The amount of private hospital bills that MediShield Life will cover will be cut from 35 per cent to 25 per cent from the first quarter of next year, if the proposal by the MediShield Life Council is implemented.
This change may affect the private integrated plans offered by seven insurers, which incorporate MediShield Life.
The proposed change is because, at 35 per cent pro-ration, a private hospital bill far outstrips the cost of the same procedure in a subsidised ward, which is what MediShield Life primarily caters for.
This means poorer patients getting subsidised care are essentially underwriting the more expensive private care of wealthier patients in private hospitals.
Compare, for instance, the average bill size for a heart angiogram to check for blocked arteries. This costs $2,470 in a B2 subsidised ward and $10,314 in a private hospital, according to the Ministry of Health.
A 35 per cent MediShield Life claim for the private hospital bill comes to $3,610 - which is $1,140 more than the B2 bill.
At 25 per cent, MediShield covers only $2,579 of the private hospital bill, which makes it just slightly higher than the B2 bill.
The council has therefore decided to reduce the claimable amount to 25 per cent of private hospital bills, as this is more aligned with subsidised bills.
This change will affect the seven insurers providing Integrated Shield Plans (IPs) for private care that 70 per cent of residents here have.
As IPs incorporate MediShield Life, which is compulsory for all Singaporeans and permanent residents, their premiums are payable with Medisave, subject to a cap.
It will mean that the insurers will have to foot a larger share of private hospital claims, as they will receive a lower payout amount from MediShield Life.
However, policyholders who opt for private A or B1 class treatment in public hospitals will continue to get 35 per cent of their bills paid by MediShield Life.
The Life Insurance Association (LIA) Singapore said it and the IP insurers will study the proposed changes closely and will give feedback to the MediShield Life Council during its public consultation.
Its early reaction is that "some of these proposed changes, should they be implemented, may lead to the further escalation of claims costs for IPs and, consequently, IP premiums".
But its spokesman said all the changes need to be carefully assessed in totality, to determine if there will be any impact on claims costs and IP premiums.
LIA told The Straits Times: "IPs continue to experience significant claims cost increases, which are putting upward pressures on IP premiums. Most IP insurers continue to make a net loss since the launch of MediShield Life in November 2015."
It added that its priority is to ensure that Singaporeans "continue to have access to affordable quality healthcare with the additional coverage provided by IPs" and at the same time, for the insurers, that it remains financially sustainable so they are able to continue offering these policies.
