Here’s Why Singaporeans Have a Part to Play in Managing Healthcare Costs

It might be something that people glazed over in 2018, but the cost of healthcare was a big part of a lot of national conversations the past year. Why? Well, because it’s been getting more expensive, that’s why. And by more expensive, we mean significantly more expensive.

To cope with these changes in the healthcare landscape, we saw several big changes implemented by both the Singapore Government as well as the Insurance industry. These moves were driven largely by a combination of key factors, namely consumers over-claiming on their health insurance policies (since a LONG time ago), a lack of regulations or guidelines around the fees that medical practitioners charge, and of course the subsequent financial burden and risk on the part of insurers.

It was very clear to us at MoneySmart that this old system very much encouraged everyone to think for themselves. And why not, you might ask? Is it unnatural to expect that people utilise their coverage to the maximum possible? And as a result of that, if people are covered fully, why should medical practitioners bother restricting how much they want to charge for their services?

Expectedly, this wasn’t something that could be solved by the Ministry of Health overnight. And I must say that all things considered (especially the stakeholders involved here), things have definitely been implemented in a well thought through manner.

But it’s still important for Singaporeans to consider that as much as there are regulations and guidelines in place, they play a significant part in this whole equation. Why? Well, to understand that, we first need to address what has changed.

So, what’s changed?

Like we mentioned, the 3 main parties in this healthcare cost equation are: consumers (you), payers (insurers) and the practitioners. Overlooking all of this is obviously the Ministry of Health (MOH), and it’s pretty clear to see that both insurers as well as the Government have been taking active steps to ensure that the overall cost of healthcare, including healthcare coverage, are kept in check.

As you will see a little later on, consumers have been benefiting from coverage practically at the expense of insurers for quite some time now. This is probably something we might take for granted but speak to anyone from, say, the US and you will realise just how lucky we are to be able to get the kind of coverage we have at such a reasonable price.

Recognising this as well as the unsustainable increases in healthcare costs, the Government has taken a few steps to try and manage things. Here are some of the significant changes last year that have really changed the game:

1. Introduction of co-payment for Integrated Shield Plan riders

In March, the Government announced that patients will have to bear a minimum 5% co-payment for new Integrated Shield Plan riders, with a cap on the co-payment amount each year. For those of you who are familiar with the way car insurance works, this is kind of similar to the excess you have to pay before making a car insurance claim.

Key Features

• Full coverage for your hospitalisation, room, board, medical related services, Intensive Care Unit (ICU) expenses, although co-insurance, deductibles, and pro-ration factors apply

• Full coverage for MediSave-approved surgeries (all surgeries listed in Tables 1A to 7C), although co-insurance, deductibles, and pro-ration factors apply

• Up to 180 days pre-hospitalisation coverage for treatments, including any Accident and Emergency (A&E) treatments 24 hours prior to hospitalisation

• Up to 365 days post-hospitalisation coverage for treatments if you seek treatment at pre-authorised private hospitals, restructured, or community hospitals

• Coverage for planned inpatient and emergency treatments in Aviva pre-authorised hospitals

• Coverage for major outpatient treatments: kidney dialysis, erythropoietin, chemotherapy, radiotherapy, brachytherapy, immunotherapy, stereotactic radiotherapy, and immunosuppressant drugs for major organ transplant

• Additional coverage for 5 critical illnesses heart attacks, major cancer, stroke, end stage lung disease, and end stage liver disease

• Coverage for preventive cancer surgery if you have previously filed a claim for cancer treatment with Aviva MyShield

• Free coverage for newborn if both you and your partner are Aviva MyShield policyholders

• Discounted premiums for your children if both you and your partner are Aviva MyShield policyholders

Terms and Conditions

Hospital Ward Entitlement

Additional Benefits

2. Pricing guidelines introduced by MOH

To wrap everything up, MOH introduced a set of fee benchmarks for surgical procedures conducted in private hospitals. With private inpatient bills growing at 9.0% year on year from 2007 to 2017, as compared to 4.9% per year for Class A (public hospital) inpatient bills, there was a pressing need for the Government to help manage these rising costs, while still being sensitive to the industry as a whole. The fee benchmarks provided a pricing range based on complexity of procedure as a reference point not only for medical practitioners, but for consumers as well. You can check all these benchmarks on MOH’s website easily.

3. Insurers working on a panel system with medical practitioners

This isn’t really a huge change but it’s one that is relevant to the previous point around fee benchmarks. Think of it in a similar fashion to authorised car workshops for car insurers.

Insurers work in a similar way to assess whether or not private practitioners are working within reasonable cost guidelines, and with the new fee benchmarks in place, medical practitioners now have a much bigger reason to stick to the guidelines, or run the risk of not falling under an insurer’s coverage.

But premiums are still going to go up. Why?

We often see people very quick to point the finger at insurers every time premiums go up. Maybe it’s because they are unaware of why this is the case, or just maybe, they don’t want to admit that they are also part of the problem. How big is that problem?

Well, if you consider that insurers were in the red two years in a row despite already raising premiums in 2017, then you can see how managing this at an industry level is of upmost importance. Simply put, if insurers keep losing money, then there will be no more insurance companies. No more insurance company means no more insurance means you pay for everything yourself.

In a nutshell, premiums go up when total claims are higher than the premiums collected. While co-payment is part of the solution to solve this, it’s not going to change things overnight unless we do our own part.

So what can Singaporeans do to help?

With the previous system, it was a very natural thing for Singaporeans to be kiasu and not want to “lose out” on how much they can claim. With the co-payment model, it doesn’t make sense for people to make claims for every small thing under the sun.

Being responsible about healthcare claims

But also, it’s even more important to recognise the impact that your claims can have at a collective level. More frequent claims across the board just places a bigger burden on the insurance sector to mitigate their risk by increasing premiums, at which point there is really no point complaining because, well, we are a big part of the problem.

With MOH’s fee benchmarks in place, you now have access to information that gives you an indication of how much your treatment should cost based on the severity of your ailment. These set of benchmarks aren’t just for medical practitioners, but also meant to empower consumers to be more discerning about the medical costs they are being charged.

It also pays to be a bit more cost conscious anyway now that there is co-payment involved in making a healthcare claim.

Being smart about healthcare coverage

It’s also important to be smart about healthcare coverage. Switching insurers isn’t going to change anything at all. In fact, you might make it even worse for yourself if you have pre-existing health conditions because you will end up not being able to get coverage for those conditions. And no coverage is far worse than expensive coverage.

With this new system in place, there is an incentive for everyone, including both insurers and medical practitioners to each play their part to keep healthcare costs within reason. It’s important to recognise that dealing with issue of rising cost isn’t just something that one or two insurers are facing, and it is prevalent across the board.

How the healthcare landscape changes in the next few years is really dependent on how we as a country embrace the system and not abuse it, and with the right guidelines in place, I think that we are in a much better place now to manage healthcare costs than ever before.