Medicating Medishield for life

Okay, so the dance of the seven veils has been staged. And more veils have been lifted on Medishield Life, especially the one shrouding the new premiums. They are big increases, but the G is covering it with a $4billion kitty that will last five years. The question is what happens after that?

Anyway, if you’re mightily confused by all the numbers, here’s a run-down on UNUSUAL key points.

Those premiums: Yup, the new ones are high and even higher for the younger people. That’s because people want to be able to pay more when they are working and less when they get older, quite an inversion from normal insurance schemes.

Should this matter? Well, not now because the G is throwing in a load of subsidies, graduated according to age-groups and income.

How? Everyone will get transitional subsidies for four years, while the lower two-thirds will also get permanent subsidies.

Then there’s the 1 per cent rise in Medisave. The one-third group who will no longer get transitional subsidies belongs to the higher-income and that one per cent Medisave increase will cover the higher premiums.

Here’s a gauge:

From next year, if you belong to the two-thirds group, you will pay no more than $3 a month, while the higher income will pay no more than $6.

From 2019, which is when transitional subsidies run out, the lower and middle income will pay no more than $14 a month and the high income will pay at most $30 (which that 1 per cent increase in Medisave is supposed to be able to cover).

Who really will be paying the most? Seems like that group of people of people who are uninsured, because they have pre-existing conditions. It seems that this group number about 65,000 (not really sure about this, sorry). They will be paying 30 per cent more in premiums compared to the rest.

Sounds terrible? Paying more always sounds terrible. But they would be paying sky-high premiums if the G wasn’t footing ¾ of the cost of insuring them – that’s $1.1 billion over five years.

 So will all these changes really help me if/when I get sick? Yes, because you can claim MORE from insurance and reduce the need to dip into your Medisave or put out cash. That’s because the claim limits will be higher and the co-insurance portion that you have to pay will be lower. Remember that this will work for subsidised wards in B2 and C.

A real-life cost-benefit example:

Of those who stayed in a B2/C class ward and got whacked with a bill of more than $10,000, only one in 10 paid less than $3,000. The rest had to dip into their Medisave or cash for more.

But Medishield Life means that six in 10 will pay less than $3,000.

Maybe that old saw about better to die than get sick will die out…In fact, it is good to be above 65 because don’t forget that the Pioneer Generation Package covers them for life.

There are two niggling issues:

First, six in 10 people have already bought Integrated Shield Plans because the current Medishield wasn’t able to cover big bills. How will private insurers react and what will happen to the current IP premiums? Past practice has seen private insurers stack on more when the current Medishield premiums changed. This time, the review committee is telling them to stack the premiums with the same increase, or less – as well as draw up a standardised B1 ward class plan. That B1 ward class plan sounds good because statistics show that seven in 10 with IP plans actually prefer being warded in B1. So here’s hoping the insurers will come up with this, and therefore reduce premiums for such people rather than lump them with uber-rich who prefer private hospital rooms.

 Second, company group insurance and medical benefits which look like a duplication of Medishield Life. Why not use corporate largesse  to enhance Medishield Life and have them move quickly to a portable medical benefits system? This is something the labour movement should take up. A one per cent contribution by companies to employee’s Medisave would go a long way. Perhaps, there should be a systematic shift that will take place over four years, when transitional subsidies run out in 2019.      

I happen to think the Medishield Life review committee seems to have considered many, many aspects of how to cover everyone, including those with pre-existing illnesses. But I wonder how it will enforce “universal coverage’’ since there would those with little Medisave because they don’t have a stable stream of income or are self-employed. Compulsion must mean penalties for non-compliance. Also, it isn’t clear what will happen to Medifund – the last resort for the down-and-out.

But what the review committee can’t do is predict the future, such as whether G largesse can continue, whether the Medishield Life fund will go bankrupt and whether people will pay escalating premiums because everyone wants to have the best of medical technology and healthcare. For all you know, a G craving popularity will forever keep premiums low – and quietly cut benefits.

We can expect to hear plenty of exhortations from the G to be careful about our health and making demands on the medical system just because we think there will be insurance to pay for everything. Looks like everyone has to bear some responsibility to keep the insurance scheme going. It’s not possible (or is it?) for the G to keep pumping in $4billion every four or five years.

There are so many “what ifs’’ especially as we look at how health insurance and retirement schemes run by governments elsewhere have gotten into a mess. Hopefully, health economists will look at the review committee’s suggestions and suggest ways to strengthen the system so it will survive into the future.

Anyway, here’s a toast to our health, the health of our finances – and to review committee chairman Mr Bobby Chin and his team.