The MediShield Life Council recently concluded its 2024 review of our national health insurance scheme. Such reviews are scheduled every three years, but this cycle was delayed by a year due to the COVID-19 pandemic.
The details of their review and recommendations, contained in the official document titled “MediShield Life 2024 Review Council Report”, address changes in the evolving healthcare landscape, rising medical costs, and the emergence of more advanced, costly treatments.
The Government has, in turn, accepted these recommendations and will proceed to implement the proposed changes starting in April 2025. (More information at: MOH | MediShield Life Review)
In this article, we will summarise some of the key changes and share thoughts on what this means for policyholders.
Summary of the Key Changes
- Increased claim limits for inpatient stays as well as day surgeries to boost coverage.
- Increased annual claim limit from $150,000 to $200,000 to better cover large bills.
- Increased deductibles for inpatient treatments to keep premiums manageable.
- Change of pro-ration factors to keep pace with the growth of private and unsubsidised bills.
- Increased outpatient coverage by increasing claim limits, and extended coverage to new treatments and home-based medical care.
- Introduced a new deductible of $500 for outpatient treatments but reduced co-insurance for outpatient treatments via a tiered structure.
- Expanded cover to high-costs treatments such as Cell, Tissue, and Gene Therapy Products (CTGTPs) and high-cost drugs for blood and childhood onset conditions.
Why the Changes to MediShield Life?
The primary impetus for these changes stems from the rising cost of healthcare and the need to ensure Singaporeans have adequate financial protection against large medical bills.
The report highlights two interconnected trends driving these cost increases:
- Medical Inflation: Like many countries globally, Singapore is experiencing rising healthcare costs due to factors such as advancements in medical technologies, increasing demand for healthcare services, and wage inflation within the healthcare sector. This trend puts a strain on the financial sustainability of healthcare financing schemes and requires adjustments to ensure they can continue to provide adequate coverage.
- Higher Utilisation: As the population ages and chronic diseases become more prevalent, the use of healthcare services is increasing. This translates into a higher volume of claims and greater financial pressure on the MediShield Life scheme. The report notes that between 2020 and 2023, annual payouts from the MediShield Life fund increased by 9.8% per year, highlighting the growing demand for coverage.
Due to these cost increases, there has been some erosion of coverage: Without the changes, the MediShield Life scheme, which was initially designed to fully cover nine in ten subsidised bills in public healthcare institutions, now fully covers just under eight in ten subsidised bills. This means that more patients are facing out-of-pocket expenses for portions of their medical bills, highlighting the need to increase claim limits for better protection.
Adapting to the Changing Healthcare Landscape
Beyond addressing the challenges of rising costs, the MOH’s changes to MediShield Life also aim to adapt the scheme to the evolving healthcare landscape:
- Shift Towards Outpatient Care: The report acknowledges the growing trend of healthcare delivery shifting from hospitals to outpatient, community, and home settings. This shift is driven by factors such as advancements in medical technologies that enable more procedures and treatments to be performed outside of hospitals, and efforts to manage healthcare costs by reducing reliance on expensive inpatient care. To better support this transition, MediShield Life coverage will be expanded to include more outpatient treatments and home-based medical care, ensuring individuals have access to affordable care in various settings.
- Emergence of High-Cost Therapies: Advancements in medical technologies are leading to the development of innovative but expensive therapies, such as Cell, Tissue, and Gene Therapy Products (CTGTPs) and certain high-cost drugs. These therapies offer potentially life-saving treatments for various cancers, rare diseases, and other serious conditions. Recognising the significant financial burden these therapies can impose on individuals, the MOH is incorporating coverage for selected clinically- and cost-effective CTGTPs and high-cost drugs into MediShield Life. This inclusion aims to ensure patients can access these potentially life-changing treatments without facing insurmountable financial barriers.
How These Changes Will Affect You
The announced changes to MediShield Life mean that you will receive better and broader coverage from the scheme. These are good steps that will update the scheme to keep it relevant for Singaporeans given the changing healthcare landscape.
Of course, better and broader coverage must also come with some trade-offs to manage the increased cost of providing such coverage. In addition to the introduction of a new deductible for outpatient care and the upward revision of the existing deductibles applicable to claims under the scheme, the premiums for MediShield Life will rise as of April 2025.
Adjustment of MediShield Life Premiums
The MediShield Life premium increases will be capped at a total of 35% and phased in evenly over three years to moderate the impact of the adjustments.
This gradual phasing aims to provide policyholders with time to adjust to the higher premiums and avoid a sudden, substantial increase in their healthcare expenses.
Support Measures to Manage the Premium Increases
The government has also announced additional support measures to help reduce the immediate impact of the MediShield Life premium adjustments, including:
- Additional Medisave top-ups for most Singaporeans
- Increase in premium subsidies, and
- Expansion of Additional premium support.
Taken together, these measures will amount to some $4.1 billion in support, thus more than offsetting the total increase in premiums, which will total $1.8 billion over the next three years.
After the first three years, the premiums can continue to be paid via Medisave, so the adjustments will have a relatively moderate impact on policyholders’ personal cash flow.
Integrated Shield Plans in Context
The improvements to MediShield Life will also have some potential effects on Integrated Shield Plans (IPs).
In theory, with the coverage under MediShield Life being improved, the absolute value of the portion of all bills that will be covered by the national scheme (and that thus does not need to be covered directly by private insurers through their IPs) will rise, potentially reducing just a little bit of the pressure that has been pushing up the cash-paid portion of IP premiums associated with the additional private insurance coverage they provide.
It seems unlikely, however, that these changes alone will translate into any significant slowing of the rise in those premiums overall, given the realities of the healthcare landscape—unsubsidised private hospital bills have risen far quicker than those of the subsidised wards in restructured hospitals.
Regardless, since MediShield Life is targeted primarily at covering large subsidised bills in Class C/B2 wards in restructured hospitals, despite the increase in the amount and scope of MediShield Life’s coverage, policyholders who wish to be covered for care in wards higher than C/B2 levels in either restructured or private hospitals would still do well to consider applying for or maintaining coverage under an Integrated Shield Plan (IP) to reduce their out-of-pocket medical expenses should they require such care.
This is an original article written by our Insurance Team at Providend, the first fee-only wealth advisory firm in Southeast Asia and a leading wealth advisory firm in Asia.
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1. The Must-Have Insurance at Different Stages of Your Life
2. Can You Still Buy Insurance if You Have Medical Conditions?
3. The Basic Principle of Insurance Planning
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