Private insurers in Singapore are engaged in a race to the bottom as they are offering very attractive terms to encourage sign-ups and win market share, the Minister for Health, Mr Ong Ye Kung, has said.
Speaking at the 25th Anniversary Members’ Night of the Securities Investors Association (Singapore) on 12 July, Mr Ong that there are Integrated Shield Plans (IPs) that promise no claim limits, and riders to protect policyholders from co-payment. IPs are medical insurance plans that consist of both the government-run basic health plan (MediShield Life) and additional private insurance coverage that private insurance companies offer.
'Buffet syndrome' in health insurance
Mr Ong said, “These features look generous and very attractive and give absolute peace of mind, but they have also aggravated the buffet syndrome and are pushing up healthcare costs.”
Explaining the 'buffet syndrome,' he said, “You see a doctor for a certain condition, and the first question the nurse asks is whether you are covered by IPs and riders. If yes, you may be prescribed more diagnostic tests and more expensive treatments. As a patient, you are happy to receive them, because the insurance company will pay for it anyway. This is the classic ‘buffet syndrome’. It is already paid for, so eat more. It is natural human behaviour happening all over the world, especially in healthcare.
He added that one of the Ministry of Health’s (MoH) main priorities today is to review the current healthcare insurance schemes, to ensure that they are adequate in protecting Singaporeans against catastrophic health events, but at the same time to not feed this 'buffet syndrome' too much and drive up healthcare costs unsustainably. “That is a very difficult task,” he said.
Health insurers, government and policyholders getting worse off
He said, “I checked the latest financial reports of insurance companies released just a couple of months ago. With escalating claims, insurance companies are hardly making profits on their health insurance portfolio.
"In the meantime, the government is very worried about escalating costs to our system, and the premium burden for our patients.
“Surely this does not make sense. The government is not happy, insurers are not making money, the patients and policyholders are facing increasing premiums. And yet, we are still doing this over and over again. It doesn’t do good to anyone.”
He also said, “Remember that in healthcare, how we pay, determines how much we pay. There is a very intricate dynamics. You try to pay for healthcare costs like a buffet dinner, ultimately it is not going to work. We all become obese and unhealthy.”
Action needed
Indicating what would be done to address the rising medical costs, Mr Ong said:
- It will first require MOH to strengthen our enforcement against errant doctors who overcharge. Recognising that the buffet syndrome is human nature, there is a need to take action against doctors who make the most egregious and inappropriate claims. This has started through the newly set-up Claims Management Office.
- Private insurance companies will have to take a hard and realistic look at their product design and rein in overly generous and unsustainable terms like no claim limits and very low or zero co-payment. They need to start thinking of offering alternatives that are more sustainable in the long run and which will actually cost everyone less in the long term.
- A stronger effort is needed to educate consumers on healthcare security, how MediShield Life as basic protection may already serve the needs of many and the kind of commercial products available so that individuals can choose "the right one in the right phase of life".
“Absolute peace of mind is important, but we need to educate consumers to know that absolute peace of mind is costing you a lot, that you may not be aware of,” he said.
He also said, “It is important that we know the situation we are in, so that we can work towards a more sustainable long-term solution.”