Yearly Loss Ratio of MediShield Life (Basic) in Last Five Years
Ministry of HealthSpeakers
Summary
This question concerns the yearly loss ratio of MediShield Life (Basic) as raised by MP Mr Gerald Giam Yean Song for the past five years. Minister for Health Gan Kim Yong explained that the not-for-profit scheme must be self-sustaining, with premiums covering current claims, reserves for future payouts, and unforeseen contingencies like hospitalization spikes. He emphasized that the Incurred Loss Ratio is a more accurate measure than the standard loss ratio because it accounts for long-term treatment obligations and future premium rebates for older policyholders. The Minister noted that setting aside part of the premiums during working ages helps distribute costs more evenly over a lifetime and moderates future premium increases. Consequently, the fund is managed according to sound actuarial principles to ensure all premiums are used solely for policyholder benefits and the administration of the scheme.
Transcript
4 Mr Gerald Giam Yean Song asked the Minister for Health in each of the last five years, what has been the loss ratio of MediShield Life (Basic).
Mr Gan Kim Yong: MediShield Life is a not-for-profit, universal scheme, that provides Singaporeans with basic lifelong protection against large healthcare bills. All premiums are placed in the MediShield Life Fund and are used solely for the benefit of policyholders and in the administration of the scheme.
The MediShield Life Fund is designed to be self-sustaining and should therefore be based on sound actuarial principles. Therefore, premiums collected have to cover potential current and future claims, including amounts set aside to support future payout commitments such as continuing claims for long-term treatments, as well as provide a buffer against unforeseen contingencies such as unexpected spikes in hospitalizations. In addition, part of the premiums paid by policyholders during their working ages are set aside to provide for future premium rebates. This will help to moderate premium increases in their older ages, and helps to distribute premiums more evenly throughout the policyholders’ lifetimes.
The Incurred Loss Ratio (ILR) compares the total premiums collected to the total monies required to ensure that the Fund is able to meet current claims and future commitments. This is a more accurate representation of the adequacy of premium collection compared to the Loss Ratio, which compares the total premiums collected with only the total claims paid in the same year, but omits a large part of what premiums are committed to support, such as future premium rebates and continuing claims for long-term treatments. For example, dialysis patients are expected to require treatment over a prolonged period or for life, and the Fund needs to support these future claims.
Table 1 below shows the premiums collected, claims paid, change in required reserves and the ILR of the MediShield Life Fund since the launch of scheme in November 2015.
