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No Singaporean will drop out of MediShield Life because of inability to pay: Gan

Health Minister Gan Kim Yong also said in Parliament that there would be no tax increases to fund MediShield Life because the Government has set aside the budget for it.

SINGAPORE: In his speech wrapping a two-day parliamentary debate on MediShield Life on Wednesday (July 9), Health Minister Gan Kim Yong explained what the Government is doing to keep medical costs down and premiums affordable.

A key strategy is in fostering greater collective support, with the Government saying it will raise healthcare spending from 33 per cent to 40 per cent or more. Patient co-payment is also an important safeguard. But beyond that, the Government will work with providers and insurers to manage healthcare inflation.

Still, MediShield Life premiums will be higher. There are three factors for this: better benefits; bringing everyone into MediShield Life, even those with pre-existing conditions; and spreading premiums more evenly throughout a person's lifetime. 

Several MPs have asked how the additional premium of 30 per cent was decided for those with pre-existing conditions. Mr Gan said in fact, those with pre-existing conditions would need to pay a lot more to reflect their higher risks, but the recommendation was for a 30 per cent additional premium, so that it will not be overly onerous.

"The ministry is currently reviewing the types of pre-existing medical conditions which will be subject to additional premiums, and will share more details in time to come," the minister said. 

Mr Gan said those in the working age groups will have to pay more, to cushion the impact of future premium increases during their retirement years. It is different from what some have suggested - to cap premiums for the elderly or have flat premiums across all ages. 

"This means that the older generation is contributing less than the payout from MediShield Life, and the deficit will have to be paid for by the younger generation," said Mr Gan.

"Given our ageing population, this is not advisable, as it entrenches an inter-generational cross-subsidy, where the young carries the burden to pay for the premiums of the old. With a growing number of elderly being supported by a shrinking number of younger policyholders, premiums of the younger generation will keep escalating, imposing an increasing burden on our children's generation. This will not be sustainable." 

And to ensure all will benefit, Mr Gan clarified that premium subsidies for the lower- to middle-income groups - which cover up to two-thirds of the population - are a permanent feature. Such subsidies will be extended to target groups, in as simple and convenient way, as possible. Details on this will be released later.

"For those who are unable to afford their premiums after premium subsidies, the Government will also provide additional premium support, similar to how Medifund helps Singaporeans with medical expenses in the public healthcare institutions today," assured Mr Gan. 

"No Singaporean will drop out of MediShield Life because of inability to pay for premiums," he stressed.

Mr Gan added there will be no increase in taxes because of MediShield Life because the Government has already set aside the budget for it. That said, whether or not taxes will be raised in future will depend on the Government's overall spending and revenues.

"The Minister for Finance has stated during this year's Budget debate that over the next decade, total healthcare spending will go up significantly. The Government will work with the healthcare providers to contain healthcare cost increases. It will also ensure it has the revenues over the next decade to fund this increase," said Mr Gan.

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