Government’s Focus Remains on MediShield Life

MOH's Reply

Straits Times, 23 March 2016

Lian He Zao Bao, 23 March 2016

Government’s Focus Remains on MediShield Life

Ms Salma Khalik (ST, 17 Mar, ‘New B1 insurance plan fails to address some concerns’), Ms Chua Mui Hoong (ST Online, 20 Mar, ‘Standard B1 health plan: A missed opportunity to bring private health insurers to heel’) and Ms Toh Yim Seong (ZB, 20 Mar, ‘Standard IP payouts insufficient’) urged the Government to do more with the Standard Integrated Shield Plan (Standard IP), beyond standardising the benefits of the plan.

The Government’s focus is to provide basic and affordable health insurance coverage for all Singaporeans through MediShield Life, regardless of their health condition. Therefore, MediShield Life is designed to provide sufficient coverage for subsidised Class B2/C wards.  Singaporeans who wish to have coverage beyond MediShield Life can purchase private IPs, which will come at higher premiums than MediShield Life due to the additional private insurance component.

The Standard IP was developed in response to the MediShield Life Review Committee’s recommendation in 2014, to provide a “no-frills” IP option, for those who want to switch from their more expensive IPs to a more affordable one, and for those who wish to have higher coverage beyond MediShield Life. The Standard IP was also designed to have standardised features to facilitate comparison of premiums by consumers.   

Like all other IPs, Standard IP coverage is optional and it is not intended to meet the needs of all Singaporeans. Underwriting for the additional private insurance component is therefore necessary. Otherwise, there will be adverse selection, where individuals may purchase the higher coverage only after they have fallen ill, leading to higher premiums for all, including for healthy policyholders who joined earlier.

While MediShield Life covers all Singaporeans for all health conditions, those with serious pre-existing conditions pay Additional Premiums as a reflection of their higher risks and to fund part of their coverage. The Government bears the bulk of the cost of covering those with pre-existing conditions.

The Government’s focus remains on providing basic universal healthcare coverage for all Singaporeans through MediShield Life, with IPs as an optional private plan providing higher than basic coverage.

MOH will continue to review MediShield Life and IPs, to ensure that they remain relevant to Singaporeans with different needs.  As our population ages, we must also focus on promoting healthy living and active ageing; transforming our care models; and improving productivity to keep our healthcare system sustainable and affordable for all Singaporeans. 

Ms Lim Bee Khim
Director, Corporate Communications
Ministry of Health

---------------------------------------------------------------

Forum Letters

Straits Times, 17 March 2016

New B1 insurance plan fails to address some concerns

Medical insurance just got more confusing.

This week, the Ministry of Health (MOH) announced the introduction of a standard B1 plan for those who want basic medical insurance coverage at the B1 level. That's one class above the B2 level that MediShield Life covers. At B1, patients can choose their doctors and enjoy air-conditioned rooms.

The new B1 standard plan is one of several Integrated Plans (IPs) that people can buy to enhance their MediShield Life coverage. It is the most basic of IPs. The problem is that it is anything but standard.

The so-called B1 standard plan, which becomes available on May 1, comes with different premiums, depending on which insurer a person buys the plan from.

MOH said it created this standard B1 plan in response to public feedback on four aspects of insurance coverage related to the launch of MediShield Life last November. They are:

• Demand for affordable IPs that provide coverage beyond subsidised treatment;

• Concern about the affordability of IP premiums over time;

• Flexibility to reassess choice of IP over time and downgrade to a cheaper plan if needed, with many saying B1 would be enough;

• Confusion about benefits since different plans offer different things.

The question is, does the introduction of the standard B1 IP address these concerns? In my opinion, the answer is "No".

Let's look at each of the four concerns in turn.

AFFORDABLE IPS

MOH has decided to leave it to insurance companies to decide on the premiums they want to charge. All MOH has insisted on is a set of standard, no-frills benefits.

As a result, premiums for the identical product do vary, by as much as $1,863 a year.

One wonders if some of these insurers are charging high premiums to discourage people because they really do not want to offer this standard IP, whether because they already have their own B1 plans or because they see little profit in this.

Furthermore, these premiums will remain unchanged only for two years, after which insurers are free to raise premiums.

So while this standard B1 plan might be affordable today, there is no guarantee that it will remain so in future.

In fact, the president of the Life Insurance Association of Singapore, Mr Khoo Kah Siang, has already warned of future hikes, saying: "IP premiums are not guaranteed and therefore different insurers may raise premiums differently over time."

The only concession to keeping this IP affordable is that it comes with no frills, so premiums will likely be lower than for those B1 IPs that come with bells and whistles.

Having said that, depending on insurer and age group, there are premiums for this standard no-frills B1 plan that cost more than some as charged B1 plans and even Class A plan for people of the same age group.

That is rather inexplicable.
 

AFFORDABILITY OF IP PREMIUMS

People worry about IP premiums rising over time and how they can afford to keep paying, especially after retirement, says MOH.

Yet, the premiums for the standard B1 plan for people over age 75 already exceed the Medisave withdrawal limits for most in this age group. They will have to top up in cash and that makes the plan less affordable to them.

The MediShield Life Review Committee had recommended that "the premiums for the Standard Integrated Shield Plan should form the basis for setting Medisave Withdrawal Limits" for such plans.

In the spirit of this recommendation, the full premiums for this plan should be payable by Medisave. But given the huge difference in premiums of almost $2,000 for older age groups, that is surely not possible.

To address people's concern about runaway premiums, MOH could have set a cap of a certain percentage increase a year. But it has not.
 

NEED TO REASSESS CHOICE OF IP OVER TIME

Many people are of the view that B1 class treatment would be sufficient for them once they have retired. With the introduction of the new standard B1 plan, all those who have bought or intend to buy IPs will be able to downgrade to a B1 plan if they wish.

In my view, there are better ways to achieve this end but, at least, this particular public concern has been addressed.
 

CONFUSION ABOUT BENEFITS

This concern, unfortunately, remains.

That's because with the introduction of the standard B1 plan in May, there will be a total of 12 B1 plans. True, three no longer accept new policyholders. That leaves nine B1 plans to choose from.

People's confusion over the different plans on offer could have been addressed if the standard B1 plan had replaced all existing B1 plans, so there is only one set of benefits for people to look at.

But doing so could have upset those who are on "better" B1 plans. After all, the standard plan comes with no frills, while some of the existing B1 plans offer more coverage, although at higher premiums.

For example, several existing B1 plans cover pre- and post- hospital treatment for up to 120 days. Some cover bills "as charged" with no treatment cap, so long as the treatment takes place in a public hospital B1 class.

With the plethora of B1 plans, it has just become harder to decide.

How important are pre- and post- hospital coverage? Is it worth paying slightly more for an "as charged" plan?

After all, MOH has said that the standard B1 plan would cover only 90 per cent of big B1 bills. The question people will ask is: Will that be enough for me?

Currently, fewer than 500,000 people, or just 19 per cent who have IPs, have opted for B1 coverage. By adding more B1 plans, is the ministry simply splitting the risk pool further? Will this result in greater premium fluctuation?

Looking at various IP categories today, generally the insurer with a larger market share tends to charge lower premiums while the insurer that has the smallest number of policyholders charges the most.

That makes sense, since one immense bill - if shared among a small pool of policyholders - could send premiums sky-rocketing. Knowing that, those insurers with fewer policyholders would need to protect themselves with higher premiums.

That same bill, shared by a large number of policyholders, would have a smaller impact. As these insurers face lower risks, they can afford to charge a lower safety margin.

By extension, diluting the B1 market could result in higher than necessary premiums.

If instead, all those who want the standard B1 plan form just one pool, then there is not only greater long-term stability, but it will also mean that everyone within an age group pays the same premium for the same benefits - instead of the current system where some pay more and others less for exactly the same coverage.

With health insurance, it's not a matter of just picking the cheapest on the market. That's because the majority of older people have developed some chronic ailments that might result in exclusions should they change to a different insurer.

One way of ensuring both standard benefits and premiums is if the Central Provident Fund (CPF), which manages the basic MediShield Life, also runs this standard plan. It could then allow for people to downgrade from a higher IP with no penalty.

Alternatively, if the CPF does not want to administer the scheme, it could tender it out to one of the five insurers to manage. The other four would get a commission for passing on their existing policyholders who opt for the scheme.

That way, there will be only one standard B1 scheme, making it easier for people to choose an insurance plan that suits them best. With a larger pool of policyholders, premiums can also remain more affordable over the long term.

It will also not eat much into existing IP business as more than four in five people are choosing IPs that cover Class A or private hospital treatments.

Some would also prefer to choose as charged B1 plans that offer more coverage.

The standard B1 IP will serve, as originally meant, as a safety net for those who want more than subsidised care.

Salma Khalik

----------------------------------------------------------------------------

Straits Times Online, 20 March 2016

Standard B1 health plan: A missed opportunity to bring private health insurers to heel

The Ministry of Health’s move last week to introduce a standard B1 health insurance plan got me elated for about 30 minutes.

I read the news flash from my colleagues, about the new standard B1 health insurance plan offered by five private health insurers that offers a tier of coverage above MediShield Life, at affordable premiums.

Fantastic, I thought. Maybe I can finally buy private health insurance. I am covered only under basic MediShield Life.

But my elation was short-lived.

Those who bought higher class coverage they didn’t need can now downgrade to this plan with no penalty.

The new plan doesn’t allow people to automatically upgrade from basic to standard B1 coverage if they are prepared to pay the premiums. 

Instead, private insurers can still cherry pick who they want to cover from this group, and what the terms are. This means they can still reject the middle-aged with past or current medical conditions (like me - I had cancer over 10 years ago) and take on only the young and healthy.

As MOH said in its press release: “Insurers are allowed to assess, approve with or without exclusions, or reject applications based on their own risk assessment frameworks.”

It did add, helpfully: “Regardless of the underwriting outcome, all Singaporeans are covered for all pre-existing conditions under MediShield Life.”

To be fair to the MOH, it was only three years ago that it took the big step of extending health insurance to all, covering even those with pre-existing illness. It has been working hard since to work out the implementation details.

It has also done a creditable job getting the five insurers on board to agree to a standard menu of B1 coverage at relatively affordable premiums - thus keeping faith with what the Medishield review panel had recommended. 

But I am disappointed that the ministry, while reviewing B1 private health insurance coverage, did not take the opportunity to regulate private health insurers more tightly. 

As my colleague, veteran health correspondent Salma Khalik, pointed out, the new plan doesn’t address many concerns. 

One salient observation she made was that adding one more standard B1 plan to the plethora of existing B1 plans offered by private insurers risks splitting the risk pool. A smaller risk pool might also end up driving premiums. 

“Currently, fewer than 500,000 people, or just 19 per cent who have IPs, have opted for B1 coverage. By adding more B1 plans, is the ministry simply splitting the risk pool further? Will this result in greater premium fluctuation?”

Private health insurance in a country is only as good as the regulator forces it to be.

If you allow pure market forces to prevail, you will have profit-maximising insurers springing up, offering to cover the young and healthy who aren’t likely to make claims, and ditching them as they get older or when they get sick. 

Hence, regulators often insist that medical coverage be “guaranteed renewable” - which means the insurer must guarantee that you can renew your policy every year, and can’t cancel on you the year after you get sick and make a claim.

Has Singapore ensured that its regulation of private health insurance provides a good outcome for patients? 

A look at how other jurisdictions like Australia regulate health insurers is instructive.

In Australia, a tax-funded health care system called Medicare provides universal health coverage for all. In addition, Australians are encouraged to buy private insurance to top up their coverage, with the government giving a rebate on premiums by up to 30 per cent, depending on income. 

Younger people are encouraged to sign up early before they turn 30. Otherwise, they pay an extra 2 per cent loading on top of the premium for each year they are above 30. (If you delay private insurance and choose to take it up at age 40, that’s a whopping 20 per cent more in premiums. But at least the insurer will still cover you, regardless of whether you have pre-existing illness, unlike in Singapore). Getting people on board private insurance, and from a young age, ensures a large and sustainable pool of members for the insurer to cover.

Four regulations in particular ensure that patients are not worse off and left uninsurable or slapped with too-high premiums as they get older and sicker. 
You can read the Australia report here.
 

NO INDIVIDUAL RATING

The first rule is that insurers are not allowed to do individual rating - which means they can’t discriminate against an individual just because he or she is sick or likely to get sick. Instead, insurance plans are community rated - the whole group is assessed together, and premiums set accordingly.

This concept is startlingly new to many Singaporeans, but is one of the bulwarks of health insurance. The very idea of insurance after all is to pool risks, not let private insurers cherry pick to the detriment of those who most need medical coverage.
 

RISK EQUALISATION FUND

To prevent insurers from setting premiums deliberately high to keep out the old and sick, and to make sure insurers who do take on on older, sicker patients are not disadvantaged, the regulator ensures there is something called a risk equalisation fund. 

This essentially means the regulator steps in and looks at all the insured patients across all the private insurers, and then reallocates risks and funding so insurance companies with sicker members don’t lose out, and an insurer does not have an incentive to pick only young, healthy members to insure. 

The premiums set by the five insurers offering the new standard B1 plan vary so widely - it makes one wonder if some of the insurers price their premiums so high for the very old, to discourage them from coming on board, and prefer to shunt them off to other insurers.

A risk equalisation fund removes such incentives.
 

PORTABILITY

Third, as for telcos here, there are rules for portability across health insurers. You can take up one insurer’s policy this year, and switch to another without penalty. 

If the new insurer offers higher benefits not covered in your old policy, you may need to wait 12 or 24 months before claiming for those new provisions. But the new insurer can’t reject you.
 

MINISTERIAL APPROVAL

Fourth, premium changes and requirements set by private health insurers need ministerial approval. 

To my mind, these are clearly sensible, superior ways of regulating private health insurance to ensure an outcome that is good for all patients. Yet there has been no such move to regulate private health insurers here. 

It is commendable that MOH chose to step up to get private insurers to agree to a standard B1 plan at affordable premiums.

But that is setting the bar rather low. The review has become a missed opportunity. 

Instead of a thorough review of regulation to bring private health insurers here to heel in a way that truly benefits patients, MOH has chosen to allow private health insurers here to continue to cherry pick patients. 

Chua Mui Hoong

----------------------------------------------------------------------------

Lian He Zao Bao, 20 March 2016

划一索赔还不够

      卫生部成立的终身健保检讨委员会两年前提出建议，要设立一套划一、涵盖B1病房医药费的保险计划，这套划一综合健保计划的详情，终于在上星期二出炉。

详情公布之后，我相信有不少人对这一计划不如预期而感到失望。划一综合健保计划（Standard Integrated Shield Plan，简称Standard IP）是为公共医院的B1级病房医疗费提供保障，为方便论述，下面我就称之为划一B1保单。

当初提出要制定划一B1保单，是因为市面上有多种私人综合健保计划（Integrated Shield Plan，简称IP）保单，公众在考虑是否要投保，以及如何比较各保险公司的保单时，往往无所适从。

B1保单之所以引起人们的关注，是因为它的医疗环境比C和B2都好，但保费又比A级的低。公共医院的B1级病房，是4人一房，装有冷气、电视机和电话，病人可以选餐食，还可以指定主治医生。以新加坡中央医院的B1病房为例，房费从每天240.75元起跳，A1房费则从每天428元起跳。因医疗费用相对较低，B1保单的保费因此会比A级病房保费低许多。

人们希望政府能制定划一的B1保单，为那些希望拥有更好医疗保障的国人划定标准，减少混乱。这意味着，少了各种索赔项目的差异，国人较能在产品之外，对不同业者的服务水平进行比较，进而做出明智的决定。与此同时，人们也希望政府能在一定程度上，管制保费的收取，增加它的透明度和确定性。

划一B1保单的宣布受到2类公众的关注：一是那些已经投保A级病房和私人医院的公众。由于私人综合健保保单的设计是年纪越大保费越高，这些投保者担心自己退休之后负担不起高昂的保费，都在盘算在适当的时刻降级。二是那些只投保终身健保，也就是最基本的保单，只保B2和C级病房医疗费的公众。他们希望能有更好的医疗环境，或者可以自由选择主治医生。

由于划一的B1保单是由政府参与制定，大家都抱以更大的期望。

令人感到失望的是，新推出的划一B1保单，索赔项目是划一了，但保费并没有划一。同样的保单条款，五家保险公司却收取不同的保费。投保人年轻时，保费的差别还不是太大，当迈入老年之际，保费鸿沟立即显现。例如79岁和80岁时，5家保险公司保费最高和最低的落差是545元，到94岁至95岁时，差别是1893元。

这五家保险公司虽已承诺，从今年5月推出的2年内不会调整保费，但大家都知道，保险公司会根据赔偿情况、风险评估，以及投资得失，不时检讨保费。那么，有谁能确保目前保费较低的保险公司2年后不会大幅度调整保费呢？

保险公司往后若调整保费幅度过高，已经投保的人也不可能在货比三家后转换保险公司。根据现有模式，保险公司会重新评估投保人的健康状况，而患重病者多不受保。因此，公众一旦投保了某家保险公司，都不会因另一家较便宜而半途转到别家去。

卫生部没有规定划一B1保单须收取统一保费，也没有限定往后保费的涨幅。划一B1保单的保费因此存有不确定性，和市面上其他私人综合健保保单的保费没有确定性的情况没有差别，这怎么不教等待了2年的公众不感到失望呢？

卫生部已经说得很清楚，划一B1保单是私人保险产品，既然如此，假如有保险公司通过附加利益来抢滩，在商业考量面前卫生部想必也无从阻止。那么，这个划一的计划岂不失去意义。

保险公司每年得向股东汇报盈利，深具营运压力，而政府则没有这层顾虑。因此，一个比较理想的做法，是由政府在终身健保的基础上，把这个划一的B1保单纳入其中，让这个全民保险计划多一个B1项目。保户可以按照自己的需要和能力，选择留在B2和C，抑或转到较高级别的B1。

教育部在20多年前放弃开办启蒙班之后，2年前为提高幼儿教育素质又接手开办幼稚园；陆路交通管理局也一改多年的做法，从今年开始为巴士服务采用营运承包制，以提升服务素质；卫生部若把享有较少政府津贴的B1级病房也纳入终身健保的范围内，那又何尝不可？

（本文刊在3月20日《早报星期天》·想法）

保险公司每年得向股东汇报盈利，深具营运压力，而政府则没有这层顾虑。因此，一个比较理想的做法，是由政府在终身健保的基础上，把这个划一的B1保单纳入其中，让这个全民保险计划多一个B1项目。

杜艳嫦 (Toh Yim Seong)