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SINGAPORE : Bit by bit, the questions about implementing means testing in public hospitals are being addressed but one has lingered unanswered, until now: Will medical insurance premiums inflate as a result?
One media report had suggested this possibility, after the Life Insurance Association (LIA) of Singapore said means testing would have a "definite impact" on the health insurance market, and insurers would have to review their product designs and policies.
Health Minister Khaw Boon Wan, however, gave his response in no uncertain terms when TODAY put the question to him. "There is no basis for such a rise," he said, in an email interview.
"The vast majority patients in Class B2 and C wards are from low- and lower-middle income groups and they will continue to enjoy the current heavy subsidy of 65 and 80 per cent, respectively. Their MediShield policies price in such a subsidy rate. As they will not be affected by means testing, why should their MediShield premiums be affected?"
Similarly, Mr Khaw said, premiums for private Shield plans — run by private insurers such as NTUC Income, American International Assurance Company and Aviva, and riding on MediShield to provide Class A/B1 or private hospital coverage — would not be impacted.
"Means testing is on the subsidised Class B2/C wards and there will be no impact on Class A/B1 or private hospitals," he said. "So, why should the private Shields up their premiums as a result of means-testing?"
Ministry of Health (MOH) figures show that of the 1.6 million policyholders who hold private Shield plans, about half have coverage for treatment in private hospitals and Class A wards in restructured hospitals.
But some believe otherwise, such as Society of Financial Services Professionals president Leong Sze Hian. The indications are that subsidies will shrink for the top 50 per cent income earners, and such policyholders may yet choose to stay in the lower class wards, he pointed out.
They would end up claiming more from insurers than they would without means testing.
To offset these extra costs, insurers would have to up prices and since it is not feasible to customise premiums based on income or housing type, "the most equitable way is to increase premiums across the board", he reasoned.
On the other hand, Mr Leong suggested, if the money saved from means testing were used to reduce hospital costs, people might end up making smaller claims which would in turn halt the rise in premiums. Or, insurers could offer people the choice to sign with the caveat that if they fail means testing, "insurers won't pay the extra costs".
Acknowledging that "a small minority of upper-middle and high income groups" who bought MediShield instead of the private Shields could end up in Class B2/C wards, with a reduced subsidy post means-testing.
"They should top up their current MediShield with a private Shield. But if they do and if they are affected by means-testing, MediShield will require them to co-pay more, so as to maintain equity with the low-income MediShield policyholders. Again, MediShield premiums will not be affected."
Mr Stanley Jeremiah, former president and a council member of the Singapore Insurance Institute, believes means testing would impact only group medical plans that cover B2/C class wards. And here, the rub is this: If a hospitalised employee fail means testing, should the insurer or employee pick up the extra costs?
To solve this dilemma, he suggests that insurers raise premiums or state they will only pay current subsidised charges. Otherwise, most critical illness or life policies for individuals pay out a fixed amount depending on the procedures, and as such will not be affected by means testing, he said.
Going beyond premiums, what of middle-income Singaporeans who would fail means testing but cannot afford to upgrade their current inadequate policy? Lawyer Leonard Loo pointed out, they could be "exposed to greater medical costs". About 1.2 million Singaporeans have only basic MediShield coverage.
And even if a policyholder can afford the top-up, insurers may refuse it if he or she is already ill.
In such cases, Mr Khaw said: "If they are genuinely distressed by the reduced subsidy, we will review their cases on an exceptional basis and assist them as appropriate."
According to the MOH, some 10 per cent of the working population is not covered by MediShield or Medisave–approved plans by private insurers. - TODAY/ar
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