SINGAPORE — MediShield Life premiums need to be adjusted so as to keep the scheme “solvent and sustainable”, said Senior Minister of State for Health Koh Poh Koon in Parliament on Monday (2 November), following recommendations by a panel to raise premiums by up to 35 per cent for some policyholders.
“Premiums collected have to cover potential current and future payouts, including amounts set aside to support future commitments as well as provide a buffer against unforeseen contingencies such as unexpected spikes in hospitalisations due to disease outbreaks,” he said while replying to questions from Members of Parliament.
In late September, the Ministry of Health (MOH) announced that the MediShield Life Council had recommended the increase in premiums, citing the need to support enhancements to the scheme and keep pace with rising healthcare costs and claims.
Launched in November 2015, MediShield Life is a basic health insurance plan for citizens and permanent residents that helps beneficiaries pay for large hospital bills or costly outpatient treatments.
Dr Koh said that the government had considered deferring the MediShield Life review and “consequent premium increases” due to the economic impact of the COVID-19 pandemic but decided that it was more important for the scheme to be able to “meet its obligations in time to come when policyholders make claims”.
He added, however, that the government will provide a COVID-19 subsidy for all citizens over the next two years, which will pay for the bulk of the premium increase in the first year. “Taken together with existing premium subsidies and support, the net premium increases for all Singapore citizens will be no more than about 10 per cent in the first year after the MediShield Life review is implemented,” said Dr Koh.
Factors driving the increase
In his speech, Dr Koh highlighted three factors that drive up MediShield Life premiums: the increase in number of claimants and amounts paid out; the refreshing of claims limits; and support for enhancements to the scheme’s benefits.
“The number of claimants has increased by about 30 per cent and the annual payouts have increased by about 40 per cent over the last four years,” he said.
Dr Koh added that, between 2001 and 2019, the average hospitalisation bill at government healthcare institutions has increased by about 6 per cent a year on average – largely due to “medical cost inflation, demographics and medical advancements over the years”.
“This growth in utilisation and payout accounts for about two-third of the premium increases,” said Dr Koh.
Regarding the enhancements to MediShield Life benefits, he noted that these include those implemented since 2018, such as the extension of coverage to inpatient hospices and serious pregnancy complications.
Planning for the future
In explaining how the MediShield Life Fund distributes its monies, Dr Koh noted that a “key feature in the MediShield Life scheme is to distribute premiums more evenly throughout the policyholders’ lifetimes”.
“Part of the premiums paid by policyholders during their working ages are set aside to provide for future premium rebates, which will help to moderate premium increases in their older ages,” he said.
Dr Koh said that between 2016 and 2019, a total of $7.5 billion in premiums were collected – comprising $4.4 billion in premiums from policyholders and $3.1 billion from the government, measured in terms of premium subsidies and other forms of premium support.
“In the same period, a total of $3.5 billion in claims were paid out, while $3.0 billion was set aside for future premium rebates,” said Dr Koh.
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