Indeed, we concur with insurance veteran's statement:
Without transparency, there is a risk that a huge reserve will never be used in the lifetime of the contributing members
As contributors to the pool, we have a right to know how MOH intends to use MediShield to cover congenital illnesses so that it can build up sufficient reserves to fund future claims. This is because variables such as individual claims experience, medical history and age determine a contributor's premium and if MOH were to apply a one-size-fits-all approach, there are people who will be unfairly treated without even knowing the methods and principles adopted by MOH to adjust premiums.
We say no to unnecessarily add to the cost of health care.
Source: Tan Kin Lian. ST Forum. MYPOINT. October 3, 2009. Pg. A43.
Sunday, October 18, 2009
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13 comments:
The Medishield came into the spotlight many years ago, though on different issues from the authors, still it will shed some light on the utility the medishield with its many changes thus far:
20 Dec 2004, The Straits Times
MediShield premium a tremendous increase
I REFER to the report on the new MediShield insurance scheme announced byHealth Minister Khaw Boon Wan to be introduced in July next year ('NewMediShield plan likely in July'; ST, Dec 13). I fully support this new schemedesigned to help Singaporeans to cope with ever-increasing medical bills.
However, I am disturbed by Mr Khaw's statement that in the revamped scheme,those covered under the existing MediShield scheme, which is managed by theCentral Provident Fund Board, will have to pay an extra $10 per month inpremium.
Under the present scheme, CPF members pay $1 a month for those 30 years andbelow, increasing to $5 a month for those between 51 and 60 years old. About1.7 million CPF members are covered by MediShield and MediShield Plus.
The extra premium members have to pay is a tremendous increase, an incrementranging from as high as 1,000 per cent to 200 per cent.
Mr Khaw said the extra premium will cover people with huge medical bills byallowing them to pay only 30 per cent of the bills under the new scheme, ratherthan 60 per cent or more under the present scheme.
I am glad the revamped scheme will benefit those who face increasingly hugehospital bills. But I don't understand how the extra premium is arrived at. Itwill be a shock to a 30-year-old member who pays $1 a month and suddenly findshe must pay $11.
It was also reported that the existing MediShield scheme is operationally inthe red. This is not correct.
According to the CPF Board Annual Report, total income including premiumscollected in the MediShield fund last year was $130.7 million, and totalpayouts and expenses were $82.6 million. This shows a surplus of $48.1 millionin one year.
In the 14 years since MediShield started, the fund has built up a surplus of$524 million. Why then is there a need to increase premiums up to 10 times foreach member?
At present, members usually pay more and claim less from MediShield fortheir medical bills. I believe this is because of the practice of deductiblesand co-payment.
Let's look at a simple example. Madam Ah Soh is hospitalised to undergo asimple operation and incurs a hospital bill of $2,000. She is covered underMediShield but can claim only $800 because she must pay the deductible amountof $1,000 and co-payment of 20 per cent of the remaining claimable amount.
If the Ministry of Health (MOH) is genuinely interested in helping those whoare in need of financial help, it should consider reducing deductibles andco-payment.
It is usually the poor who cannot even afford the deductible amount whenthey are saddled with hospital bills. The priority of MOH should be to reducedeductibles and co-payment, and to control medical costs in governmenthospitals.Seah Leong Khai
Reply From MOH 22 Dec 2004
Medishield premium increase for the young less than $10 per month
In "MediShield premium a tremendous increase" (ST, Dec 20), Mr Seah Leong Khai supported the proposed MediShield reform but was disturbed by "the tremendous premium increase". Mr Seah had the wrong impression that all policyholders will be equally subjected to the $10 monthly increase. This would not be so.
Premium adjustments will be actuarially based. As they are more likely to claim, the elderly will bear higher premium increases than the younger policyholders. Nevertheless, to keep the policy affordable, we will try to keep the maximum monthly premium increases at about $10. The premium increase for the young will certainly be less than $10 per month.
Mr Seah questioned the need for premium adjustments as he found from the CPF Annual Report that MediShield fund had yielded a surplus of $48.1 million last year. CPF operates three separate insurance plans: MediShield Basic, MediShield Plus A and MediShield Plus B. The CPF Annual Report gave the consolidated financial position of the three plans. Unlike the MediShield Plus plans, MediShield Basic has been in operating deficit since 2002, i.e. the payouts exceed the premiums collected. Hence the need for the proposed premium increases for MediShield Basic.
Mr Seah suggested that MediShield deductibles and co-payment be reduced. There is a distinction between comprehensive medical insurance and catastrophic medical insurance. The former has low deductible and low co-payment. The latter sets a significant threshold above which the insurance will kick in.
Not surprisingly, comprehensive medical insurance levies much higher premium than catastrophic medical insurance. Medisave does not support comprehensive medical insurance as it is open to abuses and over-servicing. It is far better for hospital bills below MediShield deductibles to be funded directly out of Medisave.
MediShield and the current reform pertain to catastrophic medical insurance. With changes in medical cost, MediShield deductibles have to be periodically raised to maintain the catastrophic insurance nature of this policy. Hence, the current reform requires an increase in MediShield deductible level.
As for co-payment, the reform will seek to reduce the effective co-payment from the current 60% to about 30%. This would bring tremendous benefits to those with major illnesses.
We will be putting out more details on the MediShield reform, as they become available, on our consultation website at www.moh.gov.sg and welcome all feedback to the website.
http://www.moh.gov.sg/mohcorp/mediaforums.aspx?id=4534
Cap co-insurance so Class C patients pay less
I REFER to the articles, 'Patients to pay higher initial amount from July' by Ms Salma Khalik, 'Don't leave the uninsured out in the rain' by Ms Chua Mui Hoong (ST, Feb 4); and 'To go or not to go over the counter' by Dr Andy Ho (ST, Jan 27).
The deductibles for MediShield will go up by $500. Monthly premiums will also increase by up to $11.25, so that the payout for large bills can be around 70 per cent compared to the current 40 per cent.
The increase in the deductibles and graduated reduction in co-insurance mean that while the minority of people with higher bills will pay less, the majority with lower bills who opt for Class C wards will have to pay more or not be able to make a claim because their bills do not exceed the higher deductible.
I would like to suggest a cap on co-insurance instead, as increasing the bill payout to 70 per cent does not really relieve the Class C patient's burden very much if, say, the medical bill is $20,000.
In this example, the patient will still have to fork out $3,200. By capping the co-insurance to, say, $1,500 for Class C, patients will never have to pay more than $1,500 plus the deductible. This co-insurance cap may be higher for Class B2 and B1 wards, with no cap for Class A.
Instead of the current system of separating the funding, payout and accumulation of surplus premiums for the MediShield and MediShield Plus schemes, they should be taken in totality.
In this way, the general principle of pooled sharing of risks is such that those who choose to and can afford to pay more in Class A and B wards can provide some subsidy to Class C patients.
The outcome may then be that those with lower bills in Class C may not need to pay more compared to under the current MediShield scheme.
The fact that MediShield has accumulated profits of more than half a billion dollars may also be a contributory factor to the low payout ratio.
I understand that most countries' national health insurance schemes operate at a deficit, so why does MediShield operate at a profit?
Although the basic MediShield was in operational deficit for the last two years, when combined with the MediShield Plus schemes, was the total in deficit too since MediShield Plus is operating at a surplus?
Now that MediShield Plus will be hived off to a private insurer, will the surplus accumulated be transferred to MediShield and, if so, what is the estimated amount?
Instead of subjecting the 440,000 Singaporeans without health insurance to underwriting if they want to get into MediShield, I propose that with the MediShield Plus surplus and the increased pool of those insured under MediShield, it may be actuarially viable to 'let the uninsured opt in and charge premiums based on the community rating of the total 2.7 million pool, and not discriminate against the old and sick'.
The higher minimum deductibles of $2,000 for Class B1 and $3,000 for Class A may mean more patients not being able to claim or having to pay out-of-pocket for higher sums because of the higher deductible.
The change is to promote a 'more competitive and innovative private insurers' market'. But is it not in a sense self-contradictory because private insurers are being mandated to increase deductibles, instead of lowering them to become 'more competitive and innovative', as was the case when MediShield Plus was opened up to private insurers who managed to reduce the deductible from $2,500 to $1,500?
How much of the current under-coverage may be due to the high prices of drugs and pharmaceuticals here?
I understand that in the award of drug tenders, medicines that can cost as much as 10 times more than generic drugs may be selected for use.
If there are generic drugs that are already approved and available here, we may need to give greater scrutiny to the award of tenders that are vastly more expensive.
Dr Ho said that in Britain, going over-the-counter would slash the National Health Service's annual bill of 700 million (S$2 billion) for statins alone, and 'that is why it is imperative that the Health Sciences Authority must make its own decisions fully aware of the economic and political pressures under which switches come about abroad'.
Health-care costs rose 11.1 per cent in the last five years, much higher than the 2.5 per cent increase in the consumer price index ('Why S'poreans complain about the cost of living'; ST, Feb 4).
According to The Straits Times Interactive Poll (Jan 31), 24 per cent voted 'I'm not likely to consider signing up (for MediShield) even with the changes', and 19 per cent voted 'I'm in the scheme but will get out of it'.
This is perhaps indicative of the public's sentiment and dissatisfaction.
Accordingly, I think we need to try to cut costs too, instead of just raising premiums and deductibles, and accumulating surpluses.
Leong Sze Hian
Reply From MOH 15 Feb 2005
MOH: Why financial viability of MediShield should not be compromised
In "Cap co-insurance so Class C patients pay less" (ST, Feb 11), Mr Leong Sze Hian offered several suggestions for the MediShield reform: (i) cap the co-insurance, (ii) use MediShield Plus to cross-subsidise MediShield Basic and (iii) focus on cutting healthcare costs.
We share Mr Leong's concerns about the financial burden of large hospital bills on Class C patients. That is why the Government subsidises 80% of the costs of treatment in such wards.
While capping the co-insurance will further ease the financial burden, this must be funded by higher premiums. The necessary premium adjustment will then exceed the current maximum monthly increase of $11.25. The elderly Singaporeans may find such premium increases unaffordable.
Mr Leong is mistaken in thinking that MediShield Plus has made huge surpluses to be able to cross-subsidise the additional benefits for MediShield Basic. As a long-term medical insurance plan, MediShield Plus must set aside reserves from its operating surpluses to cover future obligations and contingencies.
The tender of MediShield Plus will not free up these reserves. After the tender, MediShield will remain the basic tier of insurance for all MediShield Plus policyholders. MediShield will continue to provide basic medical coverage at the Class B2/C level. These long-term obligations have to be backed by adequate reserves.
Mr Leong is also mistaken in noting that "most countries' national health insurance schemes operate at a deficit". No insurance scheme can function with sustained losses. Either premiums have to be raised or the scheme will eventually go bankrupt, to the detriment of all policyholders as they risk losing their medical coverage.
As an example, Taiwan's National Heath Insurance (NHI) had to raise premiums in 2003 after its initial years of operating surpluses turned into deficits. Since then, its finances have continued to worsen. Further premium hikes are now being considered to save the programme from financial collapse.
Therefore, even as we seek to maximize benefits for policyholders, we must not compromise MediShield's financial position. For long term viability, MediShield premiums must be sufficient to fund payouts and the cost of running the scheme, with adequate reserves set aside for future obligations.
Mr Leong questioned the need for the deductible increase, as he felt that it would make the private insurers less "competitive and innovative". In drawing this conclusion, Mr Leong has somehow linked the deductible level with the degree of competition and innovation in the industry. But the two are not related.
MediShield and the Medisave-approved private medical insurance schemes are catastrophic medical insurance plans. Their deductibles must be adjusted periodically with changes in medical cost, so that the policies kick in only for large bills.
Market competition will come about not through lower deductibles but through a proper industry structure, where new players can enter the market and compete with existing ones for the benefit of all policyholders. That is why we are restructuring the industry to allow all private insurers to compete in the provision of enhancement plans on top of the basic MediShield tier. Such competition among the insurers will then drive the industry towards a wider range of innovative and competitively priced insurance products.
In parallel with these changes, the Ministry will continue to manage medical costs without compromising patient care. We have published bill sizes and quality indicators to allow Singaporeans to make informed choices on where to seek treatment, and provide healthcare providers with comparative benchmarks. As for drug purchases, these are consolidated to exploit bulk discounts, with selection based on price and other factors such as safety, quality and efficacy.
Patients too must play their part and moderate their expectation of the public healthcare system.
If we succeed on both fronts, then we can avoid frequent and major adjustments in deductibles and premiums.
In response to the article, Gerald Giam has written an excellent article on this area and I have reproduced it as follows, all credit to:
http://geraldgiam.sg/2009/09/medishield-should-cover-congenital-illnesses/
Two letters to the Straits Times forum in the past week shed light on a little known fact that our national health insurance scheme, MediShield, does not provide the universal coverage that many Singaporeans would have expected it to.
On September 2nd, a parent wrote in to express dismay that his newborn daughter was refused MediShield coverage because she was born with a suspected cyst in her lungs, a condition diagnosed during pregnancy. He said the CPF Board, which manages MediShield, denied her coverage, citing “the higher insurance risk posed by her pre-existing health condition”.
The parent stated that he was prepared to pay a higher premium, but did not expect his daughter to be refused Basic MediShield coverage altogether.
In their joint reply on September 11th, the Ministry of Health (MOH) and CPF Board reiterated that they are “unable to insure her under MediShield at this point” because the girl is still undergoing treatment. They then went on to say: “We encourage all parents to secure early MediShield coverage for their children before the onset of illness.”
This was quite incredible: How could this parent have secured MediShield coverage for his daughter “before the onset of illness” if she was born like that? Are parents expected to insure unborn babies?
MOH and CPF ended by saying: “Children with pre-existing health conditions can still join MediShield, but like other medical insurance schemes, MediShield could impose exclusion of certain pre-existing medical conditions from claim while still offering coverage. This is to ensure viability of the insurance scheme and to keep premiums affordable for existing members who generally enter the scheme in good health.”
Therein lies the crux of the problem, which I think requires a mindset change in this government.
Firstly, MediShield is Singapore’s national health insurance scheme, set up by the government and run by a government agency. It is not simply “like other medical insurance schemes”.
Secondly, why are MOH and CPF talking about ensuring the “viability of the insurance scheme” by excluding certain categories of Singaporeans from coverage? Since this is a state-run insurance scheme, it should be underwritten by the government as part of their social contract with Singaporeans.
Furthermore, with 75% of Singaporeans paying MediShield premiums, this should provide a huge financial base which private insurers do not enjoy.
Indeed, to get a picture of how “viable” MediShield currently is, readers can check out CPF Board’s 2008 Annual Report, which shows that last year, $303 million in premiums were collected and only $161 million was disbursed as claims. After factoring in all the administrative costs and interest earned, the MediShield fund stands at a healthy $205 million in the black.
Will it really become “unviable” if they start covering those few unfortunate newborns with congenital illnesses? (It should be noted that MediShield also excludes those over 85 years old from coverage, and it recently increased the premiums for all members, particularly the elderly.)
More importantly, what is wrong with MediShield going a little into the red? Can’t that be easily covered by the $5.6 billion that CPF gained as income from its investments of Singaporeans’ retirement savings last year?
MediShield is supposed to be one of the “3Ms” of the government’s much vaunted health care “safety net”. But if CPF Board can cherry pick who to insure and who to reject, then what makes it different from any profit-oriented private insurance company?
This revelation from MOH and CPF comes just as the debate about national insurance schemes is raging in the US. President Barack Obama in fact recognized this problem of insurers refusing coverage just when people needed it the most. In his health care speech to Congress this past week, he said of his new health care plan:
“What this plan will do is make the insurance you have work better for you. Under this plan, it will be against the law for insurance companies to deny you coverage because of a preexisting condition.”
Singaporeans have been led to believe that we already have a fantastic “public option” (i.e., a state-run health insurance scheme) in form of MediShield.
Well it seems MediShield is public alright, but with a lot of options for our bottom line driven government.
MOH is exploring MediShield cover for congenital illnesses since the report broke out:
IN HIS letter last Friday, 'Work towards MediShield for all without exception', Mr Stanley Jeremiah urged that MediShield be extended to cover those with congenital illnesses. We are studying the proposal with our actuaries.
There are two ways to help these patients: through MediShield so the healthy cross-subsidise those with congenital conditions, and/or through government subsidies and Medifund whereby taxpayers help fund their bills. The former will require an increase in MediShield premiums, while the latter will raise the tax burden on all.
There are trade-offs to be made. For example, if MediShield premiums become too high, more people, especially the healthy, may opt out, and the MediShield risk pool will be compromised.
Mr Jeremiah asked about loss ratios and profitability of the MediShield scheme. This is public information. MediShield is non-profit-making.
However, this does not mean its annual premium collections must only just cover the claims that year, which is a short-term approach.
Unlike group health insurance, much of which is renewed annually, MediShield must build up sufficient reserves to fund future claims as it is a long-term health insurance policy. Most policyholders are likely to claim only in the future when they age.
Julie Sim (Ms)
Deputy Director (Media Relations),
Corporate Communications
Ministry of Health
http://comment.straitstimes.com/showthread.php?t=25065
I am just curious that why would someone be denied Medisave coverage despite the fact that it was declared all newborn to be offered coverage. The word "Offered" simply means that all parents will then be given the choice of taking up the coverage but now that it seems it is not the case.
See attached for the report back in 2007:
All newborn Singaporeans to be offered MediShield coverage from Dec
By Hasnita A Majid, Channel NewsAsia | Posted: 27 October 2007 2016 hrs
SINGAPORE : From December, all newborn Singaporeans and Permanent Residents will be offered MediShield coverage.
The Health Ministry will also facilitate coverage for Singaporean and Permanent Resident (PR) youths from the middle of next year.
Sulaiman Azim is a healthy 11-year-old.
But when he was younger, he was often sick and was hospitalised three times - once for pneumonia and twice for viral infection.
The first in-patient episode when he was just 9 months old, left his parents with a hefty S$17,000 bill.
Without any insurance coverage, they had to foot the cost themselves.
Haslina Abdul Majid, Sulaiman's mom, says: "We had no choice but to use S$10,000 of our savings to pay for the hospital bills and S$7,000 was deducted from our Medisave account. Of course it was difficult because we didn't think that he would be in hospital for 25 days. But we had no choice at that time because due to the urgency of his case, we had to admit him to a private hospital instead of a government hospital."
Madam Haslina learnt from her experience and soon insured her son Sulaiman.
She says: "After the first hospitalisation episode, he was hospitalised again when he was 3 and 5 years old. But for those hospitalisation stays, when the bills came up to S$5,000 and S$7,000 respectively, we did not have to fork out cash because they were fully covered by the insurance. I would urge all parents to buy insurance for their children at the point they were born.
"This is because we really don't know what's going to happen - are they going to fall sick along the way, things like that. So when the government came up with the initiative of encouraging or even ensuring that all kids are covered when they were born, I thought it was a good move. I wish that it had started a long time ago when my first child was born."
Madam Haslina has since also insured her two other children from birth.
To save parents such grief, the government will now offer MediShield coverage to children born from December this year.
This will be extended to all children of Permanent Residents.
Those attending Primary One next year will also be offered coverage.
This exercise will be repeated for each batch of Primary One pupils over the next six years - 2009 to 2014.
Students in secondary schools and beyond will be offered coverage starting May 1st.
The Health Ministry says that about half of youths below the age of 20 years are not covered by MediShield.
Although it hopes to up this number with the latest move, parents who want their children to opt out of the scheme can do so.
For newborns and youths, premium is at S$30 per year and will be deducted from the father's Medisave account.
If there are insufficient funds, then it will be deducted from the mother's Medisave account.
Currently about 75 percent of Singaporeans and PRs are covered by MediShield.
With children covered, this number will go up to 85 per cent.
The Ministry says early MediShield coverage will help meet medical expenses and lift the financial burden of families.
It is also beneficial, as it is usually difficult to get subsequent insurance coverage once a person develops an illness in his youth. - CNA/ch
http://www.channelnewsasia.com/stories/singaporelocalnews/view/308130/1/.html
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