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 on rising medical expenses from people around us.
Stories about those receiving bankruptcy-inducing hospitalization bills after falling ill.
We are trying not to go down that route.
Instead, we scoured the limited official figures and tried to make sense out of them.
Now, at the behest of our dear reader Francis Chin, these are our findings.
Overview of MediShield Life Coverage
To ascertain 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 limits for inpatient, outpatient, maximum coverage, deductible and co-insurance.
Feeling that its all too complicated?
No worries, we break it down for you. (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, at 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 MSL.
Subsidised surgical expenses are largely within MSL’s scope of cover, as evidenced here.
Likewise, public information on implants from the MOH site (above) shows that implants are within the limits.
No data could be found on radio-surgery costs.
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 for radiotherapy, the issue 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 subsidised by the relevant charities, so this 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 the 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 statistically insignificant.
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, this was no urban legend, but a fact.
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 the percentage that the patient has to pay.
You are probably wondering about the oddly specific figure of $5,300 in 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
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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 illness.
A series of small hospital bills can easily deplete the Insured’s CPF Medisave.
Moreover, we have been talking about covered events.
There may be non-standard medicine or procedures that may be helpful for certain conditions.
Those will not be payable under the scope of MSL.
We are well aware of all these limitations – MSL and its predecessor, Medishield, are insurance plans targeting catastrophic hospitalization expenses.
It can only account for standard medical care as it has to keep expenses low.
Nevertheless, we cannot help but wonder if MSL is able to cover more of the deductibles.
It has been rumoured that Medishield has been reporting a surplus in 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, until 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 strategy against 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.