HealthPolicyMonitor | Surveys| University of Singapore - Singapur| 06| Recalibration of Medishield parameters

Abstract
Characteristics of this policy
Purpose and process analysis
Expected outcome
References

Abstract

Medishield parameters have been extensively recalibrated. From 1 July 2005, a new Medishield package involving substantial increases in benefits and payouts will be in effect.

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Neue Entwicklungen

Suchhilfe

Characteristics of this policy

current

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Purpose and process analysis

Current Process Stages

	Idee	Pilotprojekt	Strategiepapier	Gesetzgebung	Umsetzung	Evaluation	Veränderung/Richtungswechsel
Implemented in this survey?

Stakeholder positions

MediShield is a state-administered catastrophic insurance plan introduced in 1990 to help people with long hospital stay pay for their hospitalisation bills. However, Medishield's premiums, deductibles and claims limits have not been adjusted sufficiently to keep pace with rising medical costs over the years. Because the claims limits have not changed, MediShield ends up paying a shrinking proportion of the hospital bill. For large bills, the MediShield payout is only around 40 per cent today. The combined effects of low deductibles and low claims limits have rendered MediShield less effective than originally intended. In fact, since 2002, MediShield claims have exceeded premiums collected each year.

Influences in policy making and legislation

The main objective of the exercise is to make adjustments to premiums and claim limits in order to halve the patients' share of the major hospital bills.

a. Increased claim limits

In the reformed MediShield, claim limits -- including Lifetime claim limits, Annual claim limits, Daily claim limits, Claim limits for surgical procedures, and Claim limits for surgical implants -- have been raised across the board (see Table1).

In order to halve the patients' share of the major hospital bills, the MediShield claim limits -- including Lifetime claim limits, Annual claim limits, Daily claim limits, Claim limits for surgical procedures, and Claim limits for surgical implants -- have been raised across the board (see Table 1).

b. Co-insurance

At the same time, the co-insurance rate (i.e. the portion the policyholder has to pay after the deductible is met) has been reduced from 20% to 10% for amounts above $5,000, thus ensuring that Medishield payouts for large bills will be higher.

c. Premiums

To fund these substantial increases in benefits and payouts, MediShield premiums will be raised. The actuarial principle of the elderly bearing higher premium increases than younger policyholders has been observed, but the premiums have been deliberately calibrated such that the monthly premium increase for older policyholders is limited to around S$10, while the premium increase for policyholders below 50 years is kept at less than $4 per month. To make premiums more affordable for the elderly policyholders who have remained "loyal" to MediShield, an enhanced loyalty discount programme has been introduced. Elderly policyholders above 70 will enjoy a discount equivalent to 10% off their premiums for every 10 years that they have been with MediShield, subject to a maximum discount of 40%.

d. Deductibles

Deductibles have also been adjusted to ensure that MediShield focuses only on the large bills, and that the cover will be adequate. MediShield deductibles increased from S$1,000 to S$1,500 for Class B2 wards and from S$500 to S$1,000 for Class C wards. With average Medisave balances currently at $10,600, almost all patients would have enough in their Medisave to pay for the deductibles.

e. Opt-out Scheme

The reformed MediShield will continue to be administered by the Central Provident Fund Board (CPFB) on an opt-out basis. Despite not being mandatory, MediShield has achieved widespread coverage, with 90% of the working population insured under MediShield or MediShield-equivalent products. About half of those without such medical insurance are children. Although their risk of catastrophic illness is low, parents are being strongly advised to enrol their children for MediShield while they are young and healthy. Doing so will lock in their insurance cover at a young age and guarantee them continuing protection against any future illness which may render them uninsurable. The MediShield premium for the young is only S$2.50 a month.

Key Parameters of Reformed MediShield

Adoption and implementation

The package has been reworked based on a targeted outcome of effectively halving the current co-payment by patients, from 60% of the hospital bill to 30% (see Table 2). The important objectives were to ensure that the co-payments remain affordable, and that MediShield remains focused on catastrophic illnesses.

As healthcare cost rises over the years, future periodic adjustments to MediShield will be necessary. MOH will have to simultaneously focus on managing medical inflation.

The next step is to ask private insurers to build on MediShield as the basic tier of insurance, even as they offer enhanced schemes with better benefits for Singaporeans who wish to have additional coverage for stays in higher class wards or private hospitals. The objective is to achieve a seamless integration between MediShield and the private enhancement schemes, with maximum convenience for policyholders, while keeping administrative costs low. (see report 5/2005).

An Actual Example to illustrate the MediShield Reform