify are entitled to the permanent premium subsidies, but at half the rate that Singaporeans get.

MediShield Life premiums can be paid entirely with Medisave.

Those who do not have enough in their Medisave accounts may also tap the Medisave accounts of immediate family members, such as spouses or parents.

If, in spite of that, they still cannot afford the premiums, they can apply to the Additional Premium Support scheme for help.

The Government has promised that every Singaporean and PR will be covered by MediShield Life from birth to death, with no one left out.

Lower MediShield Life payouts proposed for patients at private hospitals
By Salma Khalik, Senior Health Correspondent, The Straits Times, 30 Sep 2020

The amount of private hospital bills that MediShield Life will cover will be cut from 35 per cent to 25 per cent from the first quarter of next year, if the proposal by the MediShield Life Council is implemented.

This change may affect the private integrated plans offered by seven insurers, which incorporate MediShield Life.

The proposed change is because, at 35 per cent pro-ration, a private hospital bill far outstrips the cost of the same procedure in a subsidised ward, which is what MediShield Life primarily caters for.

This means poorer patients getting subsidised care are essentially underwriting the more expensive private care of wealthier patients in private hospitals.

Compare, for instance, the average bill size for a heart angiogram to check for blocked arteries. This costs $2,470 in a B2 subsidised ward and $10,314 in a private hospital, according to the Ministry of Health.

A 35 per cent MediShield Life claim for the private hospital bill comes to $3,610 - which is $1,140 more than the B2 bill.

At 25 per cent, MediShield covers only $2,579 of the private hospital bill, which makes it just slightly higher than the B2 bill.

The council has therefore decided to reduce the claimable amount to 25 per cent of private hospital bills, as this is more aligned with subsidised bills.

This change will affect the seven insurers providing Integrated Shield Plans (IPs) for private care that 70 per cent of residents here have.

As IPs incorporate MediShield Life, which is compulsory for all Singaporeans and permanent residents, their premiums are payable with Medisave, subject to a cap.

It will mean that the insurers will have to foot a larger share of private hospital claims, as they will receive a lower payout amount from MediShield Life.

However, policyholders who opt for private A or B1 class treatment in public hospitals will continue to get 35 per cent of their bills paid by MediShield Life.

The Life Insurance Association (LIA) Singapore said it and the IP insurers will study the proposed changes closely and will give feedback to the MediShield Life Council during its public consultation.

Its early reaction is 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".

But its spokesman said all the changes need to be carefully assessed in totality, to determine if there will be any impact on claims costs and IP premiums.

LIA told The Straits Times: "IPs continue to experience significant claims cost increases, which are putting upward pressures on IP premiums. Most IP insurers continue to make a net loss since the launch of MediShield Life in November 2015."

It added that its priority is to ensure that Singaporeans "continue to have access to affordable quality healthcare with the additional coverage provided by IPs" and at the same time, for the insurers, that it remains financially sustainable so they are able to continue offering these policies.

MediShield Life review: 5 key benefits for Singaporeans
They include higher annual and daily ward claim limits, removal of some exclusions
By Timothy Goh, The Straits Times, 30 Sep 2020

Singaporeans will receive enhanced MediShield Life benefits under the first major review of the national insurance programme to address gaps in current coverage.

They include a $50,000 increase in the annual policy claim limit, and the inclusion of treatments for attempted suicide, drug addiction and alcoholism.

Launched in November 2015, MediShield Life is a basic health insurance plan giving Singaporeans and permanent residents lifelong protection against large medical bills.

In a release together with the MediShield Life Council, the Health Ministry (MOH) said yesterday that changes resulting from the current review are expected to be implemented early next year, following a round of public consultation.

The exercise, which began in 2018, identified at least five areas where improvements could be made.


The council highlighted the case of an eight-year-old Singaporean who was hospitalised for 147 days due to epilepsy.

The child stayed in a C-class ward, spent more than 80 days in the intensive care unit, and underwent five surgical procedures.

This resulted in a total bill of $142,100 after government subsidies.

Due to MediShield Life's current policy year claim limit of $100,000, the child's family had to pay the remaining $42,100 through Medisave, cash or Medifund.

To protect patients from the costs of such exceptionally large bills, the council recommended raising the policy year claim limit to $150,000.

For the child's family, this would have meant that MediShield Life could cover $136,037 of the bill, after co-insurance and a deductible that would come up to a total of $6,063 and which could be paid using Medisave, cash or Medifund.

Medifund is available only to those who are assessed to be needy.

The move will also protect Singaporeans from the high costs of multiple periods of hospitalisation during the year.


Next, the council cited issues that arise from the difference in the cost of sub-acute care and rehabilitative care at community hospitals.

Rehabilitative care refers to therapy to improve one's post-illness disability and functional impairment.

Sub-acute care is for complicated medical conditions that require additional medical and nursing care at a lower intensity compared with that provided at the acute hospitals.

Previously, patients at community hospitals could claim up to $350 a day from MediShield Life, regardless of whether they needed rehabilitative or sub-acute care.

But sub-acute care tends to be more expensive than rehabilitative care, so patients who need the former are not as well covered by MediShield Life as those who need the latter, said the council.

It noted the case of a 60-year-old who was hospitalised for 25 days in a community hospital to receive sub-acute care for a bone infection.

The bill came to $10,700 after government subsidies.

Under the current MediShield Life claim limits, the patient was able to claim up to $8,750.

After co-insurance, this meant the patient paid the remaining $2,212.50 from Medisave.

Under the new limits, however, the entire bill would be covered, except for $321 in co-insurance that can be paid using Medisave.

"Introducing separate claim limits for sub-acute care and rehabilitative care will ensure that both groups of patients will enjoy similar levels of coverage under MediShield Life," said the council.


Another example raised was that of a 37-year-old Singaporean who was hospitalised for two days due to a bacterial infection.

The bill after government subsidies was $1,800, but the current claim limit for normal wards is capped at $700 each day.

As a result, the MediShield Life payout was capped at $1,260 after co-insurance, with the remaining $540 paid for using Medisave.

The council recommended that the cap be raised to $800 a day for normal wards, with an additional claim limit of $200 a day for the first two days.

"Patients tend to incur higher charges during the earlier part of their hospital stay, due to costly tests and investigations to diagnose their conditions," said the council.

"This results in patients with earlier discharges being not as well covered as patients with longer stays, as the aggregate claim limit over a longer hospital stay is generally enough to cover the high initial charges."

It also recommended the cap for intensive care unit (ICU) wards be raised from $1,200 a day to $2,200 each day, with an additional claim limit of $200 a day for the first two days.

Under the recommended limits, the patient would have been able to use MediShield Life to pay $1,620 of the bill following co-insurance, with $180 remaining to be paid for using Medisave.


Patients aged 80 and older will have the deductible for day surgery lowered from $3,000 to $2,000, to align it with the deductible for inpatient stays in C-class wards.

The deductible is the amount a patient must pay once every policy year before their MediShield Life payout starts.

"This will ensure that patients are not discouraged from choosing day surgery over an inpatient stay, as they will be subject to the same deductible regardless of their choice," said the council.

It added that the deductibles for day surgery patients below 80 are already aligned with the deductible for inpatient stays in C-class wards.


Finally, the council also recommended removing the standard exclusions for treatments arising from attempted suicide, intentional self-injury, drug addiction and alcoholism.

This means patients seeking treatment as a result of these can be covered under MediShield Life.

"There is increasing recognition that proper treatment is the appropriate approach towards self-harm," said the council.

Citing the American Society of Addiction Medicine, the council added that addiction is a chronic medical disease involving complex interactions among brain circuits, genetics, the environment and an individual's life experiences.

It added: "Prevention efforts and treatment approaches for addiction are generally as successful as those for other chronic diseases.

"MediShield Life, as the national health insurance, can support individuals in overcoming their addictions and their recovery process."

MediShield Life FAQs: Better coverage, higher premiums, but what if I can't afford it?
How the insurance scheme affects you
By Rei Kurohi, The Straits Times, 30 Sep 2020

Premiums and benefits under Singapore's MediShield Life insurance scheme are set to rise if recommendations by the MediShield Life Council are accepted. The proposed changes will likely be implemented early next year.

Here are some answers to frequently asked questions about the scheme.


A: MediShield Life is a compulsory universal health insurance scheme administered by the Central Provident Fund (CPF) Board that helps cover large hospital bills, including surgery and ward charges, and some costly outpatient treatments, such as dialysis for kidney failure and chemotherapy for cancer.

The scheme offers all Singaporeans and permanent residents automatic lifetime coverage from birth, regardless of age or pre-existing health conditions.

If the MediShield Life Council's recommendations are accepted, the annual policy claim limit will be raised from the current $100,000 to $150,000.

Before patients can get MediShield Life payouts, they must first pay a deductible of between $1,500 and $3,000 once each policy year. This sieves out smaller hospital bills because MediShield Life is meant to cover large bills.


A: MediShield Life is a medical insurance scheme, while Medisave and Medifund are medical financing schemes.

Medisave is a medical savings scheme that helps individuals set aside part of their income in their CPF accounts to pay for their personal medical expenses or that of their approved dependants.

It can be used to pay the premiums for MediShield Life and other government insurance schemes, such as ElderShield and CareShield Life - which cover only those above a certain age - as well as Integrated Shield Plans (IPs), which include MediShield Life.

Medifund is an endowment fund that provides a safety net for Singaporeans who face financial difficulties in paying their medical bills even after receiving government subsidies and tapping other means of payment, including MediShield Life and Medisave.

MediShield Life does not subsidise visits to a general practitioner, polyclinic or most other specialised outpatient clinics.

These are covered by the Community Health Assist Scheme, a different programme for which all Singaporeans can apply.


A: Money can be deducted from the Medisave accounts of your immediate family members, including your spouse or children, to pay premiums on your behalf. You can also top up your Medisave account with cash.

There are premium subsidies available for individuals from lower-to middle-income households, meaning those with a monthly income of $2,800 or less.

These subsidies apply automatically and are higher for those who are older. Permanent residents also receive these subsidies, but at half the amount for a Singaporean.

Subsidies are higher for Singaporeans from the Merdeka Generation, and those from the Pioneer Generation also qualify for additional subsidies. Both Merdeka and Pioneer Generation seniors also receive annual Medisave top-ups of $200 to $800, which can be used to pay for the premiums.

Patients who have limited family support and still need help paying their premiums even after subsidies can apply for the Additional Premium Support scheme.

The Health Ministry has said that even with the increase in premiums, a typical household's total premium after subsidies is expected to be within their annual Medisave contributions and inflows. No one will lose MediShield Life coverage due to financial difficulties, Health Minister Gan Kim Yong has said.


A: The council has recommended that annual premiums be increased by 11.5 per cent to 35.4 per cent, or between $15 and $525 a year, depending on the patient's age. The changes are expected to be implemented early next year.

However, a one-off COVID-19 subsidy for Singaporeans will help cushion this increase for the first two years. This will cover 70 per cent of the increase next year after other subsidies are taken into account, and 30 per cent of the increase in 2022.

This means Singaporeans can expect to pay about 10 per cent more in premiums next year, compared with this year.

Steep MediShield premium hikes and what they signal about affordable healthcare
Better benefits and rising costs justify premium increases, but there’s the question of why they need to go up by so much
By Salma Khalik, Senior Health Correspondent, The Straits Times, 15 Oct 2020

It is no surprise that MediShield Life premiums are poised to rise next year, since only a five-year moratorium was promised when the scheme was launched in November 2015.

Two proposals have ruffled feathers. One was the more than one-third jump in premiums for people aged 61 years and older. The other was the reduction of coverage for private hospital bills from 35 per cent to 25 per cent.

The other proposed changes to the compulsory national healthcare insurance involve better coverage - such as higher annual claims as well as claims for daily ward charges - so no one is upset about them.

In fact, those changes are appreciated, as they strengthen MediShield Life as a scheme that covers 90 per cent of big subsidised bills. This is very important, especially for the 27 per cent of people here who have only the basic scheme to protect them.

Under the proposed changes, premiums are set to increase by 11.5 per cent for those aged 20 or younger, and by 34 per cent to 35.4 per cent for people aged 61 years and older.

Currently, only those aged 75 years and older pay more than $1,000 a year in premiums. With the changes, all who are 60 years and older will be paying four-digit premiums.

At the top end, premiums will go up from $1,530 to $2,055 for seniors 90 years and older - a group unlikely to be still working and contributing to their Medisave accounts. There are more than 20,000 people in that age group.

While no one likes to pay higher premiums, it is understood that they are necessary, not just for the better coverage the MediShield Life Council is suggesting, but also to keep up with healthcare inflation, which is about 4 per cent a year.

Rising healthcare costs

Healthcare inflation has several causes. One is labour cost. Just as all of us expect our pay to increase with greater experience, so too do healthcare workers. We can't deny them this, just because they are in a more humanitarian field.

Salaries are but one contributing factor. The bulk of the cost increase comes from better treatments and procedures.

Premium increases will be lower only if we are willing to settle for outdated treatments.

But why would people settle for less than the gold standard?

It's thanks to better healthcare that survival rates have improved. But with certain conditions such as cancer, survivors may require ongoing care to prevent recurrence - and this will add to the total healthcare bill.

Another reason for rising healthcare cost is the ageing population. Older people are more likely to have more serious ailments. More seniors end up in hospital and often take longer to recover, and thus end up with bigger bills.

But this last argument should not have an impact on MediShield Life premium increases, as the insurance is based on each age cohort paying for itself, with no cross-generational subsidy.

Older people have already been paying higher premiums from the day the scheme was launched, to reflect this.

High premium increases

Better benefits and rising healthcare costs justify premium increases, but the question remains: why by so much?

MediShield Life will be reviewed every three years. So how much more will premiums go up by three years from now, and subsequently at each review?

The original premiums took into account that they would not rise for five years. If the actuaries have done their sums accurately, then the current increase is to take care of the expected call on the insurance till the next review in three years' time.

If this is the rate of premium increase we can expect at the next two reviews, older people must be prepared for premiums to more than double in a decade.

That is an unnerving prospect.

To be fair to the Government, it has put in place subsidies for half the population and Medisave top-ups for seniors.

MediShield Life premiums are also structured so that younger people pay higher premiums, but will get rebates when they are older. Current rebates range from $12 to $537 a year, but may be adjusted in future.

All that is well and good. Nevertheless, the question remains: Where does the need for 35 per cent higher premiums come from?

The Government has given the assurance that the steep hike is not due to the high cost of fighting Covid-19, since the data used for the calculations was up till last year, or pre-pandemic.

MediShield Life is pegged at subsidised treatments at public hospitals. Are the bills growing so quickly because the subsidy from the Government is not enough?

Last year, it was revealed that MediShield Life coverage had dropped from 90 per cent of qualifying subsidised bills to just

80 per cent. This was subsequently corrected.

Are the higher premiums to pay for that?

One must also get to the root of what accounts for the shortfall.

• Is it due to some miscalculation on the bills that patients - especially the older ones - would tot up when the scheme started?

• Have there been runaway bill increases at public hospitals for subsidised patients?

• Have subsidies by the Government been insufficient to cover 65 per cent to 80 per cent of hospital stays in C-class wards for Singaporeans, and 50 per cent to 65 per cent in B2-class wards, resulting in patients being faced with bigger bills that insurance needs to cover?

If it is either the second or third reason, then the Ministry of Health (MOH) needs to look into the matter and, more importantly, rectify it.

Alternatively, the ministry may want to look at raising the premium subsidy rate it is giving to means-tested middle-income and lower-income citizens, or increase their Medisave top-ups, to reduce the burden of the higher premiums.

Yes, the Government will be providing Covid-19 subsidies for the first two years, but a more permanent subsidy is needed for the less well off, as the higher premiums will become a fixture - on which future premium hikes will be based.

Of course this means that people who do not qualify for the subsidy or top-ups will have to fork out the higher premiums. But as they are better off, and the dollar value of the premium increase ranges from $15 to $525 a year, it should hopefully be affordable for them.

Cutting private hospital claims

The MediShield Life Council has suggested that the pro-ration payment for private hospital bills be reduced from 35 per cent to

25 per cent. It will continue to pay 35 per cent of the bills for private B2-class and A-class wards at public hospitals.

This is unlikely to deter patients from seeking treatment at private hospitals, despite some doctors in the private sector expressing such fears.

Those who do go to private hospitals are almost certain to be the 73 per cent with private integrated plans, or IPs.

The proposed changes to MediShield Life will have no immediate impact on them, as their bills are paid by whichever of the seven private insurance companies they bought their IPs from.

However, that pro-ration payment change - which reduces by almost 30 per cent the amount insurers will receive in claims from MediShield Life - would certainly impact the insurers, and will most likely lead to higher premiums for private hospital IPs.

About 1.75 million residents here held private hospital IPs as at last year. They account for 60 per cent of all IPs, the rest being for private A-class and B1-class ward care at public hospitals.

The rationale for reducing the pro-ration amount stems from rapidly escalating private hospital bills that have made their claims on MediShield Life disproportionately large.

Since MediShield Life was designed to cover subsidised care, the payouts should reflect subsidised bills. In 2015, that meant 35 per cent of private bills were roughly equal to B2-class bills. B2 is already the more expensive of the two subsidised ward classes.

Now, however, 35 per cent of private hospital bills far exceed subsidised bills for the same treatment, resulting in public hospital patients underwriting much of the private hospital patient bills.

Let's take a quick look at a simple procedure - day surgery for a cataract in one eye. The median rate in a private hospital is $7,270. Paying 35 per cent of the private hospital bill comes to $2,545.

Compare this to the median subsidised bill of $1,342 at a public hospital. Even when paying just

25 per cent, the amount MediShield Life has to come up with for the private hospital bill, at $1,818, is still much higher than the subsidised bill.

It could even be argued that the pro-ration amount should be reduced further for it to be equitable for subsidised patients.

An MOH spokesman said that over the past four years, "the number of private hospital claims receiving a payout has increased about 20 per cent faster than the overall growth".

Last year, MediShield Life paid out $95 million for 60,000 private hospital bills. A back-of-envelope calculation shows that if the pro-ration had been 25 per cent instead of 35 per cent, it would have paid about $27 million less last year.

Overall, the drop in pro-ration will help, but won't stem the climbing claims - which rose by $109 million last year. MediShield Life paid out $1,038 million for 684,000 bills last year, up from $929 million the previous year.

However, savings for MediShield Life mean that private insurers will have to fork out more. So it would be surprising if IP premiums are not raised.

For the oldest age group, private hospital IP premiums now range from $5,842 to $12,167 a year.

The high private hospital bills are already causing a lot of angst among the IP insurers, most of whom are complaining of underwriting losses. Perhaps this is the bigger problem Singapore needs to solve if it wants to keep healthcare costs affordable.


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