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SINGAPORE – A portion of MediShield Life premiums paid by working adults is set aside for the future to moderate premium increases as people age, the Minister of State for Health said on Monday (November 2), Koh Poh Koon.
He added that these funds make up the bulk of the money earmarked for future commitments under the scheme, which has been designed to spread premiums more evenly over the life of policyholders.
Other commitments of this type include future payments for diseases that require long-term treatment, such as kidney failure and cancer.
Dr. Koh was responding to questions from seven MPs on both sides of the House, who had asked about issues such as the government’s justification for the imminent increase in premiums and the affordability of premiums for vulnerable groups.
The Ministry of Health had announced in September that MediShield Life would be renewed next year, causing premiums to increase 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 increasing health care costs. This is the first time MediShield Life premiums have increased since the program was launched five years ago.
“Premiums collected have to cover current and future potential 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,” said Dr. Koh .
Looking at the figures, he said that $ 7.5 billion in MediShield Life premiums were raised between 2016 and 2019. This comprised $ 4.4 billion raised directly from policyholders and $ 3.1 billion from the Government in the form of subsidies and other forms of premium support.
In the same period, a total of $ 3.5 billion in claims was paid, while $ 3 billion was set aside for future premium refunds.
The MediShield Life fund’s average incurred loss ratio from 2016 to last year was 104 percent, he noted. This means that the premiums collected were slightly less than the total amount required for current claims and future commitments under the scheme.
Currently, low- and middle-income households get up to 50 percent subsidies on their MediShield Life premiums, while Merdeka and Pioneer Generation seniors get additional subsidies on top of this.
The government paid about 35 percent of total premiums through various subsidies and supports in 2019, Dr. Koh said.
He also broke down the premium increases under the scheme, noting that annual payments under MediShield Life have increased by 40 percent, while the number of claimants has increased by 30 percent.
Between 2001 and 2019, the average size of the hospitalization bill at public health institutions also increased by about 6 percent annually on average, added Dr. Koh.
“This is affected by inflation in medical costs, demographics, and medical advances over the years.”
Two-thirds of the premium increases will go to pay for growth in utilization and payments, he said.
Updating claims limits to ensure Singaporeans continue to be adequately covered for most subsidized bills will account for a quarter of the increase, with the remainder supporting benefit improvements, such as the extension of coverage to inpatient hospice and serious complications of pregnancy.
He stressed that the government has several financial support plans in place to ensure Singaporeans do not lose their MediShield Life coverage or be denied access to health care because they cannot pay their premiums.
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