Costly Integrated Shield Plans don't bring peace of mind

Keeping healthcare costs in check will require tackling costly private hospitalisation plans.

- Wee Hwee Lin

Singapore’s private health insurance system is in trouble - not from neglect, but from overuse. Integrated Shield Plans (IPs), meant to give Singaporeans peace of mind, are now giving insurance companies headaches.

Payouts for claims are growing faster than the premiums collected. According to the Singapore Actuarial Society, between 2014 and 2023, insurance premiums grew by 8.5 per cent annually, while gross incurred claims rose even faster at 11.9 per cent. Insurers recorded losses in four of those years — 2017 to 2019, and again in 2023.

The Ministry of Health (MOH) has called this a “knotty situation” that must be untangled. There is an old Chinese saying: “To untie the bell, one must find the person who tied it.” The question, then, is who will “unbell the cat”?

THE PROBLEM WITH INSURANCE

Behind these numbers are larger and familiar pressures: an ageing population, pricier treatment, and the growing burden of chronic diseases. But there's another culprit: overuse. When patients don’t pay a cent at the point of care, they tend to use more - and doctors, paid per procedure, tend to do more.

Data from the Life Insurance Association shows that full-rider policyholders, who pay nothing out of pocket, made 9 to 15 per cent more claims than others between 2015 and 2020. Their average bills were at least 20 per cent higher than those with co-payment. In other words, zero-dollar co-payment has come at a steep collective cost.

In 2016, the Health Insurance Task Force was convened to address these spiralling costs and recommend ways to keep IPs financially sustainable over the long term. It brought together insurers, consumer advocates, doctors and regulators — a show of cooperation in a sector divided by incentives.