The “Unbalanced” Hand of the Private Health Insurance Market

A recent letter from SMA to The Straits Times Forum brought to surface some of the unsavoury if not unjust and even unsafe practices of certain private insurance companies offering Integrated Shield Plans, usually called “IPs”.

Newly minted Chairman of the GPC (Government Parliamentary Committee) for Health, Dr Tan Wu Meng also quoted this letter in his recent Parliamentary Speech on 1 Sep 20 highlighting the problems facing people who have bought IP Plans.

He said,

“In a Straits Times Forum letter published on 29 Aug this year, the Singapore Medical Association shared that That some insurers are no longer allowing claims for diagnostic endoscopies even when medically necessary. This is a serious development. Implications for patient care. implications for patient safety. It is also a very visible sign that Individual patients, individual customers do not have bargaining power to stop insurance companies from such practices. When an insurance company moves the goal posts for an Integrated Shield Plan, it is not so easy for a patient to switch provider, because existing conditions become pre-existing conditions under the new policy”.

He further made the call for the authorities to step in, “The invisible hand of the market appears to have become unbalanced. And so I call upon MOH and MAS (i.e. Monetary Authority of Singapore) to look at this and to see if the visible hand of the regulators need to come in, to level the playing field and our people”.

Dr Tan is a medical oncologist, and he knows better than anyone else what are the consequences when a diagnosis of cancer is missed or delayed because people cannot get a diagnostic endoscope done because there is no cover under an IP. Some of the commonest cancers in Singapore need endoscopies for accurate diagnosis – colorectal, nasopharyngeal, stomach, bladder and so on.

As we all know, many Singaporeans buy such IPs. In the October 2016 Report of the Health Insurance Task Force (HITF), it was reported that about two-thirds of Singapore residents have an IP Plan, of which half (i.e. one-third of Singapore residents) have bought IP riders that pay for the co-payment and deductible requirements of IP plans. These IP riders are paid with cash while IP can be paid for by Medisave. This is a big-money business by any measure.


The precursor of IP was called PMIS or Private Medical Insurance Schemes. The first to offer PMIS was NTUC Income. By 2002, AIA and Great Eastern also offered PMIS. PMIS was a standalone product that was unlinked with Medisave or Medishield. They paid for expenses incurred when a patient consumes medical services in private hospitals or in unsubsidised wards (i.e. B1 and A Class) of Restructured Hospitals.

In 2005, Medishield was reformed and PMIS was renamed IP, IPs were linked to Medishield and Medisave in that they could be funded by Medisave monies. So far so good.

The problems really started when one IP provider started providing as-charged plans in 2005 and by 2006, all IP providers followed suit. In 2006, IP providers also provided the aforementioned IP riders, which paid for the deductible and co-payment parts of the bill. This is called “first-dollar” coverage in the insurance industry because the policy holder doesn’t even have to come up with one dollar before the policy kicks in to cover you. Someone dropped the ball on this in MAS and MOH obviously because the experience of this the world over is that first-dollar coverage will lead to more frequent claims. This is not rocket science.

Then in 2007, the SMA Guidelines for Fees (GOF) was outlawed by the then Competition Commission of Singapore (CCS). Which meant there was now no clear guidance really for private sector doctors on how to charge. And with as-charged plans being offered by all IP providers, this expectedly led to higher claims, as well as more frequent claims.

Looking back, this Hobbit thinks the main root cause was both under-regulation and over-regulation. The insurance industry was somehow under-regulated, leading to proliferation of undesirable IP products such as as-charged plans and first-dollar coverage riders. On the other hand, CCS over-regulated the SMA GOF to its eventual withdrawal by SMA. It is this Hobbit’s opinion that these two events led to both an increase in number of IP claims and IP bill sizes.

It wasn’t before long the IP providers realised the error of their ways and then as the Hokkien saying goes, these providers “Cry Father, Cry Mother” about rising healthcare costs associated with IPs, especially those that come with as-charged and first-dollar coverage plans. But who came out with these IP products in the first place? Not doctors. Not patients.

Certain IP providers (i.e. members of the Life Insurance Association or LIA)!

Their trade association, LIA then wanted to address this problem. The Health Insurance Task Force (HITF) was thus formed in early 2016, with representatives from LIA, CASE, SMA, MOH and MAS.

The Report of the HITF was published in Oct 2016. Some of the major recommendations included:

  1. Have a new set of Fee Benchmarks or Guidelines
  2. Introducing Panel of Preferred Providers
  3. Pre-approval of Medical Treatment

The government kept its side of the bargain and MOH came up with its Fee Benchmarks for the commonest procedures in Nov 2018, after extensive consultations with stakeholders including LIA, doctors, hospital administrators, CASE and even the unions. So after 11 long years, the role that SMA GOF served in controlling healthcare costs was resurrected as the MOH Fee Benchmarks in a wonderful act of policy necromancy.

The Current Situation

You would think that all IP providers, being members of the LIA, will support the fee benchmarks. After all, this is what we would expect out of good faith and especially the benchmarks were from the government, no less. But it turns out that several IP providers have since reimbursed doctors at rates that are at the lower end or even below the low end of the fee benchmarks. Those that now go below the fee benchmarks make a mockery of the process and maybe even a betrayal of the hard work that has gone into making the fee benchmarks a reality.

Next, we look at the issue of IP providers coming with panels of preferred providers. A few IP providers have done so. One or two have done so in the wrong spirit. In the original HITF report, it was written that these panels are to be appointed in the hope of “Enhancing Insurance Procedures and Products Features. To achieve so, IP providers are  “To enhance and ensure transparency of the arrangement (e.g. disclosures on the healthcare provider selection process)” (Page 16 of HITF Report)

The exact opposite has happened. No IP provider has come clean to state what are the exact criteria they are using to select and empanel doctors. Some panels are restrictively small. Some specialties, especially the smaller ones, have no representation on the panels at all.

Many IP providers say they have many doctors on their panels, but on closer scrutiny, many of these are actually specialists from restructured hospitals (RHs) and very few are actually from the private sector. It is obvious that many IP providers are trying to shift work from private hospitals to the RHs by having panels that are heavily weighted towards the RHs and sparsely populated by private sector specialists.

In the current climate, all healthcare providers are functioning at reduced efficiency when compared to pre-Covid. The appointment and waiting times at RHs are already more trying during this Covid-19 pandemic. Do the RHs need any more business? On top of that, some IPs guarantee that their policy holders can get a specialist appointment within 48 hours, which as we all know, is practically an impossibility in most RHs.

So let us now get back to the centre of healthcare, the patient. The IP patient to be exact. He or she has paid good money to get an IP. Half of these folks have even forked out cold, hard cash to get these IP riders.

What does he get in return? Well, it all depends. If you are an Incomeshield IP plan holder, (like this hobbit), you can sleep reasonably well. Because as long as the specialist adheres to charging to within the fee benchmarks, there is little fuss. But woe be unto you if you have signed up with the “wrong” IP provider. You may well discover that one or more of the following:

  1. The doctor you have seen in the past is not an empanelled doctor
  2. You have to jump through hoops to see him,
  3. Your non-panel doctor has to justify at length why some admission or procedure is needed and what are his estimated charges, and seek approval from the IP provider
  4. The approval may take days which leads to anxiety and delay, or the approval may never come and you are forced to see someone else if you want coverage or ease of coverage
  5. Now you have to pay cash up-front to see a non-panel doctor and wait for the IP provider to reimburse you later, and there is no assurance they will do so
  6. The panel does not even contain a private specialist in the hospital or speciality that you need or want
  7. Certain things you assumed were covered no longer are – like diagnostic endoscopies such as colonoscopy. Even though you have a family history of colorectal cancer and needs periodic screening
  8. You cannot change IP provider because no new IP provider will cover you for conditions related or can be associated to e.g.  a small benign polyp that had been taken out 5 years ago during a colonoscopy

even though you have been paying years of riders for first-dollar coverage and covering as-charged bills

It is the “unbalanced” hand of the market at work, unbalanced in favour of the IP provider.

What is really the point of having IPs?

But let us take a step back and ask what is the policy intent of having IPs offered by private insurance players in the first place?

This hobbit thinks IPs were allowed by the government so that more Singapore residents can receive private healthcare. Private healthcare means primarily private hospitals, but for completeness’ sake, will also include the unsubsidised care in RHs. But RHs’ private or unsubsidised patients were not and is not the main intent or focus of IPs. Why is this so?

Think about it, the government owns MOHH which in turns own the clusters and RHs. They have great influence over how cluster boards are run and how top hospital management are appointed.  In other words, there is great influence (if not a strong degree of control) over both costs and pricing.

There is really no need for the private insurance companies to participate in IPs if the intent was for IPs just to mainly cover consumption of B1 and A class services in RHs. The government can definitely do a better job and save patients money by cutting out the middleman (i.e. the private insurance companies).

So the apparent strategy by some IP providers to try and shift work to RHs is doomed to fail in the long run.

This hobbit thinks it is perhaps time to exclude private companies from offering IPs that cover RH services. After all the government has done a good job running Medishield Life which covers C and B2 classes (i.e. subsidised classes). It doesn’t take much more to extend Medishield Life to B1 and A services.

Then, we can leave private insurance companies to only offer private insurance plans that can be partially funded by Medisave monies for those Singapore residents who wish to be served in private hospitals only. And that we can stop these IP Plans from trying to shift work to RHs and derive big profits from doing so when this was probably never the policy intent of IPs.

Regulatory Lacunae

What about the un-covered diagnostic endoscopes that we talked about earlier on? Well, we hope the guy with the regulatory muscle, MAS, will do the right thing and sit on these IP providers who are obviously doing the wrong thing. Now that it is out in the open and even discussed in Parliament, this hobbit thinks something will happen. Some authority will tell the insurance company or companies that this is not right and these companies will comply and cover diagnostic scopes once again.

This is the nub of the problem because with such a regime, people are motivated to try their luck every now and then and come up with money-making ideas at the patient’s or doctor’s expense.

Part of the problem of regulating IPs is that it perhaps falls through the cracks. IP providers and insurance companies are licensed and regulated by MAS. But really, MAS has no expertise in healthcare. And perhaps they have bigger fish to fry than IPs. On the other hand, MOH has the healthcare expertise of course, but they have little or no regulatory muscle to compel insurance companies to do the right thing because MOH really does not administer any law that can punish insurance companies.

There is thus no real punishment for the party that comes up with these unethical and dangerous ideas that compromise patient rights, patient safety and clinical standards. Today it is diagnostic scopes, tomorrow it may be biopsies.

Today, if a doctor does something that compromises patient safety or autonomy like taking a patient consent that does not meet the basic standards of the SMC Ethical Code and Ethical Guidelines (ECEG), he may be sanctioned by SMC. But will MAS, the regulatory body of insurance companies sanction or punish an insurance company for forcing doctors to adopt clinical practices that compromise patient interests (like treating patient with hydrogen pump inhibitors before scoping)? They probably do not know what are correct clinical practices in the first place.

So clever insurance people will continue to exploit this lacunae in health insurance regulation and try to push their luck. I don’t blame them. The system is performing exactly the way it is designed to. There is no downside other than the IP provider being told to withdraw the undesirable practice.

The way forward is perhaps for every IP provider to have a registered medical practitioner as medical director before an insurance company can be accredited as an IP provider. This medical director is like the head of compliance in a bank; he has double reporting lines, one to the bank CEO and one to MAS, the regulator of banks. Should the CEO of the bank try something funny, it is his duty to advise the bank CEO. If the bank CEO doesn’t comply, then he can report the CEO’s plans or deeds to MAS. If he fails to report the CEO to MAS, the head of compliance can be sanctioned too. I am told by a banker this is how bank regulation works in Singapore and every head of compliance of a bank has to be approved by MAS before he can be offered the job by the bank.

This hobbit thinks it is high time that the health insurance industry is regulated in a similar way. The medical director can report to the insurance company CEO and  to someone in MAS, perhaps a Health Insurance Commissioner seconded to MAS from MOH. If the medical director fails in his duty to ensure that the insurance company does not put up practices and policies that compromise patient safety and interests, then the medical director himself can be reported to SMC for investigation and possible punishment.

Simply put, we have to put in place a regulatory regime that has a deterrent effect, one that stops people from pushing their luck to try something that is bad for patients and the healthcare system.

One thought on “The “Unbalanced” Hand of the Private Health Insurance Market

  1. Thank you for speaking up for all IP policyholders (especially on IP providers unilaterally moving the goalposts of an Integrated Shield Plan), many of whom have taken up the rider as well to provide full coverage. Actually this full coverage no longer makes sense as IP providers introduced the panel doctors which aim to prevent patients from seeking treatment in the private hospitals. Firstly, not many doctors in the private hospitals are on the panel. Secondly, if the doctor one is seeing is not on the panel, one has to pay an annual deductible of $1,000. Thirdly, even if the doctor is on the panel, patient must obtain the pre-authorisation in time to avoid paying the $1,000, which will be impossible in the event of an emergency. These are terms and conditions which policyholders did not sign up for and not in the original contract. The years of paying good premiums to ensure peace of mind is not happening as insurance companies do not honor their contracts.


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