The SDP’s response to the public consultation on Medishield Life

October 21, 2020
Singapore Democrats

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The Singapore Democratic Party welcomes the call for public consultation on the proposed amendments to Medishield Life proposed by the Medishield Life Council. 

First, we would like to commend the council for recognizing some of the most glaring gaps in the current Medishield Life most notably the high deductibles. With the current deductible of $3,000, the vast majority of subsidized hospital bills are not covered. This has led to situations where a Singaporean senior citizen was only able to claim $4.50 of his $4,477 post-subsidy hospital bill (https://www.straitstimes.com/singapore/medishield-life-paid-just-450-of-seniors-4477-post-subsidy-bill). The inclusion of costs of treatment associated with substance abuse and suicide attempts is also welcome. However, the rest of the changes appear to be minor adjustments which may barely keep up with healthcare inflation in Singapore (https://www.lia.org.sg/media/1521/managingsingaporehealthinsurancecost_hitf_20161013.pdf).

The reality is that currently, Medishield Life only covers a small proportion of the total healthcare costs in Singapore. For 2018 for example, Medishield Life paid out close to $1 billion (https://www.moh.gov.sg/news-highlights/details/yearly-loss-ratio-of-medishield-life-(basic)-in-last-five-years) out of a total healthcare expenditure of around $18 billion (https://www.singstat.gov.sg/modules/infographics/health). Medishield life also has caps on annual payments and also caps on daily payments and payments for various procedures such as radiotherapy or day surgery. There is no clear reason why psychiatric treatment is paid for at a much lower rate than other kinds of medical conditions and this singling out of one category of illness contributes to the stigmatization that those affected by mental illness face in Singapore. These caps are also unique among national mandatory health insurance plans which usually cap the amount that an individual has to pay rather than the amount that the insurance covers. Under Medishield Life, someone with a serious illness that costs more than $150,000 a year has to find other funding to pay the balance of the costs. Furthermore, these caps also do not take advantage of the fact that the government (through MOH holdings) is by far the largest provider of acute inpatient healthcare services which take up the bulk of costs.  

The biggest concern of many Singaporeans is that the improved benefits and reduced deductibles appear to be funded largely by increased premiums to be paid by the members of Medishield Life. The Medical Loss Ratios for Medishield Life are already by far, the lowest of any public mandatory health insurance scheme worldwide (https://www.moh.gov.sg/news-highlights/details/yearly-loss-ratio-of-medishield-life-(basic)-in-last-five-years) with only $3.5 billion of $7.6 billion collected paid out in the last five years. The argument used to justify the huge reserve requirement – “set aside to support future commitments, such as long-term treatments and future premium rebates” does not make sense if the premiums are going to rise every few years. Long-term treatments would also have been factored into the actuarial calculations which have not been made public. While some degree of “front-loading” may have been justifiable in the early years of Medishield Life when a number of individuals with pre-existing conditions previously excluded from Medishield are included for the first time. However, that number is unlikely to be repeated again. 

Finally, the entire 3M structure with Careshield life is too complicated which entails significant administration and distribution costs. The most logical approach would be to replace the whole scheme with a single-payer national health insurance scheme. This could be based on the SDP’s national healthcare plan. This is a simple sustainable plan which has the government manage a national health investment fund with contributions by the public based on taxable income. This provides basic health, accident and pregnancy coverage for all citizens. There will be caps on the amount paid by the public and a return to the Singapore Medical Association’s fee guideline structure to cover more than just surgical procedures and institutions as well as providers. Evidence-based healthcare will be funded with small co-payments and the public and private sectors will be treated the same in terms of standards expected and reimbursement according to the fee guideline. The basic overriding principle is that the health of the people is paramount, not the profitability of the fund. We hope that this can be considered instead of periodically tweaking the existing complicated healthcare financing model currently in operation in Singapore. With strict fee guidelines and reduced administrative costs, this plan will save Singaporeans money as it ensures we live happier and healthier lives.