Returning MediShield to its Original Purpose

28 Aug 2004, The Straits Times

Question

Returning MediShield to its Original Purpose

ST Forum (p34) "More convincing case for Medishield hike needed"featured a letter from Mr Philip Ang who commented that the government should put up a more convincing case for the increase in Medishield premiums by providing more facts and figures "than resort to a change of law." He opined that the increase "will be as good as giving the green light to private insurers to hike their premiums." He added that instead of "forcing everyone" to be a part of the risk pool, the government should find out why Medishield is losing out to other insurance schemes. He opined that if plans under Medishield are insufficient, more plans should be introduced and members should be given the choice whether to upgrade. He also added that many CPF members are more than adequately covered by private insurers and it was unfair to force them to increase their coverage to more than what is necessary.

Reply

Reply from MOH 

Mr Phillip Ang asked for a "more convincing case for MediShield hike" to be made (ST, 28 Aug).

It is normal in the medical insurance industry for insurance parameters, like premiums, deductibles and claimable limits, to be reviewed periodically and adjusted, if necessary, to reflect changing conditions. Otherwise, the insurance policy may lose its relevance.

For example, MediShield deductibles have not been adjusted for years. As a result, MediShield today covers too many hospital bills, large and not so large, but covers them inadequately. For large bills, MediShield payout is now less than 40% of the hospital bill, leaving the rest to be paid by the patient. This works against the original purpose of protecting Singaporeans against large hospital bills.

The Ministry would like to raise the MediShield payouts substantially so as to ease the financial burden on patients with large hospital bills. This is the main purpose of the current MediShield reform.

Benefits and premiums are closely related. Better benefits have to be funded by additional premiums. At the same time, MediShield premium adjustments are overdue as they have not been updated since the introduction of MediShield 14 years ago.

We agree with Mr Ang on the "positive benefits from healthy competition". However, the current competitive model is sub-optimal. Instead of driving operators to compete to provide better benefits for all, the current industry structure encourages cherry-picking instead. Insurers find it more profitable to sign on the young and healthy, leaving MediShield to look after the older and sicker. This is not a sustainable industry structure.

The Ministry will remove cherry picking. It will be done in a way which will still allow Singaporeans choice of insurance providers, who will be properly incentivised to compete for the benefits of their policyholders.

The Ministry has begun discussions with all the stakeholders. We welcome all feedback to moh_info@moh.gov.sg.