Category: Current Affairs
Published on Wednesday, 05 March 2014 00:00
Welcome back to our special look at the Singaporean Healthcare system. Today we shall take a closer look MediShield and explain why the national insurance scheme is a voluntary one.
"MediShield is a basic medical insurance scheme designed to help pay part of the expenses arising from the insured’s hospitalisations and certain outpatient treatments for serious illnesses at approved medical institutions. MediShield works most effectively for hospitalisations at B2/C class level at restructured hospitals. It is meant to complement a member’s Medisave savings, which may otherwise be depleted in the event of prolonged illnesses that require longer-term medical treatment." CPF Website
The MediShield scheme started with an enrollment of 1.27 million Medisave account holders and another 14,500 dependents in 1990. This figure made up just under half of the total Singaporean population (2,623,700 citizens) in 1990. So why didn't the government make MediShield enrollment compulsory since it was conceptualized as a national catastrophic insurance scheme?
Then Health Minister Mr. Yeo Cheow Tong justified the voluntary nature of the scheme by pointing out that many employers provided medical coverage for their employees and some Singaporeans may already have procured adequate private insurance on their own.
Healthcare observers meanwhile also pointed out that mandatory MediShield enrollment would have meant that the government would have to annually collect or pay the premiums on behalf of 1.35 Million Singaporeans who did not have a Medisave account. The administrative costs of premium collection and the issue of who should pay for those unwilling or unable to pay were likely reasons that prompted the government to opt for a voluntary scheme where Medisave account holders were easily enrolled with minimal difficulty and minimal financial commitment on the part of the government.
Two other events following the establishment of MediShield explain why the scheme today enjoys a high enrollment rate for a voluntary program.
1. The addition of riders (known today as Integrated Shield Plans) that would enable enrollees to make higher claims if they chose higher wards. These private insurance plans originally competed with MediShield as explained by the Ministry of Health:
"Instead of competing with MediShield to provide better benefits at lower premiums, private insurers find it more profitable to pick and choose healthier and younger Singaporeans to insure. This is known as cherry picking in the insurance industry. If the cherry picking by private insurers continues, MediShield's risk pool will become progressively older and more sickly. This must result in rising MediShield premiums in order to cover its rising payouts. This is not desirable for the majority of Singaporeans who have to rely on MediShield for their medical insurance. We must remove cherry picking while retaining the competitive nature of the industry." Ministry of Health Website
Private plans were restructured as a part of the 2005 MediShield reforms because MediShield was losing out to the private sector. The government saw the need for reform to prevent the possibility of MediShield becoming fiscally insolvent. Private plans were restructured in 2005, requiring insurance enrollees to enroll in basic MediShield before they were eligible for the Integrated Shield Plans. To further encourage enrolment into the basic MediShield, the government allowed premiums for Integrated Shield Plans to be paid out of the individual's Medisave account. Thus eliminating the need for out of pocket payments by Medisave account holders
2. In 2007, a decision was made to automatically enroll newborns into MediShield
. Both this and the previously mentioned MediShield reform enabled MediShield to risk pool more effectively thanks to an expanded pool of enrollees.
Coming up in the next of our look at the Singaporean healthcare system we discuss the criticisms that have been lobbed at MediShield.
A Special Look At The Singapore Healthcare System