Managing Healthcare Insurance Premiums

Dr Hamid Razak asked the Coordinating Minister for Social Policies and Minister for Health regarding the new Integrated Shield Plan rider (a) whether the policy design anticipates that policyholders will continue to access private healthcare despite higher cost-sharing; (b) if so, what is the policy basis; and (c) what contingency measures have been developed to support restructured hospitals should there be increased patient volume due to shifts from private to public healthcare.

Mr Kenneth Tiong Boon Kiat asked the Coordinating Minister for Social Policies and Minister for Health given that the Monetary Authority of Singapore primarily regulates solvency, whether the Ministry intends to establish a dual-regulation framework to oversee the (i) healthcare outcomes (ii) panel selection criteria and (iii) loss-ratio efficiency of private insurers to ensure they align with national health goals.

My response will also address written Parliamentary Questions raised by Dr Hamid Razak in today's Order Paper, and a similar question raised by Ms Mariam Jaafar scheduled for a subsequent Sitting. If the Members are satisfied with the response, they may wish to withdraw their questions after this session.

Let me first try to put everyone on the same page. Over the past few years, patient load has been shifting from private hospitals to public hospitals. In 2010, the split between private and public was 15:85. In 2020, it became 12:88. Now, it is 10:90.

The issue of insurance and insurance riders is not the reason why patient load is shifting from private to public. This has been happening for the last 15 years and there are many reasons. Part of it is that as people get older, some of them prefer public hospitals, where there are more disciplines and more holistic care.

Another key reason is the escalating cost of private healthcare. That is in turn fuelled by Integrated Shield Plan (IP) riders, which provide overly generous health insurance coverage, and that leads to a greater tendency for over-servicing and over-consumption of healthcare services. Higher private healthcare cost is translated into higher private hospital IP rider premiums. IP premiums for private hospital have been growing at an average rate of 17% annually for the past three years – it is double that of IP premiums and even higher compared to MediShield Life premiums.

Hence, every year, about 100,000 policyholders cancel or downgrade their IP rider policies. And I suspect amongst them, many switched from using private to public hospitals.

To Dr Hamid’s question on the indicators that we used as a basis to decide policies, the data and signs have been clear and the situation is not ideal and not sustainable.

We have been actively expanding healthcare infrastructure and expanding manpower in order to cope with rising workload and manage wait times. Our plans are significant, I have made them public before and I will not repeat here.

To Mr Yip’s question, the new requirements for IP riders will only affect policyholders who purchased riders on or after 27 November 2025. Individual IP insurers will decide on their approach for rider policyholders who purchased their plans before 27 November 2025.

As for affected IP riders, and these are the new ones, we should expect the following changes.

First, IP rider premiums under the new design should be lower, on average 30% lower, compared to existing policies with maximum coverage. This is a significant recurrent saving.

Second, the new IP rider policies will not cover the minimum IP deductibles and also require higher co-payment. We share Members’ concerns about patients’ out-of-pocket costs, especially for large medical bills. But this is precisely the main aim of the rider changes: preserve the protection against very large, unexpected medical bills, but disallow coverage of the minimum deductible, which is a fixed sum, which users of private hospitals tend to be able to afford. This would help restore health insurance to its original objective, which is to provide assurance against large, infrequent, often unexpected healthcare bills, rather than the small bills.

For a rider plan designed with the new requirements, there will still be a cap of 5% co-payment up to $6,000 a year, in addition to the deductibles. In reality, these need not be out-of-pocket cash payments because patients can tap on their MediSave. We project that six in 10 rider claimants should not have to pay cash out-of-pocket after MediSave. For the remaining four in 10, majority of those with cash out-of-pocket would pay $1,000 or less, and practically all will pay $3,000 or less.

We should bear in mind that most of the affected claimants that I am talking about pertain to private hospital patients. Their IP rider premiums have been driven up so high that under the new design, many can expect significant premium savings which can more or less offset the higher co-payments.

In short, the current design of IP riders may no longer make financial sense for many policyholders and this change will help redress the situation.

Let me give you an example. A 60-year-old on a private hospital IP and rider with maximum coverage, can now save about $1,600 a year in premiums by switching to the new rider. Over three years, he would have saved $4,800 in cash, which would be more than sufficient to offset the increase in co-payment for a typical procedure – for instance, $3,300 for a knee joint replacement surgery in a private hospital.

Ms Poh asked about support measures for families facing unaffordable out-of-pocket expenses. Patients should consider their financial and healthcare needs when choosing where to seek care, including seeking subsidised care in public hospitals should affordability become an issue.

Third impact, there should be, in the medium to long term, changes in the respective utilisation of private and public care and wait times. As I explained earlier, this change is part of our efforts to mitigate the shift of patients from private to public healthcare that has happened over the last 10 to 15 years, by putting the private healthcare sector and health insurance on a more sustainable path and ensuring private care remains accessible to Singaporeans in the long term.

However, in the short term, as a few Members have expressed concern about, some individuals on the new riders may choose to seek care at public hospitals to reduce their co-payment. We will monitor this closely. Efforts to expand public health capacity – both in terms of hospital beds and outpatient capacity – are already ongoing to support the demands of an ageing population. If need be, we may need to implement surge capacity for selected treatments.

On Mr Kenneth Tiong’s question relating to the regulation of IP insurers, the Ministry of Health (MOH) and the Monetary Authority of Singapore (MAS) work closely together in exercising regulatory oversight of IP insurers, to ensure that policyholders’ interests are protected and the products are sustainable.

MOH’s key role is to oversee the development and operation of the public healthcare system and ensure universal access to healthcare. For individuals who prefer private healthcare and purchase private insurance, we should not micro-manage or prescribe the market practices. Instead, we set requirements pertaining to the key parameters of IPs and riders, such as co-payment and deductible requirements, to ensure that the schemes are sustainable. We only step in when we see a serious market failure emerging, which is why we have intervened in this case, to tighten the design of IP riders.

Doctor panels are an example of cost-management measures put in place by the market, by insurers in response to rising private healthcare bills and claims. MOH has been and will continue working with key stakeholders including insurers, healthcare providers, hospitals, medical professionals and consumer representatives through the Multilateral Healthcare Insurance Committee on these matters, to strike a balance between the interests of all stakeholders.

To sum up, we must take a long-term and balanced view of this issue so that we can put private healthcare and insurance on a more sustainable path.

Thank you, Mr Speaker. I thank the Minister for his response. Minister, I filed this Parliamentary Question (PQ) because I have received much feedback from many seniors in my constituency who have concerns about the new rider requirements.

I just have one supplementary question. I understand that policyholders may keep existing riders, but insurers may respond by re-pricing or adjusting the benefits that amount to the de facto coverage reduction. What specific safeguards will MOH impose to prevent such indirect erosion of benefits, especially for ageing policyholders with limited options?

The most important safeguard is to make sure that IP rider policies are sustainable. So, while at the point of being sold the policies, the agent probably told them, "Buy all these for peace of mind – not just peace of mind, but absolute peace of mind, you do not have to worry".

But that went down a path of unsustainability. So, while you enjoy it for a while, it is obvious, through my answer, that I have explained, it is becoming unsustainable. Because when there is over-coverage, in a private hospital, the bill just goes up. You cannot blame anybody; it is just the way human nature is. Somebody else is paying for most of the bill, so between doctor and patient, somehow, you will oversupply and I will overconsume. And the bill just keeps on going up at an unsustainable pace. And it still comes back to the consumer, to the patient, in terms of higher premiums – which is why, now, the same residents that gave the Member the feedback, is also screaming, "Why is my IP rider premium going up at 20% a year?" It is because cost is going up.

We need to tackle the issue at the root and our strong hypothesis is – in fact, there is a lot of literature on this – over-coverage just leads to wastage and cost increases. To redress this, for new riders, we are making the design different, a bit more co-payment, instil discipline in both the supply and demand for healthcare; then, I think we are much more likely to have a more sustainable position.

So, explain to your residents: choose this new rider; tell them they are paying very high premiums, rising premiums now for a tail risk, and it may not be worth it. Do their calculations, talk to their financial advisors. If they choose the new rider design, they save, on average, 30% on premiums every year. For someone in their 70s, that is a lot. That is $3,000 a year! Someone in their 60s saves about $2,000 a year.

That money saved – it differs from case to case – often is more than enough to pay the deductibles and co-payment.

Thank you, Speaker and Minister. I have one supplementary question. How would MOH prevent adverse selection, that is, those who have existing riders continue to over-consume medical services; or those who actually do not have the means to finance the co-payments and deductibles, then, decide to give up their existing riders and may, possibly, end up delaying their treatment?

There are a few questions in that question, I think. But if I were to suss out what are the key questions, one is, you want to have continuity of care. So, be assured, even if they find that, today, they cannot afford their IP rider anymore, because it is getting expensive and they give it up, there is always public subsidised healthcare. That is our assurance to all Singaporeans. You can always come back to public healthcare. And we are expanding the system; we are recruiting manpower. While we are very busy, this is our commitment to all Singaporeans.

So, on the healthcare front, be assured that it is always universal healthcare through the public health system.

As for others, who continue to stay on their riders, I think they are also feeling the pinch. As I mentioned to Mr Yip just now, IP rider premiums are going up at a very fast rate because cost is going up at a very fast rate. And why is cost going up? Because there is over-generous coverage, leading to overconsumption, unnecessary treatment. So, many existing rider policyholders are also rethinking. I hope more would do so.

Increasingly, over dinner tables, amongst friends and colleagues, more people are thinking about their rider policies, that they may not be worth it. And more and more people do their calculations and find that it is not worth it. And as it is, 100,000 every year are changing. With these changes, with this signalling, I think more may do so. At some point, insurance companies have to do their calculations. Year to year, they do change their terms and conditions, and we have to see what they intend to do with existing rider policyholders.

Mr Speaker, I thank the Minister for the reply. The reason I asked the PQ is that there has been lots of sentiments from my colleagues in the restructured hospitals that waiting times for subsidised patients have been increasing. They are worried that with this new rider that is coming up from April that those who are on private riders will then switch to public healthcare because of the higher cost-sharing that is in place.

Will the Ministry and the Minister be able to reassure that there is data in place to say that this new rider principles will, in fact, continue to encourage those with private riders to remain in private healthcare? And also reassure that insurance companies will not make unilateral decisions on premium hikes, for example, which, again, will deter our residents from staying in the private healthcare and this will give rise to a surge capacity in our public institutions as well?

Let me briefly address the comment that Dr Hamid made towards the end of his question, which is to hope that insurers do not unilaterally make premium hikes. But these are private contracts. The Government does not regulate their premiums. And when insurance companies find that cost is going up and they are barely making – most of them are actually making losses on their private hospital insurance portfolio – they will end up raising premiums. This is something we are watching, but this is a commercial arrangement, something that they may do.

I thank the Member for raising the concerns of his colleagues in the public healthcare system. I am totally with them. I am equally concerned as them, which is why we are making this move. Because, as I mentioned earlier, over 10, 15 years, the shift is very discernible, away from private into public and as I mentioned, a key reason is the rising cost in private hospitals.

And why is cost rising? It is because IP riders are fuelling that cost increase, shifting people from private to public. It makes a lot more sense when someone who has the ability to buy private healthcare insurance, including a rider, wants to use private insurance. But half of them, today, switch to public subsidised care, for whatever reasons.

It will help the entire system and in particular, the public healthcare system, if more of them who can afford it, stay with private hospital care. And so, private hospital care has to become more accessible, more affordable. But we cannot do that without this adjustment in IP rider policy.

So, please tell your colleagues that my and my colleagues in MOH's assurance is that we are watching this closely. Wait times are very important to us, capacity adequacy is very important to us and their well-being is very important to us.

Thank you, Speaker. MOH itself notes a trend of escalating cost and premiums alongside tightening claims practices. MAS can act on unfair claims handling, but MAS is primarily a financial regulator. MOH's direct levers seem strongest when policies are MediSave-linked.

So, my question is, what enforceable levers does MOH have to ensure that insurer conduct advances healthcare affordability and access? And where does MOH remain dependent on MAS?

Also, it appears to me that no one is cleanly accountable for insurer behaviour as a health system actor. Does the Minister believe that this is a gap that requires filling?

The IP rider has become a problem and we are taking action. And I think that shows accountability that when something is not sustainable, not working in the best interest of the patients and people, we will take action.

Between MAS and MOH, I think we have plenty of levers and we will work together to make sure that insurers are operating in a way that is ethical, that is viable but at the same time in the interest of patients and the people we serve. And I think we have more than enough levers to do so.

There is a part of Mr Tiong's question that talks about panel doctors. What we want to make sure is that Government's main responsibility is actually to run the public healthcare system to ensure universal accessibility. But when it comes to private healthcare, we let the market operate. But if the market cannot operate in a laissez-faire manner, we will regulate. Where we regulate is clinical effectiveness, safety, and key parameters that are sensible and make the system sustainable, and there is no market failure.

But we should not be tempted to become micro-managing, because it is the worst thing to do to say that we leave it to the market, but we micro-manage all their actions and behaviour. I think that is the worst of both worlds. Then, you might as well nationalise it. But we already have a huge nationalised system in public healthcare. So, for private healthcare, control the important levers, control the key parameters, but let the market operate.

Thank you, Speaker, Minister. Is there sufficient surge capacity in our healthcare system to deal with more private patients coming in after this policy change, especially for smaller procedures that are under the deductible limit?

Again, I will want to remind the Member that because of the ageing population, demand has been going up. There has also been a trend, a secular trend of private hospital patients moving to public. So, whatever problem that the Member is painting now, it has been happening for the last 15, 20 years.

And it is an issue we are most concerned about. We have spoken in this Chamber, many times how we are expanding capacity, ensuring people are healthy, moderating the demand by controlling chronic diseases. But IP riders are an additional fuel to the fire that we are facing, which is, mainly, an ageing population pushing up healthcare demand.

So, we will continue to expand the system and take a multi-prong approach to both increase supply and moderating the demand for healthcare, especially unnecessary treatment and wastage.