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MediShield reform plan takes effect from 1 July 2005



Protection Against Large Hospital Bills

After extensive consultations with workers, employers, insurers and the public, the Ministry of Health (MOH) is finalising its MediShield reform plan for implementation on Jul 1, 2005.
The key objective of the reform is to protect Singaporeans against the financial burden of large hospital bills, at least at the Class B2/C level.
This will be achieved by returning MediShield to its original intent of only covering major Class B2/C hospital bills but covering them adequately. Due to inadequate adjustments over the years, the current MediShield has severe limitations.
First, MediShield payouts for patients with large hospital bills have shrunk to about 40% of total bills, landing the patients with a high effective co-payment of about 60%. For a hospital bill of say $10,000, this means a co-payment of about $6,000 by the patient which may not be affordable to many.
Second, MediShield has been in operational deficit since 2002. Its premium collections no longer cover the payouts. This is not sustainable for long.
Reforming MediShield requires adjustments in three areas.
First, increase the MediShield payouts by adjusting the MediShield claim limits and co-insurance rate. This will minimise co-payments by patients and ease their financial burden.
Second, restore the financial viability of MediShield by adjusting premium rates.
Third, return MediShield to its original purpose of providing catastrophic medical insurance by adjusting the MediShield deductible levels.
Achieving an optimal reform package requires policyholders to make trade-offs, balancing their wishes for higher benefits against the contrasting desire for affordable premiums. For example, better MediShield payouts must mean higher premiums. Lower premiums would mean higher MediShield deductibles.
After extensive public consultations, MOH thinks that an optimal reform package is to half the current effective co-payment by patients, from 60% of the hospital bill to about 30%.
Increasing MediShield Payouts
To halve the patients' share of the major hospital bills, MediShield claim limits, which determine the payouts to policyholders, will be raised substantially:
  • Lifetime claim limits from $120,000 to $200,000;
  • Annual claim limits from $30,000 to $50,000;
  • Daily claim limits for normal hospital stays from $150 to $250, and for ICU stays from $300 to $500;
  • Claim limits for surgical procedures from the current range of $120~$900 to $150~$1,100; and
  • Claim limits for surgical implants from $1,500 to $2,500
At the same time, the co-insurance rate (the portion of the claim amount that the policyholder is responsible for paying after the deductible is met) will be reduced from the current 20% to 10% for amounts above $5,000. This ensures higher payouts for large bills.

Source: Ministry of Health Press Release 26 Jan 2005


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28 January 2005