The authorities do not seem to be in favour of delaying the impending MediShield Life premium hike despite concerns. Senior Minister of State for Health Koh Poh Koon said on Monday (19 Oct) that delaying the premium hike will only lead to a greater increase down the road to cope with rising claims.
The Ministry of Health (MOH) announced last month that MediShield Life premiums will rise by a third as part of a revamp to the scheme scheduled for next year. MOH said that premiums need to go up in view of rising healthcare costs and to increase the yearly claim limit from S$100,000 to S$150,000.
MOH’s announcement drew swift backlash from Singaporeans, many of whom pointed out how the premiums collected between 2016 and 2019 were more than double what was paid out in claims through the compulsory national health insurance scheme. MediShield Life paid out S$3.5 billion for 2.3 million claims while collecting S$7.6 billion in premiums, over the past four years.
Singaporeans urged the authorities to better check rising healthcare costs, curb the over-consumption of medical services and review medical malpractice laws instead of hiking premiums and asked why the premiums were increasing so soon since the scheme was only rolled out five years ago.
Responding to the backlash, Dr Koh said that the reason why total premiums collected are higher than current payouts is because MediShield Life premiums are actuarially determined based on both current claims and future commitments, given diseases that will require multi-year care.
In Parliament last week, Workers’ Party (WP) MP Gerald Giam had asked MOH what has been the loss ratio of MediShield Life (Basic) over the last five years. Loss ratios reflect the losses an insurer incurs due to paid claims as a percentage of premiums earned.
Instead of providing figures for the loss ratio, MOH responded that the adequacy of premium collection is better represented through the Incurred Loss Ratio (ILR), which compares the total premiums collected to the total monies required to ensure that the fund is able to meet current claims and future commitments.
MOH said that the average ILR of the fund from 2016 to 2019 was 104 per cent. Referring to this data, Dr Koh said in his post: “This means premiums collected were slightly less than total monies required for current claims and future commitments.”
Pointing out that policyholders pay more premiums when they are younger and receive rebates to moderate premium hikes in their old age, the ruling party politician said that the major reason behind the impending premium hike is that a greater number of Singaporeans making a greater amount of claims from the scheme.
He said that annual payouts have increased by 40 per cent, the number of claimants has increased by 30 per cent and average payout per claimant has increased by seven per cent. The other reasons for the premium hike include the revision of claim limits and enhanced benefits, some of which were rolled out even before the premiums were adjusted.
Asserting that the hike was planned to keep the national scheme sustainable, Dr Koh referred to concerns over how the increase is set to be implemented amid the pandemic as he said:
“We are mindful of the impact of Covid-19, but we hope Singaporeans can understand that we need to keep MediShield Life sustainable. As we have not adjusted the premiums for 5 years, delaying the premium increase further would only result in even higher premium increases down the road to catch up.”
He said that the Government will cushion the impact of the premium increase by rolling out a S$360 million Covid-19 subsidy for the first two years, comprising of a 70 per cent subsidy on the increase in the first year and a 30 per cent subsidy on the increase in the second year.
Dr Koh said that the net premium increase after subsidies will be limited to around 10 per cent in the first year and added: “We will continue to hold to our commitment that premiums will be affordable and no Singaporean will lose their MediShield Life coverage due to financial difficulties.”
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