MediShield Actuarial Assumptions and Adjustments

13 August 2012

Question No. 262

Name of person: Mr Gerald Giam 

Question

To ask the Minister for Health what are the specific underlying actuarial assumptions and actuarial adjustments made to the existing MediShield scheme that result in the proposed increases to the MediShield deductibles and premiums.

Answer

1             MediShield is a not-for-profit insurance scheme focused on protecting Singaporeans against large subsidised bills. MediShield premiums are adjusted from time to time in line with payout experience and the expected changes in benefits, so that it can continue to support policyholders’ claims in the future. The premiums are set based on actuarial recommendations by the appointed actuary, Deloitte Actuaries and Consultants Limited, in line with standard actuarial principles and approaches. 

2             The key assumptions and adjustments in the pricing of the MediShield scheme are:

a.    Future expected claims experience by age, based on historical claims experience

b.    Future expected claims costs adjusted for the proposed schedule of benefits and deductibles

c.    Premium rebates for older policyholders: Premium rebates are currently provided from ages 71 to 85. A portion of premiums is set aside to support premium rebates for policyholders when they grow older.  The rebates will now cover 20 years instead of 15 years with the increase in maximum coverage age, and reflect changes in expected life expectancy.

d.    Projected membership, taking into account lapses, opt-outs, deaths and new members, based on historical trends.  

e.    Contingency margin against adverse circumstances

f.     Current and projected capital position of the MediShield Fund, including projected return of the fund and administrative costs of the scheme.