A breakdown of the MediShield Life changes: How to save on medical costs

Claims limits for hospital stays and outpatient treatments will increase – but so will MediShield Life premiums. How can we maximise our MediSave and what support is available for those who may not be able to afford the rising costs?
Dr Cynthia Chen, assistant professor at the NUS Saw Swee Hock School of Public Health sits down with Andrea Heng on this week’s Money Talks.  
This podcast was produced in partnership with the Ministry of Health. 
Here’s an excerpt from the conversation: 
Andrea Heng: 
First and foremost, how are these new changes going to affect me? How much more will I have to pay? … And if more things can be paid through MediSave, what’s going to be the implications down the line? Dr Cynthia Chen: 
So the good news with the changes being announced is, with the higher claims limits (and) higher outpatient coverage, we now have greater financial protection, but it comes at a cost. So the cost would be that all of our premiums, on average, are going to increase by 22 per cent (and) for the older (people), up to 35 per cent.
So maybe I can give an example of how insurance works. So imagine we have a group of 100 people, and there’s a 1 per cent chance of one person having a major issue that costs $20,000. So without insurance, this person will have to pay the $20,000 out of pocket.
But with insurance, instead of leaving one person to pay the full cost, now this risk is shared across 100 people. So per person, now you will pay $200 into this insurance fund. For that one person who needs the money, the insurance fund will cover. So as a group, now all 100 are protected against the high cost with the financial peace of mind. So instead of $20,000, now everybody just pays $200. But everybody is protected. Andrea:
So it’s a shared burden, but it also comes with a shared benefit.
Dr Chen: 
Correct. It’s a shared burden with a shared benefit.
Andrea: 
So if that’s the case … some people have this in mind, “Okay, the premiums are going up. So maybe I should use my MediSave less or my MediShield Life premiums. I should just use whatever is subsidised less.” So should I start paying for stuff in cash then, so that I can preserve those funds? What’s your advice here? Dr Chen: 
When it comes to premiums, I think if you can’t afford it, paying by MediSave is fine. But if let’s say there are certain treatments that you undergo that requires MediSave but you actually have the cash to pay upfront, then it’s helpful to think whether should you be paying those by MediSave or through cash?
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