Medishield was launched in 1990 to complement Medisave in taking care of the larger hospital bills. The planners in the government made a few strategic mistakes in the design of this scheme.
PRE EXISTING ILLNESSES
It was compulsory for all CPF members to be be insued under the scheme, unless they chose to opt out of the scheme.
They were paramoid about the risk of pre-existing illnesses. They were worried that some people would opt out of the scheme and would come back to join the scheme when they fall sick.
They put into place strict conditions to stop people from joining Medishield after the initial launch period. This has led to many people who were excluded from the scheme because they had opted out, or were self employed when the scheme was launched.
The problem of a large number of uninsured members became more serious over the years, as more people needed hospital care when they grow older and the bills keep escalating.
The government finally decided to address this issue of uninsured members in 2013. A committee was formed to study this subject. After two years, it recommended a new scheme called Medishield Life to replace the earlier scheme.
The key features of this scheme was the inclusion of pre-existing conditions and that it would be compulsory for all Singaporeans to join the scheme.
The compulsory nature created another problems. There were many people holding Singapore passports who have left Singapore to live and work in other countries for many years. They were required to contribute to Medishield Life even though they had were insured in their country of residents and do not need to claim on the Singapore scheme.
Once again, the planners were paranoid about these people returning to Singapore in the future to join the Medishield Life scheme and be covered for pre-existing illnesses. They felt (wrongly) that these people did not contribute to Medishield Life when they were young and would be benefiting from the subsidised premiums for older people.
To close this "loophole", the planners will be introducing some complicated rules to deal with it.
The flaws in the original Medishield scheme and the revised Medishield Life scheme can be seen in the unintended consequences, in the large numbers of people who were not allowed to join Medishield and the people who were forced to pay to Medishield Life when they are not getting the cover.
I like to propose the following solution to deal with the issues affecting Medishield Life
a) All people living in Singapore should be required to join Medishield Life.
b) Citizens working abroad are not required to contribute to Medishield Life, unless they opt to be insured.
c) If they do not have money to pay the premium (because they are unemployed) or are living overseas, they will not be covered under Medishield Life.
d) To encourage people to join the scheme earlier, the annual limit for claims under Medishield Life be capped at a lower amount during the first three years of membership.
This proposal will not address all the issues involved in a compulsory insurance scheme, but it should operate better than the current approach.