SINGAPORE – Singapore needs to break the health insurance vicious circle or the escalating healthcare costs it creates will make paying for healthcare very painful, said Health Minister Ong Ye Kung.
With rising claims enabled by generous insurance policies leading in turn to rising premiums, the Ministry of Health needs to rein in the current very unhealthy buffet syndrome.
One step it has started to take is action against the minority of doctors making the most egregious and inappropriate insurance claims.
This will be done through the Claims Management Office, set up in 2022 to ensure that claims are appropriately made, said the minister in a hard-hitting speech at the Securities Investors Association (Singapore)’s – Sias – 25th anniversary members’ night.
Making a wry quip that he would talk about investing in health rather than securities, Mr Ong outlined the steps that needed to be taken to keep healthcare spending, currently under 5 per cent of gross domestic product, from rising too rapidly.
Mr Ong said the “audience of learned investors” would know health spending is not an investment.
Rather, health spending is highest when people become ill and need diagnostic tests and treatments to repair their bodies, he noted.
Naming insurance as a key driver of rising costs, he said insurance companies need to take a hard and realistic look at their product design, and rein in generous and unsustainable benefits such as no limits on claims and very low co-payments.
Overly generous benefits lead to a “buffet syndrome” of healthcare consumption, he said.
Mr Ong said: “You see a doctor for a certain condition, maybe surgery is required, and the first question the nurse asks you: Are you insured? Got IPs or not? Got rider or not?
“If yes, you may get more diagnostic tests, more expensive treatments may be prescribed. As a patient, you will be happy to receive them, because the insurance company is paying for it. This is the classic ‘buffet syndrome’. It is paid for, eat more. It is natural human behaviour, happening all over the world, especially in healthcare.”
Mr Ong said competition among insurance companies has aggravated the buffet syndrome and is pushing up healthcare costs.
And yet, the latest financial reports of insurance companies show they are hardly making profits on their health insurance portfolios, he noted.
“I think we may be in a health insurance vicious circle, of overly generous insurance policy design leading to a buffet syndrome and more non-critical or even unnecessary tests and treatments being prescribed, which in turn lead to bigger bills and higher premiums for all,” said Mr Ong.
The MOH has been studying the situation, he said, adding: “Our conclusion is that there is intense competition between insurance companies that is risking a race to the bottom.”
In Singapore’s health insurance system, 90 per cent of subsidised hospital bills are covered by the compulsory national health insurance plan, MediShield Life.
People who want higher-class coverage must buy private Integrated Shield Plans (IPs) on top of MediShield Life.
About 70 per cent of people here have IPs. More than one million people, including the minister himself, have riders which they pay for in cash that ensure they do not bear more than a small amount of the medical bill.
Mr Ong said it was understandable that people want to be fully covered but mused: “I wondered how many actually make full use of their multiple layers of insurance and they go to private hospitals each time they need care.
“Did they make use of all the insurance they buy? It turns out, not very high.”
About half of patients with IP and rider protection still end up using subsidised public healthcare when hospitalised or receiving day surgery, he noted.
“Strictly speaking, and from an episodic point of view, these patients only needed MediShield Life and they could have saved a lot of premiums,” he said.
Mr Ong said the seven insurers providing IPs must start thinking of offering alternatives that are more sustainable in the long term and ultimately will cost everyone less.
He reminded the audience that in healthcare, “how we pay, determines how much we pay”. “Trying to pay for healthcare costs like a buffet dinner; it’s not going to work.”
Mr Ong said the work of reviewing the current healthcare insurance schemes to ensure they provide adequate coverage without encouraging over-consumption is one of the Health Ministry’s main priorities today.
This entails a major review of MediShield Life, as well as looking at IPs and riders offered by insurance companies.
But it will take a collective effort to break the vicious circle of escalating healthcare costs. Aside from action being taken against errant doctors and insurers redesigning their coverage, Mr Ong said consumers also need to be educated on healthcare security.
For many, the basic MediShield Life may already be enough. And those wanting higher coverage should understand the kinds of insurance products they actually need.
In closing, Mr Ong said that MOH and Sias shared a common ethos.
“For Sias, continue to play its advocacy role as a service to the investor community. In the same vein, MOH needs to build a sustainable and high-quality healthcare system for Singaporeans, which has to include reining in a very unhealthy buffet syndrome of health insurance.”
This article was first published in The Straits Times. Permission required for reproduction.
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