Public-Private Health Insurance Partnership in Singapore

Transcription

1 Public-Private Health Insurance Partnership in Singapore Margaret Lim Central Provident Fund (CPF) Board, Singapore Wednesday 10 March 2010

2 Outline Brief background Healthcare Delivery & Financing in Singapore MediShield and Medisave-approved insurance Policy reforms Experience of MediShield and the reformed Shield plans

3 Singapore A brief background Resident population 3.6 mil (2008) 18.4% below 15 years 72.9% aged years 8.7% aged 65 years and above Singapore Land Area: 710 sq. km GDP per capita S$51,656 (2009*) Life expectancy at birth (2008): 78.4 for males, 83.2 for females Unemployment rate: 3.3% (2009*) Healthcare expenditure as % of GDP: 4% * preliminary Sources: Singapore Ministry of Health; Department of Statistics

4 Our Healthcare System Mix of public and private healthcare providers Principle of ensuring good and affordable basic medical services to all Singaporeans Continuously fine-tuning over the years in developing our healthcare system

5 Singapore s Healthcare Financing Philosophy Ensure affordability of basic healthcare for all Government subsidies to keep basic healthcare affordable Instill individual responsibility Patients expected to co-pay part of medical expenses, minimise moral hazard and wastage Range of schemes (savings and insurance) to provide patients the means for co-payments Mixed financing system using market-based mechanisms to promote competition and transparency

6 Healthcare Delivery Primary healthcare (incl preventive healthcare and health education) 2,000 private practitioners provide 80% of care in the primary setting 18 Government-run polyclinics providing subsidised primary care for remaining 20% A one-stop health centre with outpatient medical care, followup care of patients discharged from hospitals, immunisation, health screening, etc.

7 Healthcare Delivery Hospital care 7 public hospitals and 6 specialty centres provide 80% of hospital care Heavily subsidised at rates of up to 80% 16 smaller, private hospitals for remaining 20% Intermediate and Long-term care Community hospitals for rehabilitative, intermediate care Nursing homes for long-term care Vast majority are run by the people sector and their patients are heavily subsidised

8 Universal coverage through multiple layers of protection Tax-based subsidies Government subsidies across primary, acute, rehabilitative and nursing settings Universal access, but no 100% subsidy to avoid over-consumption Compulsory healthcare savings Risk-pooling via insurance schemes Ultimate safety net for the needy Individual medical savings accounts for all workers Medisave State-run, low-cost catastrophic health insurance scheme MediShield Private health insurance for additional coverage Integrated Shield plans Endowment fund set up by government Medifund Interest income generated goes towards assisting the most needy

9 Healthcare savings pillar of social security system Medisave is a part of Singapore s national social security system: Central Provident Fund (CPF) set up by the British in 1955 before independence CPF was a compulsory savings scheme for workers for retirement, housing. Medisave: national compulsory medical savings scheme introduced in 1984 CPF accounts are individual savings, not pooled Every working Singaporean required by law to contribute part of income into CPF Ordinary Account: for housing Special Account: for retirement Medisave Account: for health care

10 Total Medisave balances (Billions $) Average Medisave balances ($) Level of savings in Medisave Medisave can be used primarily for inpatient hospitalisation expenses, selected outpatient treatment (e.g. cancer), approved chronic disease management programmes ,000 Total of about $46b in Medisave: ~$15,700 saved per person Sufficient for episodes for average hospitalisation bill in subsidised wards ,000 14,000 12,000 10,000 8,000 6,000 4,000 2,000 0 Year Total Medisave balances (Billions $) Average Medisave balances ($)

11 MediShield and Medisave-approved insurance schemes

12 What is MediShield? State-run insurance option Designed to provide catastrophic, not comprehensive, coverage Incepted in 1990 Medisave alone as an individual savings account could be severely impacted with catastrophic expenses Proposed insurance to smooth volatility: otherwise, over-saving for some, under-saving for others Administration of claims and management of MediShield Fund by the CPF Board, a statutory board under the Ministry of Manpower Review of benefits coverage and overall sponsorship by Ministry of Health

13 Before MediShield was rolled out.. Relatively young population in 1980s-1990s Majority of healthcare funded by employers, govt subsidies and Medisave/ own savings Low awareness of insurance and how it works

14 Medisave as the foundation for MediShield and IPs Premiums for MediShield paid via Medisave Reduce out-of-pocket costs and raise population coverage without mandating the scheme Supplementary insurance coverage through Integrated Shield Plans offered by private insurers Premiums also payable from Medisave (up to specified limits to reduce over-consumption of private insurance from Medisave accounts)

15 MediShield s focus on large bills Basic level of coverage claim limits targeted at subsidised wards in public hospitals Focus on coverage of large bills of subsidised hospitalisation and selected outpatient treatment (e.g. kidney dialysis, chemotherapy, radiotherapy) Chose not to provide comprehensive first-dollar coverage to avoid moral hazard and preserve affordability of premiums Co-payment of 10-20% which falls as bill increases Deductibles to focus on larger bills, sieve out smaller bills that can be covered by Medisave keeps MediShield premiums more affordable

16 Measures to maximise population coverage Facilitate automatic coverage wherever possible At working age: upon first contribution to CPF Marriage registration (introduced 2003): to reach out to non-working spouses (working spouse s Medisave to pay for premiums) At birth (introduced Dec 2007): all newborn Singaporeans and permanent residents

17 Measures to maximise population coverage Individuals may choose to opt out at anytime Can re-apply if they wish Opt-out arrangement encourages participation, lowers administrative and enforcement costs of running a compulsory scheme E.g. penalties for not participating, administration procedures to monitor participation Regular public messaging to raise awareness of benefits of MediShield and insurance

18 Private Medical Insurance in Singapore Employer Sponsored Plans (Group Plans) Individual Health Insurance Plans Private Medisave-approved Shield Plans (previously PMIS ) Non Medisave-approved riders/supplements to Private Shield IPs Other Cash Plans Private Shield IPs most common Strong Appeal of Private Shield IPs: Key reason for popularity is the use of Medisave to pay for premiums, and portability (not tied to employer)

19 Development of private Medisaveapproved insurance schemes The first Medisave-approved private insurance schemes were launched in July 1994 Subject to a set of minimum guidelines from MOH Minimum deductibles to ensure focus on catastrophic expenses, co-payment to reduce possible over-consumption Pre-2005 reform: growth in PMIS market from 47,000 policyholders in 1996 to 1 million in 2004

20 Consumer demand for private Shield plans Large development of the Private Shield market has been further spurred by the Reform in 2005 that saw Increased competition: resulting in richer coverage, lifetime coverage, removal of sub-limits (resulting in easier understanding of health insurance payouts) Increased promotion by Government and Industry Growth in IP membership from 1.45m in 2005 to 1.8m in 2008 Hassle-free electronic submission of hospital bills for Medisave, MediShield and IP claims Although many Singaporeans might have Employer-provided Insurance as well as have either MediShield or Private shield IPs Reimbursement protocol in electronic claims submission process to prevent double-claiming

21 Policy Reforms: Evolution of MediShield and the Private health insurance market

22 MediShield reform 2005 Inadequate adjustments to MediShield Erosion of benefits over time MediShield payout reduced as claim limits had not been adjusted over time Increasingly covering too many bills as deductibles eroded by inflation Cherry picking due to fragmented risk pools Sub-optimal industry structure: private insurers pick and choose healthier and younger Singaporeans to insure Without re-structuring, MediShield s risk pool would become progressively older and more sickly, this would give pressure to raise premiums to cover rising payouts

23 MediShield reform 2005 Return to original purpose as a catastrophic insurance: look after large bills, and cover large bills adequately Increase in claim limits Increase in deductibles to refocus on large bills Remove cherry picking and keep premiums affordable, but retain competitive market Enlarge the pool of policyholders to maximise economies of scale and keep premiums affordable Single MediShield risk pool, rather than fragmented across various insurers Restructure PMIS plans as Integrated Shield Plans (IPs) Extensive industry consultation between insurers and regulator Integration with MediShield introduced as a condition for Medisave-approval of private plans Maintain minimum deductibles/co-insurance for IPs so that they also focus on catastrophic expenses

24 MediShield reform 05 to tackle cherry-picking Previous Sub-optimal Structure Reformed Industry Structure Cherry-picked flow MediShield PMIS Plan (A) PMIS Plan (B) IP (A) IP (B) Integrated Plan (IP) MediShield Fragmented plans Single, basic insurance tier

25 MediShield experience Year (A) Net Premiums Collected for the year (S$'000) 1 (B) Claims Paid for the year (S$'000) 1 Claims Ratio (B/A) ,503 58, ,266 76, ,688 76, ,030 83, ,902 87, , , , , , , Source : CPF Annual Report

26 MediShield changes in 2008 Objective: further increase MediShield coverage from up to 60% to up to 80% of large bills of subsidised wards Increase in claim limits for inpatient stay, selected surgeries, implants, outpatient cancer treatment Further increase in premiums due to increased benefits

27 Public private joint insurance arrangement Issues faced in 2008: first experience raising premiums for the whole MediShield market basic and integrated parts of MediShield i.e. involving private insurers Changes to MediShield now affect private insurers because of the integrated structure Increase in premiums for MediShield means insurers cede more of IP premiums back to CPF (due to joint insurance arrangement) because MediShield bears increased claims liability in steady-state Profit margins vary from insurer to insurer the increase in MediShield premiums affect private insurers profitability in the short-term

28 Differing Perspectives Insurers perspective: higher MediShield premiums erode margins Affects profitability of their IPs Regulator s perspective: Single risk pool for MediShield - both standalone MediShield as well as the basic tier of the IPs With increased claim limits, MediShield fund has higher liabilities Claims experience considered as a whole, all are paid from MediShield fund Intent of 2005 reform to require integration of IPs with MediShield to remove cherry-picking

29 Public private joint insurance arrangement: Lessons learnt? Need for open channels of communications between insurers and regulator; need for mutual understanding of issues faced by the other party Managing public expectations on reasons for premium increases With Private sector involvement, there is a need to manage communications and expectations through the agency distribution channel as well Eventually, decision of whether to absorb or pass on increased premiums is up to the individual insurers

30 Public private joint insurance arrangement: Lessons learnt? Joint insurance arrangement means all parties must be clear of their respective scope of insurance coverage MediShield focus on subsidised treatment IPs encouraged to provide higher reimbursement levels for those willing to pay; MOH shares in public messaging efforts to encourage mid- to higher-income groups to purchase IPs

31 Experience of MediShield and the reformed Shield plans

32 Growing the IP Market Healthy growth in Medisave-approved private Integrated Plans (IPs) membership There are 3.3 million MediShield (basic + integrated) members, out of which 1.9 million (60%) have IPs IPs are driving growth Increase in post-2005 reform IP membership from 1.45m in 2005 to 1.9m in 2009 (~33% growth) compared to 21% growth of overall MediShield+IP market

33 MediShield and IP membership ( ) 3,500,000 (as % of resident population) 88% 85% 3,000,000 2,500,000 2,000,000 1,500,000 51% 52% 53% 54% 57% 57% 61% 64% 67% 68% 71% 75% 75% 77% 78% 78% 78% 80% MediShield Plus and Medisave-approved plans 1,000,000 MediShield only 500,000 0

34 Growth in the IP Market Active encouragement by MOH to middle- and high-income Singaporeans who prefer treatment in non-subsidised wards in public hospitals, or treatment in private hospitals, to enhance their coverage with IPs 2006 IP membership (by plan type) 2008 IP membership (by plan type) Subsidised wards in public hospitals 2% Subsidised wards in public hospitals 1% Private hospitals 5% Nonsubsidised wards in public hospitals 93% Private hospitals 24% Nonsubsidised wards in public hospitals 75% 2006 IP membership = 1.5m 2008 IP membership = 1.8m

35 Active steps to expand IP market pte sector Ips are a key product group for the industry It is a product that can reach out effectively to the masses and all players are actively marketing these plans as it is a basic protection plan that customers should have While it is a pure risk product which has modest premiums, most industry players see it as an opportunity to serve their customers in this area so as to expand and protect their customer base

36 Contact Details Presented by: Margaret Lim Central Provident Fund Board, Singapore Co-Authors Lavinia Low Ministry of Health, Singapore Colin Chan Great Eastern Life Assurance

37 Annex Additional information on National Healthcare Expenditure (NHE) and General Healthcare Expenditure (GHE) Subsidy rates in public hospitals Medisave withdrawal limits MediShield benefits schedule MediShield premiums

38 Singapore s National Healthcare Expenditure S$M 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 S$9.42b NHE (S$M) 3.6% NHE as % of GDP S$2,053 Per Capita NHE % of GDP (FY)

39 Singapore s Govt Healthcare Expenditure 2,000 S$M S$2.2b % of GDP ,500 1,000 GHE (S$M) GHE as % of GDP 0.9% Per Capita GHE 0.5 S$ (FY)

40 Government subsidies for public hospitals Heavily subsidised inpatient care for Singaporeans to make bills affordable Majority of patients in public hospitals stay in subsidised wards (Class B2/C) No 100% subsidy to avoid over-consumption Ward Class Subsidy Level Bill Size (S$1 =US$0.71) Median 75 th percentile 95 th percentile Average A [Single-bed, air-con, TV] 0% S$2,515 (US$ 1,786) S$4,961 (US$3,522) S$15,618 (US$11,089) S$4,465 (US$3,170) B1 [4 beds, air-con, TV] 20% S$2,072 (US$1,471) S$4,297 (US$3,051) S$13,570 (US$9.635) S$3,767 (US$2,675) B2 [6 beds, self ventilated, no TV] 50-65% S$879 (US$624) S$1,630 (US$1,157) S$4,815 (US$3,419) S$1,537 (US$1,091) C [8-10 beds, self ventilated, no TV] 65-80% S$716 (US$508) S$1,401 (US$995) S$4,472 (US$3,175) S$1,410 (US$1,001)

41 Medisave withdrawal limits to manage demand Medisave can be used to cover personal or immediate family s medical expenses in line with principle of self/family-reliance Medisave can be used at all hospitals, subject to withdrawal limits: Up to $450 per day for hospital charges $250-$7,550 for surgeries (depending on complexity) 8 of 10 Singaporeans use Medisave to pay their bills Withdrawal limits to avoid over-consumption, manage demand Medisave also covers certain outpatient expenses and step-down care Expensive outpatient treatments: chemotherapy, renal dialysis, radiotherapy, immunosuppressant drugs for organ transplants Maternity expenses Chronic disease management programme: Diabetes Mellitus ( 06), Hypertension ( 07), Hyperlipidemia, Stroke, Asthma ( 08), COPD, Schizophrenia ( 09), Major Depression Intermediate- and long-term care: Community hospitals, palliative care

42 MediShield inpatient claim limits MediShield Claim Limits Before Dec 08 After Dec 08 Daily Ward and Treatment Charges - Normal Ward - ICU Ward - Community Hospital Surgical Procedures - Table 1 (less complex) - Table 2 - Table 3 - Table 4 - Table 5 - Table 6 - Table 7 (more complex) Inpatient / Day Surgery Benefits Implants / Approved Medical Consumables (per treatment) $250 per day $500 per day $250 per day $150 $300 $600 $720 $840 $960 $1,100 $450 per day $900 per day $250 per day $150 $360 $720 $800 $840 $960 $1,100 $2,500 $7,000 Radiosurgery (per procedure) $4,800 $4,800

43 MediShield outpatient claim limits MediShield Claim Limits Before Dec 08 After Dec 08 Chemotherapy for cancer -Per 7-day treatment cycle -Per 21- or 28-day treatment cycle Outpatient Benefits $150 $700 $270 $1,240 Stereotactic Radiotherapy for cancer (per treatment) Radiotherapy for cancer Kidney dialysis Immunosuppressants for Organ Transpant Erythropoietin for Chronic Kidney Failure $1000 $1,800 $80-$160 per treatment day $1000 per month $200 per month $200 per month

44 MediShield co-payment and maximum claim limits Maximum Claim Limits Per policy year $50,000 Lifetime limit $200,000 Last Entry Age Below 75 when cover commences Maximum Coverage Age 85 (age next birthday) Deductible (waived for outpatient treatment) For ages 80 and below, as of age next birthday - Class B2 / Class C $1,500 / $1,000 For ages 81 to 85, as of age next birthday - Class B2 / Class C $3,000 / $2,000 Co-insurance All Ward Classes & Day Surgery For Claimable Amounts: $0 - $3,000 $3,001 - $5,000 Above $5,000 As a % of Claimable Amount, after deductible (if applicable) 20% 15% 10% Outpatient Treatments 20%

45 MediShield premiums (S$) Age band (next b day) At inception (1990) Current (after 1 Dec 08) (max coverage age at inception) (introduced 1992) (introduced 1996) (introduced 1996) (introduced 2001) (introduced 2001) n.a , (introduced 2006) 705 (introduced 2006) 1,123