SINGAPORE: The current state of private insurance and private healthcare is unsustainable, said Health Minister Ong Ye Kung on Tuesday (Jul 1), as he spoke of a "knot" in the relationship between the insurers and private hospitals.
Mr Ong was giving the Ministry of Health (MOH)'s perspective on Great Eastern's suspension of its pre-authorisation certificates for admission to Mount Elizabeth hospitals since Jun 17.
The insurer said then that the move is part of the its "ongoing efforts to manage rising healthcare costs and ensure long-term affordability for all policyholders", citing its observation that over the past few years, "certain private hospitals have been charging significantly more for similar treatment".
In a Facebook post on Tuesday, Mr Ong said that private health insurers and private hospitals have "gotten themselves tied up in a knot, to the detriment of all stakeholders, including patients".
The "knot" came about in big part due to insurance design, he said. "Insurers know that policyholders are worried about incurring an unexpected huge hospital bill, so they launch insurance products that offer generous coverage to win customers and market share."
These products include "as-charged" or no-limit coverage, as well as riders - add-ons to the insurance plan - that will cover almost all costs.
In such cases, as insurers are footing almost the entire bill, there is the tendency to "use more than is necessary", said Mr Ong, calling it "human nature".
To illustrate this point, he said that the likelihood of a patient with such riders making a claim is 1.4 times that of a patient without one, and the size of the claim is also on average 1.4 times more.
This leads to higher claims and insurers realising that the premiums they collect can no longer cover those claims.
Insurers then respond by introducing more safeguards into the claims process, such as suspending pre-authorisation for hospitals with higher claims or entering into panel arrangements with doctors, he said.
They also respond by raising premiums, he said, noting that premiums for riders have increased sharply over the past few years.
This causes policyholders, insurers, doctors, and hospitals to all be caught in a "knot".
"Policyholders are naturally unhappy that they are paying rising premiums but with more restrictions. Healthcare providers are finding it more cumbersome to make claims. Insurers are struggling to stay viable for their health portfolios.
"As for (the) Government, with all these developments, we can see that more patients with private insurance are opting for subsidised public health care," said Mr Ong.
He added that this will increase the pressure on the public healthcare system, noting that public healthcare currently accounts for about 80 per cent of hospital beds in Singapore but provides care for 90 per cent of all inpatients.
"No one is happy."
To tackle the issue, MOH has intervened in a few ways, said Mr Ong.
One way it did so was to introduce fee benchmarks to guide pricing and prevent over-charging of medical bills. Since 2018, it has done so for private professional fees.
Now, over 90 per cent of cases fall within the surgeon fee benchmarks, compared with 80 per cent in 2018, said the health minister.
The average annual growth in private surgeon fees has also moderated from 3 per cent for the period of 2010 to 2018, to 0.4 per cent for the period of 2019 to 2023.
"We are now studying the possibility of going beyond professional fees, by introducing more benchmarks for hospital charges, to guide fee setting by private hospitals," added Mr Ong.
MOH has also intervened in instances when doctors make errant claims. The ministry has taken action against a "small minority" of offending doctors by making them attend a "refresher course on fee setting" or suspending them from claiming from MediSave and MediShield Life.
Noting the need for more affordable private hospital choices, Mr Ong said that the ministry is exploring the possibility of a new not-for-profit private hospital - first introduced in February 2024 - but that such a move will take a few years still.
However, MOH's actions are insufficient, said Mr Ong. "Ultimately, private insurers need to take a hard and realistic look at their product design, particularly those of riders."
Mr Ong acknowledged that private insurers have made "some effort" to redesign their insurance plans.
Most insurers now offer more affordable rider alternatives which do not fully cover deductibles or have a larger co-payment component, he said.
"But more importantly, these riders can help to dull the incentives to over-service and over-charge, while still providing the additional protection against large cash co-payments that policyholders value.
"It will help focus private hospitals and private doctors on delivering value and ensuring affordability for their patients," said Mr Ong.
"In the longer term, patients seeking care in private hospitals will find that they are getting a better deal than the current situation, which is clearly unsustainable."
Every stakeholder will need to do its part so that the "knot" can be gradually loosened and untied, said Mr Ong, adding that MOH will be "facilitating" this untying process.
"The recent moves by insurers may be disconcerting, but we need to see them against this broader context and the need to set the private healthcare financing system on a more sustainable footing. Otherwise, everyone loses."
Mr Ong added that Great Eastern's move only affects those patients on private insurance plans and who intend to receive care at private hospitals.
Over 90 per cent of acute inpatient care is delivered in public hospitals, including those who opt for unsubsidised wards, he said.
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Mr Ong was giving the Ministry of Health (MOH)'s perspective on Great Eastern's suspension of its pre-authorisation certificates for admission to Mount Elizabeth hospitals since Jun 17.
The insurer said then that the move is part of the its "ongoing efforts to manage rising healthcare costs and ensure long-term affordability for all policyholders", citing its observation that over the past few years, "certain private hospitals have been charging significantly more for similar treatment".
In a Facebook post on Tuesday, Mr Ong said that private health insurers and private hospitals have "gotten themselves tied up in a knot, to the detriment of all stakeholders, including patients".
The "knot" came about in big part due to insurance design, he said. "Insurers know that policyholders are worried about incurring an unexpected huge hospital bill, so they launch insurance products that offer generous coverage to win customers and market share."
These products include "as-charged" or no-limit coverage, as well as riders - add-ons to the insurance plan - that will cover almost all costs.
In such cases, as insurers are footing almost the entire bill, there is the tendency to "use more than is necessary", said Mr Ong, calling it "human nature".
To illustrate this point, he said that the likelihood of a patient with such riders making a claim is 1.4 times that of a patient without one, and the size of the claim is also on average 1.4 times more.
This leads to higher claims and insurers realising that the premiums they collect can no longer cover those claims.
Insurers then respond by introducing more safeguards into the claims process, such as suspending pre-authorisation for hospitals with higher claims or entering into panel arrangements with doctors, he said.
They also respond by raising premiums, he said, noting that premiums for riders have increased sharply over the past few years.
This causes policyholders, insurers, doctors, and hospitals to all be caught in a "knot".
"Policyholders are naturally unhappy that they are paying rising premiums but with more restrictions. Healthcare providers are finding it more cumbersome to make claims. Insurers are struggling to stay viable for their health portfolios.
"As for (the) Government, with all these developments, we can see that more patients with private insurance are opting for subsidised public health care," said Mr Ong.
He added that this will increase the pressure on the public healthcare system, noting that public healthcare currently accounts for about 80 per cent of hospital beds in Singapore but provides care for 90 per cent of all inpatients.
"No one is happy."
Related:
MOH INTERVENTION INSUFFICIENT SO FAR
To tackle the issue, MOH has intervened in a few ways, said Mr Ong.
One way it did so was to introduce fee benchmarks to guide pricing and prevent over-charging of medical bills. Since 2018, it has done so for private professional fees.
Now, over 90 per cent of cases fall within the surgeon fee benchmarks, compared with 80 per cent in 2018, said the health minister.
The average annual growth in private surgeon fees has also moderated from 3 per cent for the period of 2010 to 2018, to 0.4 per cent for the period of 2019 to 2023.
"We are now studying the possibility of going beyond professional fees, by introducing more benchmarks for hospital charges, to guide fee setting by private hospitals," added Mr Ong.
MOH has also intervened in instances when doctors make errant claims. The ministry has taken action against a "small minority" of offending doctors by making them attend a "refresher course on fee setting" or suspending them from claiming from MediSave and MediShield Life.
Noting the need for more affordable private hospital choices, Mr Ong said that the ministry is exploring the possibility of a new not-for-profit private hospital - first introduced in February 2024 - but that such a move will take a few years still.
However, MOH's actions are insufficient, said Mr Ong. "Ultimately, private insurers need to take a hard and realistic look at their product design, particularly those of riders."
Related:
THE ROLE OF PRIVATE INSURERS
Mr Ong acknowledged that private insurers have made "some effort" to redesign their insurance plans.
Most insurers now offer more affordable rider alternatives which do not fully cover deductibles or have a larger co-payment component, he said.
"But more importantly, these riders can help to dull the incentives to over-service and over-charge, while still providing the additional protection against large cash co-payments that policyholders value.
"It will help focus private hospitals and private doctors on delivering value and ensuring affordability for their patients," said Mr Ong.
"In the longer term, patients seeking care in private hospitals will find that they are getting a better deal than the current situation, which is clearly unsustainable."
Every stakeholder will need to do its part so that the "knot" can be gradually loosened and untied, said Mr Ong, adding that MOH will be "facilitating" this untying process.
"The recent moves by insurers may be disconcerting, but we need to see them against this broader context and the need to set the private healthcare financing system on a more sustainable footing. Otherwise, everyone loses."
Mr Ong added that Great Eastern's move only affects those patients on private insurance plans and who intend to receive care at private hospitals.
Over 90 per cent of acute inpatient care is delivered in public hospitals, including those who opt for unsubsidised wards, he said.
Continue reading...