Money Talks Podcast: A breakdown of the MediShield Life changes – how to save on medical costs

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.