Review MediShield Life's Claim Limits to Address Gaps

Mr Murali Pillai asked the Minister for Health how does the Ministry ensure that the pegging of hospital charges for complex medical procedures for the purpose of assessing MediShield Life coverage is made current so that subsidised patients who undergo complex medical procedures will continue to be protected against large hospital bills.

Mr Speaker, our public healthcare financing system comprises several components that work together to keep healthcare affordable for Singaporeans.

First, patients in public healthcare institutions enjoy subsidies of up to 80% of their bills. Second, we have introduced MediShield Life, a universal healthcare insurance which provides all Singaporeans lifelong protection against large hospital bills and selected costly outpatient treatments, regardless of age or health condition. Third, MediSave can be used for the balance of the bill and helps Singaporeans lower their out-of-pocket cash payments. Finally, MediFund and various forms of financial assistance at our public institutions provide discretionary, targeted assistance for those who have financial difficulties. Last year, MediFund provided about $150 million in assistance to patients who require additional help with their bills.

Taken together, this "S+3M" framework – the subsidy plus 3M – has worked well. It ensures that healthcare is affordable to Singaporeans, and no Singaporean is denied appropriate healthcare due to an inability to pay. To underscore this point, in our public hospitals, seven in 10 subsidised bills are fully paid without any cash outlay by the patient. In other words, 70% of all subsidised bills do not require any out-of-pocket cash payment by the patient at all. Of the remaining 30% of bills, one-third require payment of $100 or less in cash, and another one-third of that 30% is paid for using a cash outlay of between $100 and $500.

The enhanced MediShield Life was launched in 2015. This is a key component of our healthcare financing framework which provides universal and lifelong coverage, including for those with pre-existing illnesses. The Government provides premium subsidies to the lower- to middle-income to keep premiums affordable, and additional support to those who need more help with their premiums.

MediShield Life aims to strike a balance between keeping premiums affordable and ensuring adequate coverage of subsidised care. For this reason, MediShield Life has design features, such as claim limits, an annual deductible and co-insurance.

Coverage of claims and amount of payouts have improved since the introduction of the enhanced scheme. To provide members with a sense of the comparison, in 2017, 555,000 MediShield Life claims were approved and $845 million was paid out. This is up from 344,000 claims and $448 million in 2015 under the old MediShield. The average payout per claim was $1,520 in 2017, compared to $1,300 in 2015. For larger bills, the payout was correspondingly higher. For the largest 10% of subsidised hospitalisation bills, which was above $4,000 in 2017, the average payout per claim was $5,800. In comparison, MediShield paid out $4,000 on average for the largest 10% of subsidised bills in 2015.

As I had mentioned earlier, claim limits are one feature that helps MediShield Life strike a balance between keeping premiums affordable and also ensuring adequate coverage. MediShield Life claim limits and premiums were last revised in 2015 when the enhanced scheme was launched. At the time of launch, the claim limits were set to cover nine out of 10 subsidised bills. In addition, for larger bills within claim limits, the patient’s co-payment is reduced as the claimable amount goes up, dropping from 10% to 5%, and finally to 3%. So, for illustration, for claimable amounts above $10,000, the patient’s co-payment is 3%.

For bills that exceed the claim limit, patient’s co-payment will include the remaining bill not covered by MediShield Life. These bills tend to be for more complex cases or where patients received lower means-tested subsidies because of their higher income.

The latest available figures show that eight in 10 subsidised bills remain fully within the MediShield Life claim limits. This has come down from the limits set in 2015, caused in part by increased healthcare costs. We will review this and adjust the limits as necessary. However, even at present rates, in respect of the bills which fall outside the claim limits – in other words, outside of the eight out of 10 – about half exceed the claim limits by $230 or less.

The claim limits are necessary as they serve to keep premiums affordable. If we are to remove the claim limits altogether, there will be significant premium increases for all Singaporeans across the board, to the order of about 30% or more. Therefore, rather than impose this on all Singaporeans across the board, those who prefer to have higher coverage and are willing to pay higher premiums can consider private Integrated Shield Plans which can include "As-Charged" features that cover 100% of the bill. Conversely, where patients cannot afford the cash outlay, they can tap onto MediFund as I explained earlier, or on other financial assistance schemes.

In the recent case of Mr Seow Ban Yam, which Members raised, we understand that he had undergone a duct drainage procedure at the Singapore National Eye Centre (SNEC). The surgical procedure, which was performed by a senior consultant in an operation that took three hours, was complex, given his age. It is also not common for the procedure to be performed on both eyes at the same time. As an indication, this was only done for seven patients out of 42,000 procedures performed by SNEC that year. Mr Seow's bill was about $12,000 before subsidy. Of this amount, the Government subsidises approximately $7,500, leaving a balance of $4,500, or about $1,400 above the MediShield Life claim limit in this case.

Because the SNEC bill was significantly higher than the claim limit, the payout was comparatively small, after the yearly deductible of $3,000. However, the balance of Mr Seow's bill was thereafter fully covered by MediSave, which meant that Mr Seow did not have to pay any cash out of pocket for the procedures which he underwent. Nonetheless, we had asked SNEC to review their charges. Following the review, SNEC has decided to scale down its fees for this procedure and a number of other complex procedures with higher fees, and will do so from 1 March 2019.

MOH regularly reviews MediShield Life claim limits and benefits. For example, we recently extended coverage to Home Parenteral Nutrition and direct admissions from emergency departments of public hospitals to community hospitals.

Last year, we also started a review of claim limits, with a view to making the appropriate adjustments as may be necessary. This ongoing review requires a careful assessment of the appropriate claim limits and also the consequential impact it may have on premiums, to ensure that the coverage of MediShield Life remains broad-based and also sustainable. This review is also being done in the context of the commitment to keep premiums constant for five years after the scheme was introduced in 2015. We expect the latest review to be completed by end 2020, but if the review is completed ahead of time, we will, of course, announce the revisions earlier. Moving forward, MOH intends to conduct these reviews of claim limits more regularly, around once every three years.

Just as important as having a good healthcare financing framework is managing healthcare costs effectively, so that overall affordability can be maintained. We have to work hard on this and also explore various fronts on which this can be done.

The need to monitor and manage costs and charges in public healthcare is particularly important. The majority of Singaporeans utilise subsidised healthcare in our public healthcare institutions. Some examples of our efforts to keep costs sustainable are the use of group procurement to get better prices, tapping on technology to improve productivity and applying healthcare technology assessments to guide the appropriate use of services, devices and drugs. We have also introduced programmes and services to help Singaporeans receive care earlier or at more appropriate settings. For example, under the hospital to home programme, patients receive visits at home for a few months after hospital discharge to ensure that they recuperate well and do not get re-admitted to the hospital. Together, these initiatives help Singaporeans manage costs and moderate increases in healthcare bills. We will keep a close watch on public healthcare costs and redouble our efforts to keep healthcare costs sustainable and affordable for Singaporeans.

To sum up, we have a healthcare financing framework that has worked well in striving to keep healthcare affordable for Singaporeans. The healthcare financing framework is designed with several different but overlapping components to provide holistic support to meet Singaporeans' healthcare costs. MediShield Life is one key component that provides Singaporeans lifelong protection against large hospital bills and selected costly outpatient treatments. Its features are aimed at ensuring adequate coverage while keeping premiums affordable. We will continue to review, refine and strengthen MediShield Life and other components of our public healthcare financing system, and, just as importantly, manage our healthcare costs to ensure that public healthcare remains affordable for all Singaporeans.

I thank the Senior Minister of State for the very comprehensive answer. I have two supplementary questions. Firstly, for such an eye operation, which I would imagine is quite common for the elderly and with the ageing population, it will be imperative that we keep the cost affordable for them. So, since SNEC is reviewing its charges, will MOH also ensure other public hospitals or other healthcare institutions offering similar procedures also review their charges to make sure that they are on par and, therefore, ensure affordability for elderly citizens? That is the first question.

Secondly, I think Mr Seow's case has been quite unsettling for a lot of the elderly, given that it seems like a very reasonable procedure, common enough and yet the experience is that the payout is only $4.50. Given the spirit of MediShield Life, such an example will not be very helpful in giving that sense of assurance in terms of healthcare affordability. While I am heartened that there is a review, I am wondering if the review can be brought forward, given that MediShield Life was launched quite a number of years ago. So, whether the review could be brought forward and, in terms of the review frequency, I understand that the Senior Minister of State is estimating around every three years. Would this be timely enough? Does this coincide with the general healthcare inflation pattern?

I thank the Member for the questions. Yes, we have to keep healthcare cost affordable. Members have heard me explain that that is our objective in designing the framework that we have. And in doing so, we try to strive to do that with two broad prongs. The first, obviously, is to look at the claims limit, which is the thrust of the Member's second question. And yes, we will review the claims limit and we will ensure that it is in tandem with the cost and ensure that the differential, as they move towards the inflationary cost for the healthcare sector, that it is kept in check and in tandem. Whether it is five years or three years, the objective is the same – to ensure that there is parity and that it rises in tandem, so we have decided to do it at three years. But, if necessary, we can always relook at the timescale as well.

The second prong is to deal with the charges side, because one has to look at the claim limits as one sector. The other one is, of course, the amount of cost that is charged at the healthcare institution. That will also be looked at to ensure that there is parity. And that is one key aspect of trying to bring down and maintain healthcare cost to keep it affordable. So, both will be looked at at the same time. In terms of timing, three years is what we aim for, both the reviews that we are doing now. And thereafter, we will see if that is in tandem with the trends and patterns in the healthcare industry. We will adjust as necessary.

Mr Speaker, may I ask the Senior Minister of State how are deductibles derived at, and how do we make them more affordable? I am glad to hear that SNEC will look into the high cost of the eye duct operations. May I now ask whether MOH would also look at other departments, especially those with high charges on the conditions that require operations, in order to keep healthcare costs down? And how does MOH reassure Singaporeans that public healthcare costs, including the deductibles, are affordable to give them peace of mind?

Deductibles are necessary, because they are one component of ensuring that the premiums remain affordable. If there were no deductibles, or there are no other co-payment schemes, then one would imagine that the premiums would rise and we want to ensure that, for the broader base of Singaporeans, premiums remain at a scale which is affordable. So, deductibles are necessary for that reason.

In terms of how the deductibles are looked at, one has to consider it in the context of the kinds of treatments, the claims assessment, the actuarial assessments as well, and then when you look at that in contrast with the premiums that we want to maintain, the levels at which we want to fix the premiums, that is how the deductibles are looked at and determined.

In the context of assurance, as I have explained earlier, the healthcare financing framework is made up of not just MediShield Life. It is a combination of MediShield Life, together with MediSave and, if necessary, MediFund, along with the subsidies, all working in tandem and often overlapping with one another. Which is why, even in the context of Mr Seow's case, which Members have heard me explain, is not quite as common as one might imagine. Even in that situation, with the deductibles and with the co-payments after MediShield Life, the patient does not have to be out of pocket because of MediSave. So, one has to look at the entire framework working in tandem as being the framework that will sustain affordable healthcare in Singapore.

Mr Speaker, I would like to thank the Senior Minister of State for some of the statistics he gave. Mr Seow's case, of course, has started a whole enquiry into MediShield Life and how it works amongst many members of the public. I had a resident who has come to me, was hospitalised for two days for a minor stroke, out-of-pocket, including MediSave, from his own monies, it is about 25% of the bill. He sees a line item "MediShield Life" contributing zero dollars, that is, because it is within the deductible limit. So, my question really is about the review that MOH is undertaking – whether it is in line with the spirit of the MediShield Life Review Committee report, to have greater transparency on reserve requirements. Because that is where a large chunk of the public discussion is going to now – whether the amount of premiums collected is too high or is it just right? It is unclear to members of the public as to whether MediShield Life is over collecting premiums. Some clarity on that would be helpful, in line with the spirit of the MediShield Life Review Committee report.

Well, there are two different questions at play here in Mr Pritam Singh's questions. The first obviously deals with the review of the claims limit, and that is a product of working out where the claims limit lie in the context of how many bills MediShield Life is designed to cover and looking at the healthcare cost in tandem with that and to achieve the ratio that one seeks to. That is the review of the claims limit that I spoke about earlier.

What Mr Singh is separately asking about is the adequacy ratio. The adequacy ratio is something which is kept at a pace that ensures longer-term sustainability of the fund, longer-term ability to meet vicissitudes of life, and also to ensure that the MediShield Life scheme, on a longer-time basis, remains sustainable. That is something we constantly look at as well. But I want to emphasise that it is a separate issue from looking at the claims limit, which deals with the actual cost itself and how many bills are covered by MediShield Life.

Mr Speaker, Sir, I have two questions for the hon Senior Minister of State. The first question is in relation to claim limits for day surgeries. As the Senior Minister of State would know, with the advancement of technology, a number of procedures would entail patients to go through day surgeries instead of being warded in hospitals. This may result in cost-savings. Could these cost-savings be taken into account in setting the claim limit for complex procedures in day surgeries? That is the first question.

The second question is in relation to the information flow between the national health agencies setting their costs and MOH when assessing whether or not the claim limits would be sufficient and relevant. In the context of this case, for example, would ordinarily these healthcare agencies inform MOH, have that discussion on whether or not the price setting is appropriate before it is finalised?

There are several hundred thousand bills that are put out in our public healthcare institutions, so it is not possible to look at every bill that goes out and in discussion with the healthcare institution before that. There are basic guidelines and benchmarks, and that is something that we look at. It is, in fact, the subject of the review that we will do as well. And particularly in the context of this case, that is what SNEC has reviewed and will implement from 1 March. So, I assure the Member that we will constantly look at that and keep that within the range that fits in with the philosophy of MediShield Life.

On the question of day surgery, to some extent, shortening procedure timings or use of technology might save time and possibly expenses and money. That would be another feature that would be looked at in the context of setting the claims limit. As the Member knows, there are tables of charges for different procedures and these are regularly reviewed with a very broad spectrum of expertise. Certainly, the issue as to whether or not cost savings might be gained from day surgeries or shorter surgeries or procedures which may be truncated because of technology, all these would be taken into account as we review the amount of claim limits that we have.

Mr Speaker, Sir, I thank the Senior Minister of State for his detailed answers. Just three supplementary questions. The Senior Minister of State alluded to the adequacy ratio. Can I ask if the Government consciously benchmarks the adequacy ratio of MediShield Life against other similar healthcare insurance schemes where the insurance is mandatory by legislation in other countries in the world? Is MediShield Life's adequacy ratio benchmarked to be similar or in the same range as the similar schemes worldwide?

The second question is in relation to – if I understand the Senior Minister of State correctly – the 10% or so bills which fall above the claim limit where the difference is more than $230. Would the Senior Minister of State be able to share with us any pertinent common characteristics in such bills? For example, are they usually for older patients, where procedures may necessarily be a bit more complex? That may be helpful for various stakeholders out there to know what are the common characteristics as we think about this problem.

And the third question is just a clarification. For patients whose bills go above the claim limit, are they, as matter of routine, informed by public healthcare staff that MediFund assistance that is means-tested, is available to them?

The adequacy ratio is not necessarily compulsorily or in a fix fashion benchmarked against other jurisdictions. But nonetheless, there are comparables that are looked at in determining and also assessing what the adequate ratio would be. But ultimately, we have to look at it in the context of our own domestic situation, our own claims pattern, the kind of procedures that we expect to see and also the healthcare trends that we expect in Singapore itself. And the ratio has to be determined based on those factors.

On the second question, the bills that fall outside the last 10%, as I explained in my speech earlier, they are largely made up of complex cases. I do not have the age breakdown for those cases. But, also, a sizeable component of those would be made up of patients who do not pass the means test for subsidies and that is why the amount outside of that would be larger.

Finally, the question of MediFund, at various stages in different hospitals, there will be counsellors, medical social workers as well who will be able to advise on the particular patient's case and the accessibility to MediFund based on the individual situation of that patient.