MEDISHIELD PLUS

[Mr Speaker in the Chair]

BG George Yong-Boon Yeo: Mr Speaker, Sir, MediShield was introduced on 1st July 1990 to help Medisave members and their dependants meet hospitalisation and medical costs of serious illnesses. The scheme now covers more than 1.5 million people or 88% of eligible Medisave members.

The White Paper on Affordable Health Care recommends that the Government improve and extend the coverage of MediShield to help meet the increasing medical costs so as to reduce the need to significantly increase Medisave contribution rates in the future. MediShield will be extended in two ways: by improving the present Basic MediShield benefits package and introducing a second tier optional scheme called MediShield Plus to cover hospitalisation expenses in higher class wards.

The White Paper also recommends that employers should build their medical benefits system on Medisave. They are encouraged to make voluntary additional Medisave contribution for their employees, over and above the statutory contribution, in lieu of part of their traditional benefits in kind.

The Civil Service has taken the lead by introducing a new medical benefits scheme, called the Medisave-cum-Subsidised Outpatient (MSO) scheme, for new employees along these lines. New recruits from 1st January 1994 will receive additional 1% Medisave contribution over and above the statutory Medisave contribution, in lieu of hospitalisation benefits and retain the traditional outpatient benefits subject to an annual cap. Existing civil servants can also opt into the MSO scheme. MediShield Plus is introduced by the Government so as to facilitate conversion of the traditional medical benefits in kind offered by employers towards the MSO-type of schemes.

MediShield Plus

Ministry of Health together with the Central Provident Fund Board has worked out the MediShield Plus Scheme. MediShield Plus will offer a two-tier plan to extend adequate coverage for those using Class A and B1 wards on a voluntary opt-in basis. We are not changing the basic MediShield package in this exercise which already provides adequate coverage for B2 and C wards. However, we are currently studying various improvements to this basic package, but to be implemented separately later.

The structure of MediShield Plus benefits is similar to the basic MediShield package, with co-payments on deductibles, and with specified coverage rates for room and board, including medications and investigations, ICU, surgical operations, etc. MediShield Plus Plan A is designed to provide coverage for those using the Class A wards and, to a lesser extent, the private hospitals, while Plan B is for Class B1 wards.

The deductible limits are higher than for Basic MediShield, because the new schemes are designed for middle (50th percentile) and upper-middle (70th percentile) households, who are the major users of Class A and B1 wards, and who should be able to absorb a larger amount of medical charges themselves before needing help from MediShield. Lowering the deductibles would have meant raising the premiums further.

MediShield Plan A will have a claim limit of $500 per day of hospitalisation with a deductible of $4,000 per policy. Plan B will have a claim limit of $300 per day of hospitalisation with a lower deductible of $2,500. Both Plan A and Plan B will have a co-payment of 20%, as in the case of the Basic MediShield scheme. MediShield Plus will pay 80% of the amount in excess of the deductible.

MediShield Plus also caters for certain outpatient medical treatment such as radiotherapy, chemotherapy and renal dialysis. There will be no deductible for such treatment and MediShield Plus will pay for 80% of the medical bills incurred subject to the claim limits.

The detailed MediShield Plus benefits package for Plan A and Plan B are given in Annex 1 (Cols. 249 - 250). Some examples of reimbursement computation for Plan A and Plan B are given in Annex 2 (Cols. 251 - 254). Annex 1 - MEDISHIELD BENEFITS AND CLAIMABLE LIMITS (Cols. 249 - 250)

Annex 2 - Reimbursement Computation for MediShield Plus Plan A (Class A), Reimbursement Computation for MediShield Plus Plan B (Class B1) (Cols. 251 - 254)

Premium Structure

The annual premiums are between $60 and $660 for Plan A and $36 and $396 for Plan B, depending on the age group. The detailed premium rates are given in Annex 3 (Cols. 255 - 256). As in the Basic MediShield Scheme, the age limit for MediShield Plus coverage is 70 years. Annex 3 - ANNUAL MEDISHIELD PREMIUMS (Cols. 255 - 256)

Medisave members can use their Medisave for the MediShield Plus premiums for themselves and their dependants. They can also use Medisave to pay for the deductible and co-payment.

In general, the premiums for Plan A are five times those for the basic package, and for Plan B three times the basic package. This is roughly the ratio of charges between Class A and the average B2/C wards, and between B1 and B2/C wards. A 70th percentile upper-middle income household, with an income of $4,000 per month, can afford the Plan A premiums for a family of two adults and two children on 1% of its income, while a 50th percentile middle income household, with an income of $2,700 per month, can afford Plan B premiums on 1% of its income. The premiums are therefore comfortably affordable.

Implementation

Ministry of Health and the CPF Board will work out the implementation details including media publicity and the promotional materials to explain the MediShield Plus scheme before the official launch in March this year. MediShield Plus applications will be accepted from 1st April 1994 onwards and the coverage will commence from 1st July 1994, after a two-month waiting period for approved applicants.

Medisave members and their dependants who are now covered by Basic MediShield can also apply to join the MediShield Plus. On the commencement of MediShield Plus coverage, their Basic MediShield coverage will cease automatically.

Private Insurance Companies

We intend to allow private insurance companies to offer competing MediShield Plus-type schemes, offering similar benefit structures, drawing on members' Medisave accounts. As a first step, we are discussing with NTUC Income, which should be ready to launch its scheme soon. We will review our experience with NTUC Income's scheme after six to 12 months and then decide how to extend it to other insurance companies.

Revised Medical Benefits for Civil Servants

Mr Speaker, Sir, MediShield Plus is designed as primary insurance coverage, ie, for people with no medical benefits in kind from employers, and no insurance coverage, eg, civil servants on the Medisave-cum-Subsidised Outpatient scheme. However, the scheme will also be open to people who do receive employer medical benefits in kind, eg, civil servants opting for the revised Comprehensive Co-payment Scheme (CCS) of medical benefits who want additional protection for themselves or their families.

In fact, with the Government paying 85% of the hospitalisation bills of civil servants under the Comprehensive Co-payment Scheme, and 60% of their dependants' bills, this group probably does not need MediShield Plus. The coverage of MediShield Plus will overlap with the coverage provided by the employer's medical benefits. Civil servants who have both will, in fact, be over-insured, and will pay unnecessarily high premiums.

The needs of civil servants and their dependants who are on the Comprehensive Co-payment Scheme will be better met by a medical insurance scheme specially tailored for them. The Public Service Division has discussed with NTUC Income about offering supplementary medical insurance to civil servants to cover the additional co-payment they now have to bear. NTUC Income has proposed a scheme, called Co-pay Assist, to cover half the hospitalisation expenses which civil servants and their dependants who are on the Comprehensive Co-payment Scheme have to pay.

With this scheme, civil servants will pay 7.5% of their medical costs, while their dependants will pay 20%, with an equal share borne by NTUC Income. Since civil servants on the new medical benefits scheme will have to co-pay approximately twice as much of their hospitalisation costs as under the old medical benefits, Co-pay Assist will restore the civil servants to the level of co-payments which prevailed under the old medical benefits scheme. The difference is that they now have a choice whether to take the supplementary insurance and pay the premium, or to save the money and bear the additional medical costs themselves.

The Co-pay Assist scheme will be available to civil servants on a voluntary basis. The premiums are shown in Annex 4 (Cols. 257 - 258), and will be paid in cash. They are modest, much less than the salary increases received by civil servants. Whether or not individual civil servants choose to take up this supplementary insurance from NTUC Income, it is for them to decide, but the availability of the scheme proves clearly that civil servants are better off with the new salaries and medical benefits than before. In other words, civil servants can have their cake and eat it too under the Comprehensive Co-payment Scheme, but they have to decide how many calories they want. Annex 4 - ANNUAL PREMIUMS FOR CO-PAY ASSIST (Cols. 257 - 258)