In July, Health Minister Ong Ye Kung 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 at the time. “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 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 then, calling it “human nature”.
According to MOH data, private hospital policyholders with riders are 1.4 times as likely to make a claim as those without riders, and their average claim size is also 1.4 times higher.
Private hospital bills have surged, with the median bill size rising from S$9,100 in 2019 to S$15,700 last year.
Insurers have been raising premiums of private hospital plans and riders significantly to keep up with claims, said the ministry. Despite this, four of the seven insurers offering Integrated Shield Plans reported losses of between 9 and 48 per cent in 2024, while the remaining three “barely broke even”.
“These changes will help to bring health insurance back to its original objective, which is to protect patients against larger healthcare bills,” said MOH. “It will increase cost discipline over minor episodes, and reduce overservicing and overconsumption associated with non-essential hospital admissions or treatments.”
IMPACT ON POLICYHOLDERS
About six in 10 claimants across all ward types will not need to pay for anything in cash, as MediSave limits are enough to cover deductibles and co-payments, said MOH.
About three in 10 claimants will pay less than S$1,000 after MediSave, while the remainder – mostly private hospital patients – may pay more than S$1,000.
Premiums for existing riders have become costlier as policyholders age, prompting many to downgrade or drop them. For example, a 60-year-old policyholder would have to pay an average of S$9,500 per year for a private hospital plan and rider, which includes the cost of MediShield Life. A 40-year-old policyholder would pay S$3,400 per year.
With the changes, new riders are expected to be about 30 per cent cheaper than current ones offering maximum coverage, MOH said.
This translates to annual savings of about S$600 for policyholders with riders for private hospital coverage and S$200 for those with riders that cover public hospitals.
“While the changes entail more co-payment for smaller bills, they should not stop patients from seeking care when it is needed,” the ministry said.