MEDISHIELD AND ELDERSHIELD REVIEWS

MEDISHIELD AND ELDERSHIELD REVIEWS: 1.

Mdm Halimah Yacob asked the Minister for Health if he will provide an update to the House on the MediShield and ElderShield reviews and when these reviews will be completed.

The Minister for Health (Mr Khaw Boon Wan): Sir, both reviews of MediShield and ElderShield are on-going. I hope to complete the reviews within the next few months so that we can have them implemented this year. There will be many rounds of public consultations during the review so that we can forge the best solutions for Singaporeans.

The basic MediShield reform is more straight-forward. We did one last year which has brought about many benefits.

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The industry structure is now sustainable. Cherry-picking has been eliminated. MediShield has regained its financial viability. Patients with large bills have benefited from larger payouts, with co-payment reduced from 60% to 40% of hospital bills. They have saved thousands of dollars.

But 40% is still high for many patients. Preliminary soundings suggest that Singaporeans are prepared to pay higher premiums for greater MediShield payout, provided the premium increase is not too big. Our actuary consultant is helping us in the review.

In addition, we are reviewing the deductible imposed on the private MediShield enhancement policies. The current level of $3,000 may be too high and there is scope to reduce it by $500 or so. We will settle the details within a month or two. This will particularly benefit the middle income group who use the private unsubsidised wards.

As for ElderShield, this is a four-year-old scheme launched in 2002 to provide some basic financial protection for Singaporeans with severe disabilities. It is contractually bound for a review and renewal by September this year. So we will conclude the review within the next few months and be clear on what to do come September.

Our actuary consultant has been on this assignment for a few months now but it is a complicated review. I hope to achieve clarity by next month so that we can discuss more of this in this House.

Dr Lily Neo (Jalan Besar): Sir, supplementary question on MediShield. Could I ask the Minister whether he is concerned about the 30% of Singaporeans who are not covered under MediShield? How does this group of people pay for their high hospital bills as many of them, in fact, belong to the less

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well-off group? If the Minister is going to reply that they can apply to Medifund to pay for their bills, then may I ask him how long will the present Medifund last, taking into consideration the increasing life expectancy of the majority and the fast ageing population?

Lastly, may I ask the Minister whether MediShield can only be claimed through hospitalisation as many illnesses can now be treated under day-surgery? Should we not heed to prevent over-consumption incentives in the design of medical insurance?

Mr Khaw Boon Wan:

Sir, I am certainly as concerned as Dr Lily Neo and, rightly so, because if you stay out of insurance thinking that you will never fall very sick, then when you are hit with a major illness, life will be rough on you. As for the 30% uninsured - I thought it was 25% but I cannot remember the figure but it is a significant minority - not necessarily all of them belong to the lower income group. I have looked at some of the data and there are those in the middle-class and many of them are housewives of middle-income families. My message remains the same: please buy insurance for your spouse. Most of them are female who are not working and they look after the family, so as husbands, please look after them and buy them insurance. But a large number are children who are not yet in the workforce. Because they are young, their insurance is actually very low. I remember it is only about $30 a year. Please buy insurance for your children as well. They may be young and fit, but you never know, when something happens and you want to buy insurance, they may be excluded because of pre-existing illness. It is far better to sign them on when they are young and healthy.

I think we have discussed this in this House several months ago. A large number of them are young and below 20

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years old. We will eventually catch up with them because once they start working and contribute to CPF, we have a way of reminding them. But it is the spouses whom some husbands may have forgotten, but please sign them on.

As for the adequacy of Medifund, certainly with ageing, the demand will grow and that is why every year, around this time, I will be reminding the Minister for Finance to top up Medifund, if possible. There is an immediate target to double it to $2 billion and I am sure the Minister for Finance will be sympathetic.

Mdm Halimah Yacob (Jurong):

Mr Speaker, Sir, after the review, I would like to ask the Minister whether he will give an assurance that MediShield and ElderShield will continue to remain affordable to Singaporeans, in particular, since the Minister has announced that premiums will be reviewed.

My second question is what will be done to assist older and lower-income Singaporeans who do not have enough Medisave savings to take care of their healthcare needs and also to pay for their MediShield premiums.

My third question is to ask the Minister whether he will review the upper limit imposed on Medisave funds because once it reaches a certain amount it will roll over into the Ordinary Account. Will the Ministry be reviewing the upper limit imposed on the Medisave account?

Mr Khaw Boon Wan:

Sir, I can certainly assure the Member that affordability must be one of the key elements in the design of the 3M system because, if it is not affordable, what is the point. It may be a good plan on paper but if most people are excluded, then it does not serve any purpose. That is the reason why in the last MediShield reform, I sought advice

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from Members and I remember Mdm Halimah and Dr Neo gave me very good advice that the premium increase should not exceed single digit which limits it to about $10 a month. That is why we designed the last MediShield reform that way. But once you are limited by $10 per month, the payout is also limited and that is why I was not able to bring the co-payment down from 60% to 20% which was the target I set out to do. But, never mind, we achieved quite a good outcome in reducing it to 40% and this year I hope that the public, at least based on the people whom we have spoken to during the focus group discussions, will find it reasonable to have another round of increase of a few dollars a month and, hopefully to bring co-payment down to 20%, if possible. The various computations are actively being done now. I hope this is something that we can achieve and we can discuss this next month.

On the inadequacy of Medisave for the elderly, whenever the budget allows it, we have some top-ups for the elderly. I am looking forward to the Budget Statement next month. Hopefully, there is some good news for us too.

Dr Lily Neo: Sir, a supplementary question on ElderShield. But before that, the Minister did not reply to the question on whether MediShield can be claimed without hospitalisation. On ElderShield, may I ask the Minister whether the take-up rate is small and whether he will look into this issue? May I also ask him whether he will look into the tenure and amount of ElderShield payout? Is $300 per month for a totally dependent elderly not too little, even for subsistence?

Lastly, could he also look into the unaffordable premium for ElderShield for the elderly?

Mr Khaw Boon Wan: I think the limitations of the current ElderShield have

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been voiced by Dr Lily Neo and Mdm Halimah and a few MPs before and I have taken note of those criticisms. They are valid and that is why the design of the revised ElderShield will take some time.

Roughly, what I have in mind, which we can discuss more next month is this: obviously the society is not homogeneous and there are people who find $300 per month helpful, but there are also people who find $300 per month too little for the premium they have to pay. Like in the case of MediShield, what I have in mind is to restructure it so that there are various plans and, obviously, they come with different prices, and it is up to Singaporeans to choose which plan they think is reasonable, and then subscribe to it.

As to the acceptance of ElderShield, I am quite glad that the last few times when I looked at the subscription level - because we have a system now, whenever Singaporeans reach the age of 40, a notice will go out to them to encourage them to sign on - those who objected and said, "No, I don't want to sign on.", I think it is down to about 10%. So, in terms of flow, 90% of Singaporeans who reach 40 are signing on to ElderShield. I think that is good and there is a better understanding of the need of such a severe disability plan. But I am quite sure, after reform, if we do a good job of it, many more will find it even more acceptable.

As regards the MediShield for non-hospitalisation or day surgery, I thought it covers.

Dr Lily Neo: Medisave covers.

Mr Khaw Boon Wan: Only Medisave? I have to refresh my memory on this point. Is the Member quite sure that day surgery is not covered by MediShield?

Dr Lily Neo: Not for MediShield.

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Mr Khaw Boon Wan: I suppose, like all things, if you want it to cover more, then the premiums have to go up too. So it is one of those things that we always have to find a balance. But the key point is to make sure that at least on hospitalisation, the additional $10 premium increase must be able to cover. If indeed day surgery is not covered then I think the reason must be this: because this is not a routine general health insurance, it is a catastrophic illness insurance, that is, it is for the very sick who requires hospitalisation and typically may require prolonged stay in ICU. So, for day surgery, probably that is why there is no coverage.

Mr Speaker: Mdm Halimah, last question.

Mdm Halimah Yacob: The Minister did not answer my last question. I asked whether he would consider raising the upper limit as currently imposed on Medisave account, instead of allowing it to roll over because there is now more need for funds on the part of the individual.

Mr Khaw Boon Wan: I am sorry for missing this out. Yes, I am sympathetic on this particular issue. Mdm Halimah has raised it before. I have voiced my support for this. The ultimate decision lies with the Minister for Manpower because CPF comes under him. But I will continue to lobby for raising it. I think it is still academic at this stage because most people have not quite crossed that level. But we will look at the data and see when it is a good time to raise it, provided there is acceptance by the other Cabinet Ministers as well.