Second Reading Speech by Mr Gan Kim Yong, Minister for Health, on the MediShield Life Scheme Bill, on 29 January 2015

Madam Speaker, I beg to move, “That the Bill be now read a Second time.”

Strengthening Collective Responsibility through Risk Pooling

2.           Madam, PM Lee announced in August 2013 during the National Day Rally that MediShield would be enhanced and renamed MediShield Life. This marks a significant shift in healthcare financing towards greater collective responsibility to give Singaporeans better peace of mind so that they need not face life’s uncertainties alone.

3.           This strategic shift is in line with the Healthcare 2020 Master Plan to keep healthcare accessible, affordable and sustainable over the long term. It is also a response to the feedback received during Our Singapore Conversation that Singaporeans want to come together as a community and nation, to better support the more vulnerable and the needy, especially those who meet with unexpected shocks in their life journeys.

The MediShield Life Review  

4.           The MediShield Life Review Committee headed by Mr Bobby Chin was set up in November 2013 to review and make recommendations on the MediShield Life Scheme design and parameters, taking into account feedback from the public and key stakeholders.

5.           After 8 months of extensive public consultation and intensive study, the Committee submitted its report to the Government and the White Paper on the “MediShield Life Review Committee Report” was debated in Parliament in July last year. I am pleased that it received unanimous support from Members of the House.

6.           As recommended by the Committee, MediShield Life will provide every Singaporean with better and lifelong protection against unexpectedly large medical bills, regardless of changes in their life or health circumstances. The key recommended enhancements include:

        a)   Remove life-time claim limit so that it will provide life-long protection;
        b)   Increase the policy year and daily claim limits so that it will cover more; and 
        c)   Reduce co-insurance rate so that patients pay less especially for larger bills.

7.           The Committee also recommended that MediShield Life should be universal for all Singaporeans with no exemption, but appealed for the Government to bear the bulk of the cost of bringing those with pre-existing conditions under MediShield Life, and to provide the support needed to keep premiums affordable, especially for the vulnerable groups.

8.           The Ministry of Health has been preparing for the introduction of the MediShield Life Scheme and this Bill will provide the legislative framework for the establishment, governance and administration of the Bill.

9.           Madam Speaker, I shall now highlight the main features of the MediShield Life Scheme Bill.

MediShield Life Scheme and Council

10.       First, clause 3 of the Bill provides for the establishment of the MediShield Life Scheme and for the transition from MediShield to MediShield Life. It also provides for the Scheme to be administered by the CPF Board. 

11.       Clause 7 of the Bill provides for the current MediShield Fund to be renamed the MediShield Life Fund, and that all payments under the Scheme are to be met from the Fund. CPF Board, as the administrator for MediShield Life, is not liable for the payments under the Scheme, and therefore cannot use other monies that it holds to meet the obligations under the Scheme.

12.       In short, the MediShield Life Fund is to be a self-sustaining insurance fund supported by the premiums it collects. All of us contribute to the Fund. Those who fall seriously ill get payouts from the Fund. This is the spirit of collective responsibility, but with strong support from the Government. Up to two-thirds of the population are eligible for Premium Subsidies of up to 50%. Premium Subsidies are a permanent feature of the Scheme – which means that these subsidies will continue to be extended to Singaporeans who meet the criteria, and will not be phased out over time.

13.       Clause 8 of the Bill provides for the establishment of a MediShield Life Council, comprising up to 17 members. We have benefited much from the wide ranging experience and professional expertise of the members of the MediShield Life Review Committee in the review and design of the MediShield Life Scheme. I am confident that we will also benefit from the advice and guidance of the MediShield Life Council in the implementation and administration of the Scheme. The key roles of the Council are outlined in clause 8 of the Bill.

14.       The Council will review the design of MediShield Life Scheme benefits and parameters regularly, consider appeals for Additional Premium Support, and decide on the approach and guidelines for the recovery of outstanding premiums.

15.       The Council will be established by the time the Scheme takes effect. We are still working through the details of setting up the Council and we will release more information later.

Universal Coverage

16.       Let me now turn to the issue of universal coverage under MediShield Life, and the approach for bringing in those with pre-existing medical conditions.

17.       The MediShield Life Review Committee consulted extensively on the issue of universal coverage. The vast majority of Singaporeans strongly supported bringing the uninsured, including those with pre-existing medical conditions, under MediShield Life. Many saw this as part of the move towards a more inclusive society. This will reduce the financial burden on these individuals by spreading the costs more evenly across the population. This is also aligned with views gathered from Our Singapore Conversation where Singaporeans expressed support for greater collective responsibility to help one another with unexpectedly large hospital bills.

18.       Clause 3 of the Bill provides for the MediShield Life Scheme to apply to all Singapore Citizens and Permanent Residents. This enables those who are currently uninsured and those with pre-existing medical conditions to benefit from MediShield Life coverage. However, this also means that the Scheme will face higher costs, given the higher risks of these groups.

19.       As noted by the Review Committee, while it would be fair that those with pre-existing medical conditions pay higher premiums to reflect the higher risks, we also need to ensure that the Additional Premiums would not be too onerous. On balance, the Review Committee recommended that: the Government bears the bulk of the costs of bringing in individuals with pre-existing medical conditions; these individuals with pre-existing medical conditions should also shoulder part of the costs by paying Additional Premiums of 30% for the first 10 years; and the rest of Singaporeans co-share a modest part in the spirit of collective responsibility.  

20.       Under the Scheme, a pre-existing medical condition is one that has already developed before an individual’s insurance coverage begins. Those who fall ill only after their insurance coverage begins will not be considered to have pre-existing medical conditions and will therefore not need to pay Additional Premiums.

21.       MOH is currently reviewing the list of serious pre-existing medical conditions, with specialist advice from clinicians, and will share more on the broad categories of such conditions later. Individuals who have to pay the Additional Premiums will be informed before the start of the Scheme. 

22.       I wish to assure Members and the public that we will adopt a fair and compassionate approach in the assessment for Additional Premiums. The key focus would be on serious pre-existing medical conditions that are likely to be life threatening; or have high risk of future complications or recurrence, and therefore may require prolonged treatment. Singaporeans with these conditions will benefit significantly from the enhanced protection when they are covered under MediShield Life, as many of them would not have been able to get insurance coverage for their pre-existing conditions in the past.

23.       Madam, having a serious medical condition is worry enough. Therefore, we want to make the process of identifying such individuals a more convenient one. Part 5 of the Bill allows MOH and CPF Board to do so by accessing individual’s information already existing in Government administrative databases and medical institutions. We hope that, through this, the majority will avoid having to undergo medical assessments or provide medical reports. 

24.       We understand that some Singaporeans may not be comfortable with us accessing their medical information. They may decline choose to MOH and CPF Board access to their medical information. However, if they do so, we will not be able to ascertain that they do not have pre-existing medical conditions and therefore, they will have to pay the Additional Premiums under the MediShield Life. Notwithstanding, they can submit the necessary medical reports and documentary evidences to certify that they do not have any pre-existing medical conditions or if they change their minds later, they can consent to the access of their medical information.

Premiums

25.       Madam Speaker, let me now move on to MediShield Life premiums and payments.

26.       With the significant benefit enhancements and provision of universal coverage under MediShield Life, premiums will have to increase to support the higher payouts.  However, premiums will remain affordable for all Singaporeans through a variety of measures. 

27.       First, the Government will provide strong support in the form of various subsidies and support measures, to help Singaporeans with MediShield Life premiums.

28.       For lower-to-middle-income households, they will be able to benefit from MediShield Life Premium Subsidies. The eligibility criteria for the Premium Subsidies will be based on household monthly income per person and the Annual Value of one’s residence. MOH will also take into account multiple property ownership, to better reflect the individual’s financial circumstances, similar to the approach for other Government schemes such as the GST-Voucher (U-Save) Scheme.   

29.       Besides Premium Subsidies, the Government has also announced special subsidies and Medisave top-ups for all Pioneer Generation Singaporeans. With these subsidies and top-ups, all Pioneers will pay less for their MediShield Life premiums than they would otherwise have to. 

30.       The Government will also provide Transitional Subsidies for all Singapore Citizens over four years, to help ease the shift from MediShield to MediShield Life.

31.       Second, Medisave may be used to pay the full MediShield Life premiums. For the 94% of Singaporeans who are already covered under MediShield today, including those who bought Integrated Shield Plans, their existing Medisave payment arrangements will be retained. For those who wish to have another immediate family member to help with premium payments, they can request the Board to do so. These Medisave payment arrangements will be provided for under clause 4 of the Bill.    

32.       For children below the age of 21, clause 4 further provides for their premiums to be borne by their parents. Citizen babies born after 2012 can tap on the $3,000 Medisave grant under the Marriage & Parenthood Package to help pay for their premiums.

33.       The 1%-point increase in employers’ CPF contribution to Medisave accounts this year will also help to cover the increase in MediShield Life premiums for most Singaporean households.

34.       For needy Singaporeans who need further help with their premiums even after these subsidies and support measures, the Government will provide Additional Premium Support on a case by case basis for their premiums.

35.       Madam Speaker, premium subsidies and support are a key feature of the MediShield Life Scheme.  

Facilitated Eligibility Checks

36.       The MediShield Life Review Committee recommended that the process of applying for subsidies should be made as simple and convenient as possible so that those who need them will receive them. Many Singaporeans have also suggested that we simplify the application process to reduce the need to provide similar information to different agencies repeatedly.

37.         Therefore, Part 5 of the Bill allows MOH to do so by using individuals’ information in Government databases, to check and compute premium subsidies for each individual. These Facilitated Eligibility Checks will ensure that eligible Singaporeans are able to access MediShield Life premium subsidies as conveniently as possible, without having to apply individually and submit supporting documents. 

38.       While MOH will do our best to use the latest information, the outcome of the Facilitated Eligibility Checks depends on information in the Government databases being up-to-date. We know that some Singaporeans may not have updated their NRIC addresses after moving out to a new address. Some who have rented out their flats may not have updated their tenants’ particulars as well. To help us compute your subsidy eligibility, we urge individuals to do their part by checking and updating these records.

39.       Similar to the access to medical information, Singaporeans may choose not to participate in the Facilitated Eligibility Checks so that MOH and CPF Board will not have access to their information, but this means that they will not receive any premium subsidies as we will not be able to assess their eligibility. However, if you do change your mind subsequently, you can apply later to be assessed.

40.       I would like to assure Members that stringent safeguards are in place to protect the information from unintended or inappropriate uses. First, only authorised persons will be allowed to access, use or disclose medical and financial information for specified purposes. They will be required to sign appropriate undertakings. Second, the Minister in charge of the agency that controls the information requested will have to approve the disclosure of that information, and can impose appropriate terms and conditions. Third, clause 29 of the Bill makes it an offence for any person to access, use or disclose information about an individual obtained under Part 5 of the Bill without authorisation or the written consent of the individual concerned. Offenders may be punished with a fine of up to $5,000 or imprisonment of up to 12 months, or both.

Facilitating Premium Payments

41.       Madam Speaker, let me now address the issue of premium payments and recovery measures for MediShield Life Scheme.

42.       As MediShield Life is a universal and self-sustaining Scheme, all citizens and PRs must play their part in paying their premiums on time, to ensure that the Scheme can continue to pay out the benefits, and meet its commitments. To facilitate and assist Singaporeans in paying their premiums, a comprehensive framework of measures will be put in place, in addition to the subsidies and support I mentioned earlier.

43.       First, we will facilitate the process for other immediate family members to pay for your MediShield Life premiums if you do not have sufficient Medisave balance.

44.       Second, for those who have missed premium payments due to insufficient Medisave balances, we will send regular reminder letters to alert them to top up their Medisave and to make use of the alternative payment modes available.

45.       Third, we recognise that there may be some who need further help with their premiums even after Premium and Transitional Subsidies. Some may not be aware of the help available or how to access it. We will put in place measures to help the vulnerable to ensure that those who are needy will receive help.

46.       However, there may be a small group who refuse to pay their premiums, despite multiple notices and reminders, even though they have the means to do so. Their premium defaults will translate to bad debts into the MediShield Life Fund, and lead to higher premiums for all Singaporeans.

47.       The MediShield Life Review Committee had noted this and recommended that the Government adopt appropriate premium recovery measures and penalty to ensure social responsibility in the payment of premiums.

48.       Let me emphasise that the premium recovery framework and penalty are directed at this small group of freeloaders who are wilful defaulters and do not contribute their share, even though they can afford to. It is necessary to have a set of firm measures in place to deter defaults and uphold the spirit of collective responsibility behind MediShield Life. This will ensure that the MediShield Life Fund remains sustainable and can meet its commitments to all Singaporeans. It also ensures that the debts of these freeloaders will not be unfairly shouldered by those who have paid their share responsibly.

49.        This is similar to other countries with mandatory national insurance schemes which have also adopted strict enforcement measures, to ensure compliance and recover outstanding premiums.

50.       Part 3 of the Bill provides for a robust premium recovery framework, with powers adapted from existing income tax legislation. Whether it is MediShield Life premiums or taxes, they rely on the same principle of collective responsibility, and there is a need to take a firm stance against those who are able to, but refuse to play their part.

51.       Clause 12 empowers a recovery body to appoint defaulters’ agents such as banks and employers who can be directed to pay defaulters’ outstanding premiums from the defaulters’ savings and salaries respectively.

52.       If necessary, the recovery body may prevent those with outstanding premiums from leaving the country without paying them, as provided in clause 16 of the Bill. Those who are notified about such a direction from the recovery body and yet choose to violate the direction will be committing an offence punishable with fine or imprisonment or both.

53.       Clause 17 allows the recovery body to impose a penalty, not exceeding 17%, on outstanding premiums and any interest imposed on the outstanding premiums. This is aligned with the maximum penalty of 17% for income tax arrears. Let me clarify that the 17% is not a recurrent penalty. It is the total maximum that can be imposed on a year’s outstanding premiums. It acts as a deterrent for delaying payment, and will go towards covering the enforcement costs of recovering premiums. Clause 11 allows interest to be imposed on outstanding premiums. This is not a penalty but to fairly reflect the opportunity cost to the MediShield Life Fund, which could have earned a return from investing the premiums to support payments from the Fund.

54.       I assure Members that we will exercise discretion and impose interest and take the various recovery measures only in appropriate circumstances, when the defaulters wilfully refuse to pay their premiums despite multiple reminders and attempts to contact them and to help them, over an extended period of time. The MediShield Life Council will provide direction on the broad approach towards premium recovery.    

55.       I would also like to clarify that late payment of premiums will not be a criminal offence.

56.       IRAS and the CPF Board will be appointed as recovery bodies to help ensure that premium payment is made in a timely manner. This enables the Scheme to tap on their expertise and resources in administering these measures in an effective and sensitive manner.   

Conclusion

57.       Madam, let me conclude. MediShield Life is a major step to strengthen collective responsibility and give Singaporeans a peace of mind. We discussed at length during the Parliamentary debate last year on issues ranging from the benefit features and premium affordability to Fund sustainability. The debate concluded with unanimous support for this significant shift in healthcare financing. We are taking another step now to make this a reality. The MediShield Life Scheme Bill will provide the legislative framework for this shift to take place, and for the implementation and administration of the Scheme.

58.       MediShield Life is a complex Scheme. We will step up our outreach efforts to explain the benefits of the scheme, how Singaporeans can receive subsidies and support for premium payments and to explain the effects of this Act.

59.       Madam, the idea of MediShield Life goes beyond healthcare and insurance. It is in fact a reflection of the kind of society we want to build.   A more inclusive society – where we pool our resources together to help the vulnerable and the sick among us. And a more caring and progressive society – where those who are able will play their part while those who are needy receive more help. This MediShield Life Scheme Bill sets the framework not only for the introduction of universal coverage for all, but also for every Singaporean to play a part in nurturing an inclusive, caring and progressive society.

60.      Thank you.