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SINGAPORE: The proposed increase in MediShield Life premiums is driven by three factors, including an increase in annual payments and the number of claimants, Minister of State for Health Koh Poh Koon said in Parliament on Monday (2 of November).
Responded to questions from various members of Parliament from the People’s Action Party (PAP), the Workers Party (WP) and the Singapore Progress Party (PSP) about the Government’s justification for increasing premiums, plans available to help who cannot afford it. , as well as the increase in hospital fees.
The MediShield Life Council had announced several recommendations in September to improve MediShield Life benefits and adjust premiums up by as much as 35 percent for some. It is the first major revision of the national insurance system since it was introduced in 2015.
READ: MediShield Life premiums can increase by up to 35% for some higher claim limits proposed as part of the review
Giving a breakdown of the figures, Dr. Koh said that over the past four years, the number of applicants for MediShield increased by about 30 percent and annual payments increased by about 40 percent.
Between 2001 and 2019, average hospitalization bills for public health institutions increased by about 6 percent annually on average, affected by inflation in medical costs, demographics, and medical advances over the years, added.
“This growth in utilization and payment accounts for roughly two-thirds of the premium increases,” he told the House.
READ: Aging Population, Medical Advances Among Factors Contributing to Rising Health Care Costs: Koh Poh Koon
A quarter of the premium increase comes from “updating” MediShield Life claims limits, while the remainder, just under 10 percent, “supports benefit enhancements,” including those implemented since 2018. These include Extension of coverage include inpatient hospice and serious pregnancy complications.
“Premiums have been unchanged for the first five years of MediShield Life, in line with our previous public commitment. They must be adjusted to ensure that the MediShield Life Fund remains solvent and sustainable so that it can meet its obligations to all policyholders, ”said Dr. Koh.
Responding to a question from PSP’s non-constituent MP Leong Mun Wai on whether it is unusual by international standards for a health insurance plan to increase its premiums by 35 percent in a single adjustment, Dr. Koh said it would not be It is appropriate to compare with other schemes as premiums have prices based on multiple factors “that inevitably vary from one country to another.”
“It would also not be meaningful to calculate how many premiums a Singaporeans will have to pay during his lifetime simply by assuming a fixed compound factor each year,” said Dr. Koh.
“Future premiums would depend on how the underlying drivers evolve… and this depends on many factors, including what we can achieve together to manage health care costs. The amount of premium subsidies an individual will receive will also vary throughout their life, depending on their financial circumstances. “
KEEP PREMIUMS AFFORDABLE
Financial support plans are in place to ensure that all Singaporeans can continue to pay their premiums, Dr. Koh said.
For example, low- and middle-income households, as well as seniors from Merdeka Generation and Pioneer Generation will receive premium subsidies and support.
“Together, approximately 35 percent of the total premiums collected were paid by the government through various subsidies and support schemes in 2019. For people 65 and older, the government contribution is even higher, around 50 percent of their premiums, ”he said.
Singaporeans can use MediSave to pay their premiums in full, and they can also use their MediSave to pay their family member’s premiums.
Those who still need more help can apply for the additional premium support, including those who are in the middle of medical treatment or have recently lost their job and part of their income.
Additional Premium Support will cover all pending and future premiums, said Dr. Koh.
READ: Singaporeans to Receive COVID-19 Subsidy to Offset Proposed Increase in MediShield Life Premiums
In addition, Singaporeans will receive a COVID-19 subsidy for the next two years, which “will pay for most of the premium increase in the first year,” said Dr. Koh.
He noted that the government had considered deferring the MediShield Life review and premium increases due to the current “tough economic situation” with COVID-19.
“However, I must emphasize that it was important for MediShield Life to remain solvent and sustainable so that it can meet its obligations in the future when policyholders make claims. Their coverage also needs to be updated and improved to remain relevant to the healthcare needs of Singaporeans, ”he said.
PART OF PREMIUMS RESERVED FOR THE FUTURE
Mentioning the MediShield Life Fund, Dr. Koh said that a portion of the premiums paid by working adults is set aside to provide future premium refunds, which will help moderate premium increases as individuals they grow old.
“This constitutes the majority of the future commitments reserved in reserves. As most policyholders are relatively young today, the amount reserved has been increasing,” he said.
Dr. Koh added that other similar commitments include diseases currently under treatment that will require long-term care, such as kidney failure and cancer.
Providing figures in Parliament, Dr. Koh said that a total of S $ 7.5 billion in premiums was collected between 2016 and 2019. This comprised S $ 4.4 billion collected from policyholders and S $ 3, 1 billion from the Government in terms of subsidies and other forms of premium support.
In this same period, S $ 3.5 billion in claims were paid, while S $ 3 billion was reserved for future premium reimbursements.
The fund’s incurred loss ratio averaged 104 percent over the 2016-2019 period.
“This means that the total premiums collected were slightly less than the total money required to ensure that the fund can meet current claims and future commitments,” said Dr. Koh.
He stressed that the fund must be “self-sufficient” and based on “sound actuarial principles”.
“Premiums collected have to cover potential current and future payments, including amounts set aside to support future commitments, as well as provide a buffer against unforeseen contingencies, such as unexpected spikes in hospitalizations due to disease outbreaks,” he added.
COMPUTER PREMIUM INCREASES
Several MPs raised questions about how premium increases are calculated.
In response to a question from PAP MP Foo Mee Har on whether the Health Ministry would “spell out” the factors that contribute to the premium increase, Dr. Koh said that it is difficult to predict the technology that drives clinical practice.
In the past, a head injury only justified a skull X-ray, which costs about S $ 15 to S $ 20. But now, just 20 years later, CT scans are required for head injuries, which can cost ” hundreds of dollars, “he said.
“So unlike a transportation fair formula where the parameters and variables are a bit more fixed and more predictable, health inflation takes into account many kinds of unforeseen variables that will come up along the way,” he said.
While it will be difficult to have a single formula with “that level of clarity,” actuaries who use current data to project will make adjustments over time, and that is why the government has to review premiums on a regular basis, he added.
WP MP Gerald Giam reiterated his question on whether the Government would make MediShield Life’s full actuarial report available, for the sake of transparency.
Dr. Koh said MediShield Life premiums are proposed and calculated by outside actuaries who are independent of the Government. The size of the funds, the amount raised and the amount paid are also externally audited and the report will subsequently be presented to parliament annually, he added.
However, Dr. Koh acknowledged that the government may have to have a “better system” to observe how the assumptions and calculations should evolve.
“Over time, maybe we can hire different consultants to take a look, challenge the assumptions, do another calculation at the appropriate time, to make sure we are still on the right track,” he said.
He added that the ministry will speak with consultants about the publication of some of the data “in an academic way”, but emphasized that “it will not be something that most laity understand.”
