[Perspectives] Generous Health Insurance Policies Inflating Healthcare Costs In Singapore – Key Learnings From ChannelNewsAsia’s Deep Dive Podcast (3 Aug 24)

In a ChannelNewsAsia podcast, hosts Steven Chia and Crispina Robert discuss with Liaw Yit Ming, CEO of Foundation Healthcare Holdings and Christopher Tan, CEO of Providend, discuss healthcare costs in Singapore, and debate if generous healthcare insurance policies are contributing to rising medical costs. Here is a summary of the discussion points that you need to know.

Watch the podcast:

Healthcare Costs In Singapore

Large Disparity In Costs Between Subsidised And Non-Subsidised Wards

Healthcare costs in Singapore have been on the rise, and there can be a substantial cost difference between the cost of medical treatment for subsidised and non-subsidised patients. They mention, for example, the average cost of heart bypass surgery at different tiers of wards:

• Public hospital subsidised C-class ward – S$6,400
• Public hospital non-subsidised A-class ward – S$40,000
• Private hospital – S$80,000

Components Of Cost Of Hospital Treatment

Components of the cost of medical treatment in hospitals are professional fees (e.g. doctor’s fees), the facilities fees (cost of using hospital facilities), and medication fees.

The Ministry of Health (MOH) can “control” professional fees via setting benchmarks for reasonable levels of professional fees. MOH however, cannot control the type and number of treatments prescribed by the doctor, which will have an impact on costs.

Facilities fees are not controlled by MOH.

MOH contains the cost of medications in Singapore via only allowing certain drugs to be included under approved drug lists.  For example, for cancer-treatment drugs, there is a Cancer Drug List. Only drugs that have been proven to be clinically and cost effective may be placed on the list and are claimable under MediShield Life and Integrated Shield Plans. Insurers may also place limits on the cost of medication that may be charged to policies.

Health Insurance – Why They Are Necessary But Might Drive Up Heralthcare Costs In The Longer Term

Key Benefits Of Health Insurance

Health insurance such as Integrated Shield plans with riders, can provide substantial benefits to policy owners.

Key benefits of such Integrated Plans with riders may include:

• Coverage for treatments at higher tier, non-subsidised wards or at private hospitals.
• Non-subsidised wards (B1 and above) allow patients to choose the attending doctor.
• “As-charged” insurance payouts.
• Insurance coverage for cancer drugs not on the approved Cancer Drug List.
• Removal of co-payment requirements.

Health Insurance Costs And Limitations

The tradeoff for better health insurance benefits is that the premiums will be accordingly higher. Also, unlike life insurance whereby the annual premiums remain constant as we get older, the premiums for health insurance increase with age.

Claiming against your insurance policies may also cause the premiums for your policy to be increased substantially for subsequent years.

Reportedly, about 2.2% of people eventually surrender their health insurance riders due to the cost of the premiums.

The panelists in the discussion also bring out an important consideration that some might not be aware of – while higher-tier health insurance may cover treatment at private hospitals, follow-up medical costs beyond the first 12 months might not be covered. Thus, for chronic illnesses whereby treatment might last for years or for a lifetime, there are still longer term cost benefits to getting treatment at subsidised wards.

How Generous Health Insurance Policies Can Inflate Healthcare Costs In Singapore

The panelists were of the view that the healthcare costs in Singapore can be inflated due to generous health insurance policies in the following manner:

• Additional medical costs due to over-prescribing of treatments by medical professionals for patients covered by insurance resulting in additional costs, or over-consumption of medical services by insured patients.
• Increased demand for medical services and facilities resulting in increased prices.
• Over-claiming against insurance resulting in increased premiums subsequently for the patient.
• Insurers adjust for increased claims by raising premiums systemically.

Key Considerations And Implications For Individual Patients

While we may feel that cost inflation at the national level is a direct concern more for government policy-makers than for ourselves as individuals, there are some key takeways from the podcast discussion that are relevant at the individual level that we should be aware of.

How We Can Mitigate Against Increasing Medical Costs In Singapore

The measures we can take to mitigate against increasing medical costs include:

• Get annual health screenings to detect diseases early, while they are the easiest to manage.
• Consider getting health insurance early – consult your financial planner or insurance agent on the appropriate policy and coverage based on your requirements, preferences, and means.
• Consider if you really need private healthcare, or if non-subsidised or subsidised treatment at public hospitals is sufficient. Are you able to afford follow-up treatments at private hospitals if they are no longer covered by insurance?
• Keep in mind that choosing a less costly treatment option and avoid making an insurance claim may prevent increases in the premiums payable in subsequent years. Consult your financial planner or insurance agent when in doubt.

Disclaimer: Health365 is not a qualified financial advisor. When in doubt about coverage and premium implications relating to your health insurance policy, do consult your financial consultant / insurance agent for advice.

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