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SINGAPORE – Private healthcare insurance is in its current unsustainable state due to excessive competition that has gone wrong, said Minister of State for Health Rahayu Mahzam.
Insurers, private hospitals, and providers have got themselves tied up in a knot, resulting in escalating private hospital bills, rising insurance premiums, and more safeguards introduced to the claims process.
To start untying this knot, the Ministry of Health (MOH) has urged the insurance industry to relook their overly generous policy design, such as minimal rider co-payment – the proportion of bills to be paid by the policyholder.
“Insurers will need to balance between providing assurance and protection, and encouraging prudent consumption and servicing”, she said in Parliament on Sept 24.
Ms Rahayu said that the current state was not caused by collusion or anti-competitive behaviour, which would have led to supernormal profits by market players, at the expense of consumers.
Instead, Integrated Shield Plan (IP) insurers are either making losses or barely breaking even on their health portfolios.
An IP is a private medical insurance plan, offered by seven private insurers here, which provides additional coverage on top of the national MediShield Life scheme. MediShield Life covers expenses incurred for hospitalisations and certain outpatient treatments such as radiotherapy for cancer and kidney dialysis.
Ms Rahayu said that a significant root factor causing the situation is the design of private health insurance, where insurers offer generous coverage and benefits through their IPs and riders, covering almost to the last dollar with little co-payment.
However, as insurers are the one paying for almost the entire bill, there is tendency for over-servicing and unnecessary treatments.
Ms Rahayu said that data backs this up. The likelihood of a patient with a private hospital rider making a claim is 1.4 times that of one without a rider. The size of the claim is also on average about 1.4 times that of a claim from somebody without a rider.
She was responding to queries from five MPs related to the current state of the private healthcare insurance sector, including whether existing laws preventing profiteering and anti-competitive behaviours among healthcare service providers and private insurers are sufficient.
Mr Yip Hon Weng (Yio Chu Kang) referenced recent “unilateral changes by IP insurers” and asked if the Government will consider a dedicated healthcare insurance law to protect consumers and establish a mandatory dispute resolution platform, and whether there are regulations to prevent insurers from influencing healthcare decisions against policyholders’ best interests.
Recently, IP insurer Great Eastern had
temporarily stopped issuing pre-authorisation certificates
for IP policyholders admitted to Mount Elizabeth hospitals from June 17.
In response, Ms Rahayu said that regulation will not loosen this knot. Conversely, it will make things worse.
“If we restrict insurers’ claims management practices, we will likely see even larger premium increases. And if we cap premium increases, products will become unviable, which will hurt policyholders”, said Ms Rahayu.
Hence, the step-by-step loosening and untying of this knot requires every stakeholder to do its part, and MOH will facilitate the process.
There are also existing laws and dispute resolution channels in place, such as the Competition Act to proscribe collusion and anti-competitive behaviour.
For disputes over specific claims, policyholders can take it to the
Financial Industry Disputes Resolution Centre
(FIDReC), an independent and impartial institution that assists with insurance-related disputes.
In addition, the Monetary Authority of Singapore will also act against insurers if they do not pay claims in accordance with policy terms and conditions or have unfair claims handling practices.
To rein in private sector cost increases, MOH has developed and published over 2,800 doctor fee benchmarks, which providers and insurers reference to set fees and review reimbursements respectively, she pointed out.
“We will study what more can be done to guide fee setting by private hospitals.
“MOH will also continue to work through the Multilateral Healthcare Insurance Committee (MHIC), which brings together key stakeholders from healthcare providers, medical professionals, insurers and consumer representatives, to address these issues collaboratively.”
She added that more will be done to educate consumers on choosing the appropriate health insurance coverage and that a public education campaign would be launched soon.
