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Saturday, September 7, 2013

Let Medisave cover premiums fully

Published on Sep 07, 2013

Most retirees will still need to fork out cash that some can ill afford

By Salma Khalik Senior Health Correspondent

THE $200 increase for Medisave withdrawal caps seems like a good, proactive move to help the elderly pay the premiums for integrated MediShield plans.

But it does not go far enough - because almost everyone aged 66 and older who is on an integrated plan will still need to top up their premiums with cash that some can ill afford.

The Health Ministry (MOH), in announcing the increase yesterday, said this "will enable Singaporeans to use more Medisave in paying for premiums for the private Integrated Shield plans".

Everyone above 65 will have their Medisave withdrawal limits raised by $200, making it a cap of $1,000 for those aged 66 to 75, $1,200 for ages 76 to 80 and $1,400 if you are 81 and above.

The previous caps were already enough to cover premiums for the basic MediShield plan.

With the new caps, the Government hopes to ease the burden for those on integrated plans, which are offered by private insurers and give higher payouts.

Two in three people on MediShield, the national health insurance scheme, are on integrated plans. But premiums keep increasing with age.

To be of real help, Medisave needs to at least cover the premiums for the lowest of the three integrated plan categories, which pegs payouts to B1 rates at public hospitals. But even with the new caps, these premiums are not fully covered.

By the age of 66, most people would have retired and be living on their savings. The worry raised during Our Singapore Conversation and at many health dialogues over the years is that this group of retirees would have trouble paying the cash portion of their medical insurance premium.

They would either have to downgrade to the basic MediShield, losing their years of higher premium contributions, or scrimp and save to top up what they cannot pay with Medisave.

The $200 increase will be enough only for people aged 66 to 70 years on four of the seven lowest category integrated plans, where premiums range from $888 to $1,238 a year.

The higher cap is not enough to cover any of the integrated plans for people aged 71 years and older.
Between the ages of 71 and 73, annual premiums range between $1,089 and $1,677.

This rises to between $1,249 and $1,948 at 75, then $1,601 and $2,733 for 80-year-olds.

In contrast, the highest premium for those 60 and younger is $562, well within the $800 cap.

The reason to choose an integrated plan is that basic MediShield limits - capped at $70,000 a year and $300,000 a lifetime - may not be enough if one is hit with a huge hospital bill.

But the B1 integrated plans have annual claim limits of $110,000 to $250,000. Lifetime limits range from $800,000 to unlimited.

Given the way health-care costs have been rising, it makes sense to opt for integrated plans.

What the MOH should do is to allow Medisave to be used to pay for the premiums fully, at least for the lowest category of integrated plans.

Premiums for these plans have been going up steadily, some much faster than others. This means that there will be seniors who started on a plan which was cheaper in the past, but has become more expensive than others.

It is extremely difficult for someone in his 60s or older, who has been with one insurer for decades, to switch to a cheaper one, since most would by then have some pre-existing illness.

As the saying goes, it is easier to ride a tiger than to get off.

This is where government intervention would be appreciated.

It could cap the premiums that insurers can charge for the lowest integrated plan category.

Let insurers work within these caps to offer the best deal possible for their policy holders.

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