Impact of Changes in MediShield Life Deductibles on Inpatient and Outpatient Bills

Let us take a step back to explain the need for deductibles first. One of the truisms of healthcare is that, ultimately, people always pay. Some systems offer healthcare for free, but they are not really free, as people ultimately pay through high taxes. Others use insurance, but people also ultimately pay through premiums.

We have concluded that through a mix of subsidies, insurance and co-payment, mostly through MediSave, we can minimise the ultimate burden on the people while delivering good health outcomes. This is the second truism of healthcare, which is how we pay determines how much we pay. In particular, co-payment by patients, including deductibles, helps keep the system lean and more efficient.

Deductibles, as a feature of insurance, in particular, sieve out the small bills so that insurance claims can defray a large part of the big bills. Further, deductibles also help sieve out the unnecessary procedures or over-servicing, which can add up to a lot of wastage.

Deductibles, therefore, serve a good purpose in our healthcare financing system. The MediShield Life Council, which was tasked to review the system, noted that our inpatient deductible has not been adjusted since 2015. With rising medical bills, the deductible has, therefore, become less effective in sieving out smaller, more affordable bills which can be paid for by MediSave. The Council, therefore, proposed an increase in deductible, which the Government accepted. Without the changes to the deductibles, MediShield Life premiums will need to increase by an average of 31 per cent, instead of 22 per cent in the latest round of review.

It is difficult to estimate the number of inpatient bills where co-payment by patients will increase due to an increase in deductibles. It may be a fifth to a quarter of subsidised bills incurred by Singaporeans, depending on healthcare consumption pattern. But most will be lower-cost procedures that can be covered by MediSave, for which withdrawal limits will also be adjusted. This means that subsidised patients should, generally, not have to pay more cash out-of-pocket due to the changes in deductibles.

The Government will also introduce a new outpatient deductible, to future-proof the scheme as its coverage expands to more outpatient treatments and home-based medical care. This is accompanied by significant increase in claim limits. For example, we have increased the claim limit for dialysis from $1,100 to $1,750 per month. We expect the cumulative, annual increase in outpatient claim limits to more than offset the outpatient deductible for most treatments. The net impact on each individual would differ, as it depends on their claim, ward class, premiums and the subsidies and top-ups that they receive.

Overall, these changes aim to improve assurance for Singaporeans over large subsidised bills as MediShield Life and MediSave will fully cover 90 per cent of such bills, up from under 80 per cent today. On an aggregate basis, the Government is allocating much more resources to defray cost of healthcare, than the increase in payouts or deductibles. To illustrate, over the next review cycle, the increase in premiums amount to $1.8 billion and changes to the deductibles reduce MediShield Life payouts by $0.6 billion. These additional outlays for policyholders will translate into higher payouts, especially for bigger hospital bills. In addition, the Government will provide $4.1 billion in support measures, including $3.4 billion in MediSave top-ups, which can also be used to help Singaporeans offset the impact of both premium and deductible increases.