AMID plans to revamp the MediShield scheme, Health Minister Khaw Boon Wan has called on private insurers to work with the Government to give Singaporeans a greater peace of mind about their medical expenses.

The private sector can complement the state-run insurance scheme, which covers the costs of basic medical care and aims to relieve members of the burden of large hospital bills, he said.

Mr Khaw suggested that MediShield forms the basic tier of insurance for all Singaporeans at the B2 and C-class levels.

“Private insurers such as NTUC Income can then compete to provide further enhancement plans, as riders to the basic MediShield tier,” he said at the NTUC Income Day dinner at Swissotel The Stamford last week. 

These riders would offer additional coverage for those who want to stay in higher-class or private wards.

The Health Ministry is reviewing MediShield because the scheme is no longer adequately meeting its original aim of covering large hospital bills, with premiums that have stayed the same for 14 years despite rising healthcare costs.

In his speech, he said that private insurers like NTUC Income are not immune from the problems facing MediShield. He urged all the private insurance plans to return to their original purpose of only looking after patients with large bills and looking after them adequately.

“This means raising both the deductibles and the claim limits at the same time, to give such patients with major illnesses larger insurance payouts. After all, this is the very purpose why they buy these medical insurance plans in the first place.”

He said that he was glad to learn from NTUC News of the support that the union movement is giving to the MediShield reform. Last week’s issue of NTUC News reported unionists backing the call for the revamp, and supporting the suggestion that the national insurance scheme be made compulsory. Unionists noted that doing this would pool the medical insurance risks and keep premiums down for all Singaporeans.

Noting that the competition in the medical insurance industry has become “dysfunctional”, he said the current industry structure is unsustainable as “it pits Medishield against all the private insurers, but in an unfair way”.

Mr Khaw explained: “While all private insurers are allowed to select their policyholders and reject applicants they do not want, MediShield is generally required to take care of all Singaporeans.”

Because private insurers focus on “chasing the cherries and rejecting the less young and healthy”, the health-care insurance risk pool is now fragmented, and this has resulted in smaller economies of scale and higher premiums.

And while younger and healthier Singaporeans may benefit from this, Mr Khaw asked what happens when these people are no longer young and healthy?

Make it easy for policyholders

In urging private insurers to cooperate with the Government, Mr Khaw also called on them to help policyholders by giving them more coverage and minimising the administrative costs.

To make it more convenient, he suggested that NTUC Income and other insurers make back-to-back arrangements with MediShield. Under such arrangements, when policyholders need to make claims, they need only file one claim to the private insurer, which will then settle with MediShield directly on his behalf.

This would not only save policyholders the need to file two claims – one to the private insurer and another to MediShield – but also allow existing policyholders of IncomeShield or private insurance plans to remain with their current insurers, even as these plans become riders to the reformed MediShield.

Mr Khaw concluded that, while competition is good, it “should be properly applied so that the insurers compete to promote a healthy lifestyle among their policyholders, reduce over-servicing by hospitals and pressure the hospitals to manage their costs better, instead of aiming to merely serve the young and healthy”.

He added: “In this way, we achieve a sustainable industry structure that still allows Singaporeans choice and the benefits of competition.”