MediShield Life premiums to be at Medisave levels

SINGAPORE — Under a subsidy framework, premiums for the MediShield Life scheme will be kept to levels within that of annual contributions Singaporeans make to their Medisave accounts, said Health Minister Gan Kim Yong yesterday, as he reiterated that the universal coverage for life plan will be affordable for all.

The Ministry of Health (MOH) also stressed the importance of avoiding cross-subsidisation between generations for the new national medical insurance scheme, expected to be launched next year.

“The pre-funded amounts paid by each age cohort should be set aside for their own use in future, and not used to subsidise premiums for the current elderly,” the ministry said, in response to the MediShield Life Review Committee’s preliminary observations published last week.

The committee had noted that there is a misconception of pre-funding for MediShield Life premiums such as the young subsidising the old, when it actually means the working generation paying more in return for lower premiums at an older age. It also called on the Government to help the elderly and lower-income afford MediShield Life premiums.

Speaking on the sidelines of the Singapore Cancer Society’s 50th anniversary event yesterday, Mr Gan said the new subsidy framework his ministry is working out will keep premiums for MediShield Life within that of annual Medisave contributions to give the lower income, even up to the middle income, the assurance that ... premiums will always be affordable to them”. The new subsidy framework will be “over and above” the GST voucher for Medisave and the current Workfare top-ups.

Mr Gan also said those who contribute less to their Medisave because they are in a lower-income bracket, as well as large middle-income households that face financial challenges, will get help from the Government. A part of the Pioneer Generation Package — details of which will be released on Sunday — would go towards helping the older generation pay premiums for MediShield Life, he said.

Turning to those who are currently not covered by MediShield — because they have pre-existing conditions, for instance — but will come under MediShield Life, Mr Gan noted that there has to be a “cost-sharing framework so that it is reasonable for all parties”.

He said society, as a whole, has “some role to play” to take care of these individuals, but added that the Government will bear “the majority part of the cost” of including them. Mr Gan also cautioned that Medisave contributions might have to go up at an “opportune time” to ensure that Singaporeans can pay for their MediShield Life premiums and co-pay medical bills.

Healthcare financing experts and observers agreed that MediShield Life should avoid inter-generational cross-subsidising, given the rising healthcare costs and an ageing population.

Noting that this will avert future problems because of the rising old-age dependency ratio, Assoc Prof Phua Kai Hong, from the Lee Kuan Yew School of Public Policy, said: “Can we trust insurance to contain future healthcare cost increases without stronger government regulation on the supply side?”

But Dr Jeremy Lim, head of the health and life science practice in Asia for global consulting firm Oliver Wyman, noted the higher healthcare expenditure of the current elderly generation “run the risk of premature depletion of their age-cohort MediShield Life funds, forcing either onerously high premiums or cutting back of medical benefits”.

The Pioneer Generation Package could help to avoid either scenario.

Tanjong Pagar GRC MP Chia Shi-Lu, who is on the Government Parliamentary Committee for Health, also noted that during dialogues and feedback sessions, young people expressed concern that pre-funding would mean they are paying more to fund the elderly.

Meanwhile, the MOH also announced it will extend MediShield coverage beyond the age of 90 as an interim measure before MediShield Life kicks in. Their annual premiums will stay at S$1,190 — the same amount as those aged 90 — and the move will benefit 150 policyholders who are turning 91 soon.

Correction: The original article named Dr Jeremy Lim as Principal Consultant at Insights Health Associates. This is incorrect. He is the head of the health and life sciences practice in Asia for global consulting firm Oliver Wyman. We are sorry for the error. This article was edited at 12.20pm on Feb 5, 2014.