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SINGAPORE – Delaying the increase in MediShield Life premiums would only result in steeper increases on the way to catch up with the growing claims, Senior Minister of State Koh Poh Koon said on Monday night (October 19).
The actuaries determine the premiums for mandatory national health insurance and are based on both current claims and future commitments, he added. That is why the total premiums charged are higher than the current payments.
“We are aware of the impact of Covid-19, but we hope Singaporeans understand that we have to keep MediShield Life sustainable,” he said.
The Ministry of Health (MOH) had announced last month that MediShield Life will be renewed next year, which would increase premiums by up to a third.
The increase will pay for a broader range of benefits, such as increasing the annual claims limit from $ 100,000 to $ 150,000, as well as increased health care costs. This is the first time MediShield Life premiums have increased since the program was launched five years ago.
To cushion the impact of the premium increase, the Government will implement a Covid-19 subsidy of $ 360 million for the first two years.
Singaporeans will get a 70 percent subsidy on the increase in the first year. This drops to 30 percent in the second year.
Net premium increases after subsidies will be limited to about 10 percent in the first year, Dr. Koh said.
The imminent rate hike has provoked a strong reaction from the general public. Some asked why premiums had to go up so soon after the scheme was launched, while others questioned the impact the increase would have on Private Integrated Shield (IP) plans, which are based on what MediShield Life has to offer.
Many of those who wrote in the Forum pages of The Straits Times called on the government to do more to control the rising costs of health care, which they saw as the root of the problem. Suggestions included controlling excessive consumption of medical services and reviewing medical malpractice laws.
One reader pointed out that premiums collected under the scheme between 2016 and last year were more than double what was paid in claims. Others proposed that the Health Ministry consider rewarding those who stay healthy with a “no claims” bonus.
Over the past four years, MediShield Life paid $ 3.5 billion for 2.3 million claims. It raised $ 7.6 billion in premiums during the same time period.
In his Facebook post on Monday, Dr. Koh said that total premiums are higher than current payments because some diseases currently under treatment will require care for several years, such as kidney failure and cancer.
“Policyholders also pay more premiums during their working age, which are reserved for future premium reimbursements to moderate premium increases in their old age,” he added. “This goes some way to making premiums more affordable when we’re older.”
Looking at the numbers, Dr. Koh said the MediShield Life fund’s average incurred loss ratio from 2016 to 2019 was 104 percent.
“This means that the premiums charged were slightly less than the total amount required for current claims and future commitments,” he said, noting that the government paid about 40 percent of premiums through subsidies for the low- to middle-income. and various other bonuses. support for.
Over the past four years, MediShield Life’s annual payments have increased by 40 percent, he said. Meanwhile, the number of claimants has increased by 30%, while the average payment per claimant has increased by 7%.
Most of the increases in premiums are due to this and increased health care costs, he added.
Addressing the questions raised about higher premiums for seniors, Dr. Koh said premiums are expected to increase with age. This is because people are more likely to make claims as they age.
Among those 65 and older, about one in six received MediShield Life payments in the past year, he added. This compares to about one in 30 for the rest of the population.
He noted that older people also tend to have more serious conditions that result in higher bills. In this older age group, the average payment per claim was $ 1,620, compared to $ 1,420 for the rest of the population.
The MediShield Life plan is non-profit, he emphasized, adding that collected premiums are put into a fund and used solely to benefit policyholders and administer the plan.
In a previous letter to the forum, the director of financial policy at the Ministry of Health, Cham Dao Song, said that the ministry already publishes rate benchmarks and appropriate care guides to encourage the proper use of health services by people. doctors and patients.
It has also worked with IP insurers to introduce a minimum 5 percent copayment for all new IP passengers, so that healthcare decisions are “carefully considered.”
Said Dr. Koh: “We will continue to deliver on our commitment that premiums will be affordable and no Singaporean will lose their MediShield Life coverage due to financial hardship.”
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