Not too long ago, someone named Francis left a comment on our blog.
Please write a post on whether one medical insurance policy is sufficient to cover everything, including those government mandated “shield” stuff.
The simple answer to his answer will be…
The most comprehensive medical insurance is inadequate for everything if your definition of everything includes domestic & international medical attention, income-replacement while ill, etc.
However, he did bring up a fascinating point on the government’s MediShield Life (MSL) plan.
Is it adequate?
We have definitely heard anecdotes from people around us on the rising medical expenses.
Stories about those received a bankruptcy-inducing hospitalization bills after being ill.
We are trying not to go down that route.
Instead, we scoured for the limited official figures and tried to make sense out of them.
Thus, at the behest of our dear reader Francis Chin, these are our findings.
Overview of MediShield Life Coverage
To ascertain on the adequacy of MSL, we have to take a look at its individual coverage.
These are the benefits of the newly launched MSL (taken from MOH).
These are the itemised coverage limit for inpatient, outpatient, maximum coverage, deductible and co-insurance.
Feeling its all too complicated?
No worry, we will break them down. (It’s far simpler than most people think)
Inpatient Treatment Claim Limits
As long as you are a Singaporean staying in an A – ward or below of a government hospital, Medishield Life (MSL) is able to cover the daily cost adequately.
For ICU and community hospitals, there are some outliers for you to take note but generally, it is sufficient.
For a stay in IMH, it will typically set you back $29 – $54 which is below the daily limit of $100 for the MSL.
Subsidized surgical expenses are largely within the scope of cover of MSL as evidenced here.
Likewise, the public information of implants from MOH site (above) shows that implants are within the limits.
No data could be found about radio-surgery cost.
Verdict – Adequate
Outpatient Treatment Claim Limits
The lack of data makes it difficult for us to evaluate this area.
Fortunately, an NUS paper on the medical expense of treating lymphoma sheds some light on this issue.
$2,588 and $889 were spent monthly on chemotherapy and radiotherapy respectively.
Chemotherapy is definitely within MSL’s claim limits but radiotherapy remains a question mark.
Monthly kidney dialysis can go from $1,195 to $2,200 which is above the claim limit of MSL.
Organ transplants are rare in Singapore and it seems that erythropoietin medicine is being subsidized by the kidney charities so it should be less of a concern.
Verdict – Inconclusive due to lack of information
Maximum Claim Limit
The yearly limit of $100,000 is the only issue.
A research paper in 2014 by NUS Department of Economics shows that the overall chances of an extreme hospital bill to be above $100k are 0.64%.
We believe that the risk of someone reaching the maximum limit should be higher, given that they may incur more than one bill in a single policy year.
Nevertheless, it should be in the region of 1% which is insignificant statistically.
But of course, if I am personally affected, this claim limit seems to be unacceptable.
Verdict – Adequate but a bi-annual review may be needed to cater to rising costs
Deductibles and co-insurance
Early this year, there was an online article detailing how MSL is ineffective.
The patient had to pay 87.1% of his hospital expenses while MSL paid the remainder.
Regrettably, it is not an urban legend but the truth.
The Deductible amount for a B2 ward was $2,000. Co-insurance made up of 10% of the remaining portion of $333.51. Thus, the total payable by the patient was $2033.35 as shown in the bill.
Before we castigate MSL, let us look at another example.
This time, we shall use a bill of $5,300.
MSL is paying for 56% of the expenditure now.
Thus, it can be deduced that the higher the hospital bill is, the lower percentage that the patient has to pay.
By now, you will be wondering about the odd figure of the above example.
$5,300 is the average B1 ward hospital bill based on 8 medical institutions in Singapore.
In our opinion, if a patient has to pay 44% of his hospitalization invoice, it is too much.
Verdict – Inadequate
MSL fares reasonably well in its inpatient claim limit and policy year limit.
In the area of deductibles and co-insurance, the Insured has to fork out a substantial sum from his own pocket or CPF Medisave.
On its own, a single medical bill should be affordable.
However, it is not uncommon to see someone going in and out of the hospital several times a year due to chronic illnesses.
A series of small hospital bills will definitely deplete the Insured’s CPF Medisave.
Moreover, we have been talking about covered events.
There may be non-standard medicine or procedure that may be useful for your condition.
Those will not be payable under the scope of MSL.
We are well aware of all these limitation as MSL and its predecessor, Medishield are insurance plans targeting at catastrophic hospitalization expenses.
It can only account for the standard medical care as it has to keep its expenses low.
Nevertheless, we cannot but help to think if MSL is able to cover more of the deductibles.
It has been rumored that Medishield has been reporting a surplus from the past years.
Should that be true, we think that it is only right that the surplus is used to offset the deductibles or given back as a premium refund.
However, unless there is greater transparency, this is what we have to work with at the moment.
MSL alone may not be your answer to building a complete protection against the rising healthcare costs.
An integrated private insurer’s shield plan may be a better option.
Do you agree or disagree that Medishield Life itself is a sufficient cover?
Share your thoughts with us in the comments below!
www.ClearlySurely.com aims to eradicate the knowledge gap between consumers and Life Insurance. Our Vision is that one day, every Man, Woman, and Child will be properly insured.
This article is originally published on 26 Jun 2016 and has been refreshed on 13 Jun 2017.