The Workers’ Party (WP)’s Gerald Giam has urged the Government to release the full actuarial report of the MediShield Life scheme to enable independent actuarians to accurately calculate its premiums and benefits.
The Aljunied GRC Member of Parliament (MP) in a Facebook post on Tuesday (3 November) gave a recap on how he had asked Senior Minister of State for Health Koh Poh Koon for the report in Parliament during the debate on the proposed hikes of MediShield Life premiums on Monday.
Dr Koh, however, replied that the Government may release more actuarial calculations to external consultants and academicians for further analysis.
Mr Giam in his Facebook post highlighted that other jurisdictions such as Taiwan have already released actuarial reports for their national insurance schemes.
“For example, Taiwan’s National Health Insurance Administration is required by law to release an actuarial report every 5 years, and their latest report is available on their website.
“I urged the Government release a report like this so that independent actuaries can analyse it. This will go a long way in improving transparency and helping Singaporeans understand the calculations behind MediShield Life’s premiums and benefits, instead of being asked to take the Government’s word for it,” said Mr Giam.
The Government had earlier announced that MediShield Life premiums may rise by up to 35 per cent next year, making the first increase in premiums for compulsory health insurance since its launch in 2015.
Dr Koh told the House yesterday that the number of MediShield claimants has increased by about 30 per cent over the last four years, while annual payouts have increased by about 40 per cent.
He added that the size of the average hospitalisation bills for public healthcare institutions had increased by about 6 per cent a year on average, between 2001 and 2019.
“They need to be adjusted to ensure that the MediShield Life Fund remains solvent and sustainable so that it can meet its obligations to all policyholders,” said Dr Koh, emphasising that premiums have been kept unchanged for the first five years of the scheme.
Progress Singapore Party’s (PSP) Non-Constituency Member of Parliament (NCMP) Leong Mun Wai asked whether it is unusual by international standards for a health insurance scheme to increase its premiums by 35 per cent in a single adjustment.
Dr Koh responded that it would not be appropriate to compare MediShield Life’s premium increases with other schemes as premiums are priced based on multiple factors “which inevitably vary from country to country”.
Mr Leong also asked the Senior Minister on the total MediShield premium that will be paid by an individual in a lifetime, assuming that the premiums are compounded at 2.5 per cent and four per cent interest respectively.
Dr Koh replied: “It would also not be meaningful to compute how much premiums a Singaporean will need to pay over his lifetime simply by assuming a fixed compounding factor each year.”
He explained that future premiums depend on how underlying drivers evolve and this depends on many factors, adding that the amount of premium subsidies an individual receive will also vary over his lifetime, depending on the person’s financial circumstances.
Dr Koh also pointed out that financial support schemes are provided to all Singaporeans in order to ensure that they can continue to pay their premiums.
“Taken together, about 35 per cent of the total premiums collected were paid for by the Government through various subsidies and support schemes in 2019. For the elderly aged 65 and above, the contribution from the Government is even higher, at about 50 per cent of their premiums,” he noted.
The Government had considered deferring the MediShield Life review and premium increases following the current economic situation brought by the global pandemic, but Dr Koh emphasised that it has to remain “solvent and sustainable” so that it can meet “its obligations in time to come when policyholders make claims”.
“Its coverage also has to be updated and enhanced to remain relevant to the healthcare needs of Singaporeans,” he added.
Dr Koh revealed that a total of S$7.5 billion in premiums was collected between 2016 and 2019, comprising S$4.4 billion collected from policyholders and S$3.1 billion from the Government in terms of subsidies and other forms of premium support.
He added that S$3.5 billion in claims were paid out in the same period, while S$3 billion was set aside for future premium rebates.
Dr Koh also noted that the Incurred Loss Ratio of the fund was an average of 104 per cent from 2016 to 2019, which means that the total premiums collected were “slightly less than the total monies required to ensure that the fund is able to meet current claims and future commitments”.
He went on to emphasize that the fund has to be “self-sustaining” and based on “sound actuarial principles”.
“Premiums collected have to cover potential current and future payouts, including amounts set aside to support future commitments as well as provide a buffer against unforeseen contingencies such as unexpected spikes in hospitalizations due to disease outbreaks,” Dr Koh asserted.