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16 Jun 2005
One key objective of the MediShield reform is to promote a competitive medical insurance market, offering Singaporeans greater choice of private insurance plans. These plans will build on the basic MediShield to provide more coverage, including protection against stays in Class A/B1 wards and private hospitals. To bring this about, current private medical insurance plans have to be restructured from 1 July to incorporate the reformed MediShield, for the convenience and benefit of all policyholders.
The private insurers have responded positively to the reform. So far, four insurers have already submitted their proposed insurance plans to MOH for approval. Three are existing insurers (AIA, Great Eastern and NTUC Income) who have restructured their existing plans to meet the new guidelines. The fourth (Aviva) is a new entrant to the market.
All four applications have been approved. The insurers with existing plans have begun to inform their policyholders of the changes, and the arrangements to migrate to the restructured plans.
The changes have yielded immediate benefits for Singaporeans.
First, all Medisave-approved insurance plans will now incorporate the basic MediShield plan. This is an important structural change which removes "cherry-picking" and restores the MediShield risk pool at the national level. With this change, all policyholders of the private insurance plans will enjoy the benefits due to them as MediShield policyholders, such as the MediShield loyalty discounts, in addition to the benefits provided by their insurers. In practice, there will be seamless integration between MediShield and the private plans. The private insurers will provide a single point of contact to service their policyholders. In other words, policyholders only need to pay one consolidated premium and make one claim with their private insurers.
Second, all the insurers with existing Medisave-approved insurance plans have enhanced significantly the coverage for their policyholders, with hardly any changes to the current premiums. The effect of market competition is clearly filtering through, bringing about greater efficiencies in the medical insurance industry.
Third, new insurers are adding depth and breadth to the market. Aviva is bringing to the market fairly innovative insurance plans to differentiate itself from the competition. Another insurer has indicated its intention to enter the market in the second half of this year. With these new insurers coming on board, Singaporeans can now choose from a wider range of competitively-priced medical insurance plans.
These early benefits affirm the usefulness of the MediShield reform. We can look forward to another round of benefits when MediShield Plus is privatised in a few months time. We expect the tender to drive stronger competition and set new price benchmarks for the market.
CPF Board will announce the details of the MediShield Plus tender next week.