Private Healthcare Insurance: Trust & Transparency

In life, there are errors of commission, and there are errors of omission. Dr Alan Ong’s opinion piece in The Straits Times on 7 March is of the latter. His column “The coming healthcare crisis: Unsustainable financing” talks about the dangers of having runaway healthcare inflation and offers several solutions.

He is the medical director of AIA Singapore, a major player in healthcare insurance locally. Therefore he must know what he is talking about. And what he commits or omits glaringly is most worthy of our attention.

What does he commit in the abovementioned article?

  • Singapore needs to have a financially sustainable healthcare system
  • Integrated Shield Plans (IPs) will become unaffordable if current healthcare inflation trends persist
  • We need to maximise the value or healthcare outcome out of every healthcare dollar spent

The healthcare insurers feel that to maximise the healthcare outcome of every healthcare value spent, the following needs to be achieved:

  • Appropriate healthcare behaviour
  • (better) Collaborations between healthcare providers and insurers
  • Greater transparency in outcomes

In providing recommendations and possible solutions to the above, Dr Alan Ong quotes extensively from the recommendations of the Health Insurance Task Force (HITF) Report. The HITF was a Taskforce that comprised representatives from Life Insurance Association (LIA) of Singapore, SMA, CASE, MOH and MAS (Monetary Authority of Singapore) and it was chaired by an independent chairperson. The Report of the HITF was published in October 2016.

He states that MOH’s move to stop the sale of full riders (as recommended in the HITF Report) and introduced co-pay riders for new IP plans will promote appropriate healthcare behaviour.

He further opines that the appointment of certain doctors to preferred provider panels will improve collaboration between insurers and healthcare providers. He gives an example of healthcare screening as an example of how having empanelled doctors will prevent consumption of unnecessary tests. He further states by steering higher volumes of work to empanelled providers is good for these select few who will benefit from more work and policy holders will also likewise benefit as insurers negotiate better treatment pricing for them from these empanelled providers.

Dr Ong then goes on to discuss pre-authorisation, which is also a recommendation of the HITF, and says that with the implementation of this through a standard industry-wide form, the insured will have better peace of mind that their claims will be covered.

On the issue of costs, Dr Ong states that “Singapore already has a fair degree of transparency”. What Singapore needs is more transparency on clinical outcomes and quality indicators so that patients can make better informed choices, providers can improve and insurers can know what they are paying for.

All this sounds fairly reasonable. Now let’s look do a deep dive into the facts.

The whole gist of Dr Ong’s article is that as long as there is no unnecessary consumption of healthcare, financing will be sustainable. Actually, that is one big assumption. Sometimes even when there is no unnecessary consumption, financing is still insufficient or unsustainable, because the premiums collected are just plainly not enough or when the middle-man takes too much. Middle-man being people like Managed Care, Third Party Administrators and even folks like actuary practitioners and insurers.

In any case, let’s give him the benefit of the doubt, since he is a public health specialist (i.e. with specialist knowledge of healthcare policy and financing, presumably). Unnecessary consumption can be therefore divided into two categories – overpricing and over-servicing. Often, it is a combination of both.

HITF’s #1 Recommendation

The HITF report made several recommendations. Two were stated in the article, preferred panels of providers (doctors) and pre-authorisation.

Very interestingly, he failed or omitted to mention the FIRST recommendation of the HITF, which is the recommendation to have Medical Fee Benchmarks or Guidelines. Arising from this recommendation, MOH formed the Fee Benchmarks Advisory Committee in January 2018. In Nov 2018, this Committee published fee benchmarks for 222 commonest procedures covering the vast majority of procedures performed in private hospitals in Singapore.

All IP providers in Singapore are members of the LIA, which in turn was represented on the HITF. The HITF had government and consumer representatives as well, in addition to SMA, which represented doctors. Arising from the HITF’s recommendations, the MOH (i.e. government) formed this Benchmarks Advisory Committee which promulgated the fee benchmarks in November 18. It must be stated that these benchmarks serve as guides, and there is no legal obligation of providers to adhere to them. But nonetheless, doctors, being generally obedient people, largely do charge according to these benchmarks nowadays, since they are issued by MOH.

Therefore, in theory and on moral grounds, all IP providers should respect and subscribe to the recommendations of the HITF (because there were members of LIA), as well as the benchmarks published by a Committee appointed by MOH (MOH being a fair, neutral arbiter). Adherence to these benchmarks will effectively stamp out overcharging and go a long way in making healthcare financing sustainable in the private sector.

An Error of Omission

But this is what actually happened. In a brief survey done in late 2019 for common procedures done by doctors, a year after the benchmarks were published, only ONE IP provider fully respected the fee benchmarks: NTUC Enhanced Incomeshield. Incomeshield will pay its empanelled doctors as long as they charge within the benchmarks. AIA and Prudential reimbursed doctors at the lower end of the fee benchmark bands. AIA basically took the lower limit of the band and added another 10%.

For example, the MOH fee benchmark for gastroscopy was $600 to $1000, AIA’s reimbursement rates was $660. For removal of single breast lump, the benchmark was $2500 to $3200, AIA’s reimbursement rate was $2750.

To be fair, that is still OK, because the AIA reimbursement rate falls within the range of the MOH fee benchmarks, albeit at the lower end. But another 3 IP provider’s reimbursement rates fall below even the lower limit of the MOH fee benchmarks!

Frankly, for the MOH fee benchmarks to work (to make healthcare financing sustainable), everyone needs to play their part and NOT UNDERMINE these benchmarks. This would mean doctors must not charge beyond the higher limit of the benchmarks, and payers, such as IP providers, must not reimburse below the lower limit. If IP providers do NOT RESPECT the benchmarks at the lower end, why should doctors charge within the higher limit?

This hobbit is quite sure an experienced industry player like Dr Alan Ong knows all this. But he has not mentioned any of these practices of other members of the healthcare insurance industry. In fact, he makes NO mention of the MOH Fee Benchmarks at all! It is as if though MOH Fee Benchmarks have no role in making healthcare financing sustainable and averting his “coming healthcare crisis”. Hello, these are MOH fee benchmarks, not the hobbit’s grandmother’s benchmarks, ok?

Incredible isn’t it? I call this an error of omission. And a glaring one. As to why this omission happened, you, the alert reader of this inconsequential column, had better ask Dr Ong yourself. Did The Straits Times run out of newsprint because all the paper has been redirected to make toilet paper? But we do have the online version now after all…..

We now go on to empanelling doctors, otherwise as “preferred providers”. He gives the example of how unnecessary screening can be curtailed with this. This hobbit is confused. Since when did IP Plans cover screening? Also, if you want to curtail unnecessary screening, just state clearly what an insurer would pay (and how much) and what it wouldn’t pay for. It’s that simple.

The second point on empanelling is even more disturbing. He wrote “Patients will benefit too, as panels allow insurers to negotiate better treatment pricing, leading to lower co-payments and premiums”. It means it empowers insurers to extract even lower prices from providers (including doctors) when half the IP providers are already reimbursing below the lower limit of the MOH Fee Benchmarks. AIA is now at “lower end+10%”. How much lower do you want doctors to go, Dr Ong?

In itself, pre-authorisation is not a bad thing. But the information sought for in this standardised pre-authorisation from the LIA members initially did not give the assurance that the information will not be used against policy holders when they renew their policies. It was only after repeated attempts by SMA to get this assurance for patients and SMA’s initial refusal to support the pre-authorisation form that LIA finally clarified and assured that information collected from the pre-authorisation form was to be used solely for pre-authorisation.

The Big Picture

Let’s now get back to the big picture.

Private insurance plays a small part in the health financing of Singapore. 40% of the financing comes from government. A lot of the remaining 60% comes from our savings in Medisave, State-run insurance Medishield-Life, employment benefits and out-of-pocket payments.

While private healthcare insurance plays an important part in the bigger scheme of things, fixing it alone won’t make healthcare financing sustainable. This is important to note, in case anyone gets delusions of importance or grandeur with regard to private healthcare insurance. We are actually not as dependent on private healthcare insurance as many other developed countries.

Secondly, there are four big stakeholders in the private healthcare insurance space:

  • Patients
  • Government
  • Providers (including doctors)
  • Private Healthcare Insurance Companies (especially IP providers)


The patient is at the centre of it all. Who does he trust most? In Singapore’s context, it is probably the government, often seen as a fair (albeit stern) arbiter of various stakeholders’ interests

Who does the patient trust more, after the government? I think if you were to poll many patients and ask them to choose between doctors and private insurance providers, most of them will choose doctors.

This hobbit’s hunch is that generally speaking, the public trust private insurance companies less than the government or the medical profession.

And of course, doctors trust the insurance industry even less.

Life is tough when you have a deficit of trust from both patients and doctors. I don’t know how much the government trusts the insurance companies, so I won’t comment on this aspect.

What can the insurance companies do to improve the situation? The answer is in what Dr Ong went to at length in the second part of his column: transparency


He mentioned about the need for cost transparency, transparency on quality and clinical outcomes. This hobbit would like to suggest a few more areas in which we can have much more transparency:

  • Can the insurance companies be transparent about the criteria by which doctors are empanelled? And why some doctors cannot be empanelled? No one now knows how insurance companies select doctors to be empanelled.
  • If we extract price savings from doctors, how much of these savings will be passed onto as savings on premiums of insurance policyholders by the insurance companies? How many cents for the dollar? Some listed companies have a dividend policy, promising X% of their profits will go to paying out dividends to shareholders. Can IP providers make such a commitment? If so, doctors may be encouraged to cut fees  to ease the policyholder’s burden.
  • Can we be transparent on what is reimbursable and what is not and publish these online, so that not just doctors, but policyholders can also see clearly for themselves?
  • Can we also be transparent on doctors’ reimbursement rates to policyholders? As a policyholder holder myself, I would like to select my IP provider based on several factors. One of which must be how the IP provider pays the doctors that take care of me. I might want to choose the IP provider that pays the doctor the most, or the least. That choice should be for me to make as a consumer or patient. But this information is now not available to the public.
  • How many doctors are empanelled in each IP provider? Will every IP provider publish this important metric? I think MOH also has a role in ensuring better transparency in this aspect. If the IP providers do not want to publish this individually, for a start, it can publish how many empanelled doctors there are in each of the IP providers. Split the data into two categories: private specialists and specialists in the restructured hospitals. It would empower the public to make an informed choice when they buy an IP Plan.

Trust and transparency. We all need them to make healthcare financing sustainable in the private sector. The private healthcare insurance sector included.





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