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MPs question sustainability, sufficiency of MediShield Life

MP Chia Shi-Lu called for an independent body to assess new medical treatments before approval for use by MediShield, while NCMP Gerald Giam took issue with the MediShield Fund's reserves.

SINGAPORE: A parliamentary debate on MediShield Life on Tuesday (July 8) saw 13 MPs raise questions about the scheme's financial sustainability and sufficiency in the long run and on how to keep premiums affordable.

Addressing the issue of cost, Government Parliamentary Committee for Health chairman Dr Chia Shi-Lu called for an independent, expert body to be set up specifically to assess new medical treatments before they are approved for widespread use and coverage by MediShield.

"The Health Sciences Authority (HSA) in Singapore grants approval for the use of drugs and medical devices. But HSA looks mainly at safety and basic efficacy. We do not yet have a central body that evaluates the true efficacy and value of medical interventions, from a best-practice and cost-effectiveness perspective," said Dr Chia, who is also the MP for Tanjong Pagar GRC.

Pasir Ris-Punggol MP Dr Janil Puthucheary took on opposition Non-Constituency MP Gerald Giam on the issue of the MediShield Fund's reserves. Mr Giam again asked if too much was being set aside, which could mean collecting more premiums than was necessary.

Parking too much in reserves, Mr Giam said, had resulted in MediShield's low medical loss ratio last year at 44 per cent, meaning that "out of every dollar that was collected in premiums last year, only 44 cents was paid out in claims.”

“Under the Affordable Care Act in the United States, commercial insurance companies are required to issue premium rebates to policyholders if their loss ratio falls below 80 to 85 per cent. Can MediShield Life, which is a not-for-profit scheme, do something similar, so as to reduce the premium burden on Singaporeans?" questioned Mr Giam.

Dr Janil said Mr Giam had misunderstood the medical loss ratio, calling it an "instructive misunderstanding" that needed to be addressed.

"The reality is that for Obamacare, the Affordable Healthcare Act, the 80 to 85 per cent mandate, it includes the direct claims, it includes the unpaid claim reserves, the changes in contract reserves, and reserves for contingent benefits. This is not the same as what we are talking about for the MediShield Life simple loss ratio,” said Dr Janil.

"What Mr Giam has done is analogous to trying to compare two companies. One is an American private for-profit company, and the other is a Singaporean social enterprise. In trying to compare the financial positions of these two companies, on one hand he has said ‘Tell me everything about this company, your income, your expenditure, your profit, your loss, your liabilities, your debts, your total financial position.’ And then looking at the Singaporean company he said, ‘I want to know the cash flow.’ And on the basis of that he has compared the two. It is completely inappropriate and it is a misrepresentation of the financial position of MediShield in the past and going forward."

The MediShield Life debate continues on Wednesday (July 9) and Health Minister Gan Kim Yong is expected to respond to MPs' questions. 

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