MediShield Life changes good in principle but concerns remain

The second review of MediShield Life did not disappoint, with some out-of-the-box suggestions, such as tying it with the national Healthier SG initiative, in the hope that a healthier population would draw less on the insurance.

Many of the tweaks involve bringing the mandatory national health insurance scheme back to its original purpose – that is, to cover 90 per cent of subsidised bills – and to keep abreast of the latest, validated procedures.

All highly commendable, and accepted recently by Parliament.

Obviously, it also

comes with a bigger price tag

. Here, the Ministry of Health (MOH) has given the assurance that the less well off will not suffer, with

the promise of $4.1 billion

in support measures.

Minister of State for Health Rahayu Mahzam also assured Parliament that no one would lose coverage as a result of being unable to pay for it.

While I agree entirely, in principle, with the changes recommended, I do have some concerns.

Provides for 90 per cent

When MediShield Life was launched in 2015, one of its tenets was to fully cover the big medical bills of 90 per cent of patients seeking subsidised care.

But both back in 2020, when the first full review of the scheme was made, and again in 2024, the MediShield Life Council found that the proportion of subsidised bills fully covered by the insurance was 80 per cent or less.

Healthcare costs keep rising. This is a given.

The question here is whether MediShield Life can take price increases into account in order to continually maintain full coverage for 90 per cent of subsidised patients.

This would not require a full review of the scheme every year. Instead, it might work on a formula that when certain categories of claims start to fall below, say, 88 per cent of claims, the cap for that category is automatically raised.

It seems unfair that two patients of the same age undergoing identical treatments had different extents of their bills covered simply because one had it done in 2021 and the other in 2024, when costs had gone up and claim limits hadn’t.

The earlier patient had full insurance coverage. The second had to dig deeper into MediSave, or his own wallet, to pay for the treatment. Both paid identical premiums, but the proportion of their bills covered by insurance differed.

Reviewing claim caps annually could ensure that the insurance continues to cover 90 per cent of all subsidised bills – which are incurred at public hospitals – so there should not be any fear that overcharging would skew the coverage.

Fairer subsidy

Not only are treatment costs going up, the number of people making claims is also on the rise.

With the rapidly ageing population here, the number of claims per year is expected to continue going up.

To pay for all this, premiums will also have to go up. The council has capped the premium increase at 35 per cent, to be phased in evenly over three years.

This high premium increase will affect only certain age bands as the average premium increase will be 22 per cent.

This can still be extremely hefty. MediShield Life premiums now range from $148 to $2,093 a year. The premium range will go up to $200 to $2,826 with the revision.

Knowing this, the council has recommended that the Government ease the premium increase with subsidies based on income level, with those in the upper-middle income bracket getting the smallest subsidy.

However, there is a caveat that people who live in properties with an annual value of $21,000 to $25,000 will receive 10 percentage points less in subsidy and those with an annual value of above $25,000 will receive no premium subsidy at all.

This means that seniors who have no income but live in private homes, for instance, will bear the full brunt of premium increases – compared with those in the upper middle income bracket, who will get at least some subsidy if they are living in homes with an annual value of $25,000 or less.

This seems intrinsically unfair.

Among them may be retirees no longer earning an income but living in homes bought decades ago. They may be asset rich, but are cash poor. Like most people, they would like to age in familiar surroundings, but are being penalised for it.

At the very least, they should be accorded the same premium subsidy as high-income earners.

When this issue was raised in Parliament by various MPs on Nov 11, Ms Rahayu said only that those who need more help or are facing extenuating circumstances may appeal for more assistance, and would be assessed case by case.

But the question is why upper middle income earners living in HDB flats are entitled to premium subsidies, while retirees with no income living in private houses don’t get a cent.

Higher deductible

One of the biggest changes is the increase in deductibles – and the implications of such a change.

Today, patients with MediShield Life opting for subsidised treatment have to pay a deductible of $1,500 to $3,000, depending on the ward class chosen and their age, before insurance kicks in.

The high-powered team that set up the parameters for MediShield Life wanted it to help people cover big medical bills – not every bill they might rack up.

Hence, they mandated a deductible – an amount people have to pay each year before insurance comes into play – and co-insurance, where patients have to pay a portion of the bill on top of the deductible.

The council has suggested increasing the deductible, since with higher bill sizes, the current deductible “has become less effective in sieving out smaller, more affordable bills”. Removing these small bills from insurance coverage will help to keep a lid on rising premiums.

Nothing wrong with this in theory, and if MediShield Life were the only insurance scheme in play. Unfortunately, the picture is muddied by private Shield plans and riders.

Slightly more than two in three people here own Integrated Shield Plans (IPs) that sit atop MediShield Life, providing coverage for non-subsidised care.

There are three categories of IPs: those that cover private hospital care, and those that cover public hospital A and B1 class wards.

The question is whether changes to MediShield Life deductibles will lead to similar changes in IPs.

IPs currently have deductibles of $1,500 to $5,250.

Will private insurers raise deductibles correspondingly in order to keep premiums more affordable?

If any or all of the seven IP insurers raise their deductibles, it might slow down the rise in premiums. On the flip side, it could drive up the purchase of riders if people worry about the higher amount they may have to pay out of pocket.

A rider is a separate plan bought to complement IPs.

The original purpose of the rider was to take care of the deductible and the co-payment, leaving patients with nothing they had to foot themselves.

Riders also cover some cancer treatments that have no, or limited, insurance coverage.

If more people start buying riders to cover their higher deductibles, it could send the IP market into a tailspin as claims shoot up.

In 2018, MOH revealed in Parliament that people with full riders had bills that were 60 per cent higher than those without riders. Riders are a major driver in pushing up healthcare costs, and more people buying them would accelerate rising healthcare costs.

MOH also revealed that, in the prior two years, IP premiums had gone up by up to 80 per cent, while rider premiums had soared by as much as 225 per cent.

Even though the rules now state that riders cannot cover the full amount of a bill – patients have to pay a minimum of 5 per cent of the bill, subject to an annual cap of $3,000 – more people are buying riders every year, and today, two in three people with IPs have them.

If IP deductibles rise, more people might feel the push to buy riders to cover the increase.

Unless the Government decides to put more curbs on riders, they will continue to drive up healthcare costs.

Link with health promotion

The council has suggested linking premium support to the Healthier SG initiative, launched in 2023.

The idea is that people would be motivated to take better care of themselves in exchange for discounts to their health insurance premiums.

But this is only a theory.

For such incentives to work, they have to be very attractive. Otherwise, the rewards will merely go to people who are already leading healthy lifestyles, while not adding new converts.

It would simply be money down the drain – money which might be better used to provide more help in coping with the higher premiums that will come in April 2025, when the changes to MediShield Life start taking effect.

Correction note: The article has been edited for clarity.