Legally Amoral

Why do some people turn to a life of crime? Or at the very least, why do some people live their lives skirting and flirting with the edges of the law?

There could be many reasons, but they probably fall broadly into these three mutually non-exclusive categories

  1. Times are very bad and the person turns to crime to survive. That’s why crime rates go up when unemployment rates go up.
  2. The person has a pathologically criminal mind and he loves breaking the law, much like what you see in the villains that Batman battles – the folks found in Arkham Asylum like The Joker, Penguin, Two-face etc
  3. The person desires to have extraordinary or supernormal profits or pay-cheques that normal business and employment activities cannot match. These people are usually motivated by greed, and their greed overcomes their fear of the law or whatever social stigmata that comes with the running of such (legal) “shady” activities

Obviously, many of these infamous KTV outlets are operated by people belonging to the above third category. These outlets are usually called KTV clubs, bars or lounges. There are also many “family” KTV outlets which are indeed bright and wholesome (which this Hobbit sympathises with – they should indeed be statutorily classified differently from KTV clubs). But those pre-Covid KTV clubs that come with hostesses are obviously not without social stigma, yet they exist because there is demand for them and there are people willing to run these businesses because the profits and margins are very attractive.

Taking this into consideration, this hobbit cannot help but wonder – what makes some people think that by just giving them Food and Beverage (F&B) licenses, these KTV club and lounge operators will suddenly be willing to pivot to a life in the slow lane of humdrum F&B normalcy? Especially when many of these outlets don’t even have commercial kitchens. And why would anyone go to these kitchen-less F&B outlets for the food? Couldn’t they get food delivery to deliver the food to their homes instead?

In addition, it was reported in The Straits Times on 22 July 2021 that “Only 18 ex-nightlife outlets (were) given support packages to switch to F&B” by Enterprise Singapore (ESG). It was reported that 400+ such nightlife establishments pivoted to the F&B industry and yet only 18 received these support packages. This would imply at least two things – the grant was exceedingly hard to get, or that the vast majority of the 400+ outlets did not apply for the package. If the latter is true, the next question that needs to be asked is why would people not want the grant? Take the example of couples who buy a property near their parents and qualify for a government housing grant. This hobbit has never heard of anyone who would not take this grant. People who have nothing to hide will take grants if they can qualify for them. On the other hand……

To this hobbit, this episode of the KTV cluster really shows a lack of understanding of the imperfect human condition and what drives people to do what they do. And yes, it would have been quite hilarious, if not for the serious public health consequences that had arisen from it.

It’s gotten so bizarre that on 25 July 2021 (“Group wants tougher penalties for errant nightline operators”), The Straits Times (ST) reported that “the Singapore Nightlife Business Association (SNBA) also recommended that the 400 nightlife establishments that switched to the food and beverage sector last October come under police supervision”.

This is the first time in a long time in super-safe Singapore that anyone or any organisation has volunteered to come under police supervision. The only folks we run towards here, regardless of race, language or religion, are the parking ticket aunties and uncles who are about to issue a parking ticket to your vehicle. We usually run away from police supervision, not towards it.

OK, so much for the light-hearted stuff. We move on to something more serious and saddening.

On 17 July 21, a letter to the Forum of The Straits Times by a Ms Denise Ho said that her hospitalisation insurance claim for stage 2 breast cancer treatment and claim for critical illness payout were rejected on the grounds that she had failed to report she had vertigo and asthma. These diagnoses were purportedly made after she made visits to a GP for dizziness and cough.

On 26 Jul 21, the Life Insurance Association (LIA) responded by giving by what can be described as a legally correct and general answer. The reply did not comment specifically on the case at hand, but gave the general principle that “in order to reject a claim or invalidate a policy, life insurance companies are responsible for proving that the non-disclosure of the health condition to a question asked in the application form is material to the underwriting outcome…”

LIA also said a person could seek redress with the Financial Industry Disputes Resolution Centre (FIDREC), and finally an aggrieved person can also explore legal action.

On 29 Jul 21, a letter from Mr Chia Boon Teck to the same ST Forum revealed important information. Apparently FIDREC does not allow for involvement by lawyers and “has a claims cap of only $100,000”. So for higher claims, the policyholder has to get legal help, which Mr Chia rightly pointed out, “victims in such scenarios would hardly have any money for their medical treatment, let alone for legal expenses”. Ouch.

Now the LIA reply took pains to say it “is not in a position to comment on any assessments by any specific insurer”, this hobbit is not bound by such self-imposed and convenient rhetorical handcuffs and mufflers of the LIA.

Interestingly, up till now, the relevant regulatory authorities have also kept silent on this matter.

Let’s now really examine the case at hand – breast cancer with a possible history of vertigo and asthma.

Anyone who is medically trained will wonder what has vertigo and asthma got to do with breast cancer. But according to the reply by LIA, the key words are “underwriting outcome”, which means anything that would have altered the insurance policy’s terms, such as loading of insurance premiums or limitation of coverage may allow the insurance company to “reject a claim or invalidate a policy”. This is evidenced by what LIA’s stated condition: – “the terms of the policy would have been different from the terms that were actually offered and issued”.

So while vertigo and asthma have got nothing to do with breast cancer, the fact that these conditions may lead to different terms of the policy from the terms that were actually offered and issued already entitles and justifies an insurance company’s action to deny a claim for breast cancer.

To this hobbit, this is the legally correct but amoral world that policyholders and healthcare providers have to contend with when we deal with insurance companies. It is effectively heaping misery upon misery on a sick person. It is bad enough to have cancer, but the policyholder has to now also contend with the shock and dismay of knowing the hospitalisation insurance policy is not providing coverage because of a technical breach of a contract and face the terrible consequences of this reality.

As a wise dwarven lord told me once, “Always look for the money trail”. On 2 Aug 21, Business Times (“Claims management measures help boost Integrated Shield 2020 results”) reported that Integrated Shield Plans (IP) insurers performed much better in 2020 than 2019. In fact, in 2019, only two (out of seven) IP insurers were profitable, in 2020, all but two insurers were profitable. In 2019, the seven IP insurers incurred an underwriting loss of $43.11M; in 2020, the same insurers made an underwriting profit of $103.75M, a swing of $146.86M!

The most impressive performance was put in by Great Eastern (GE), which went from losing 57.88M to making a profit of $23.29M, a swing of 81.27M. It also somehow managed to cut its management expenses from $33M to $22M from 2019 to 2020.

But let us briefly return to the KTV club sector again. Many KTV hostesses are poor young foreign women who may be brought here to be exploited as hostesses. That in itself is immoral. But many are also here of their own volition to earn a quick and big buck. In which case, other than the fact that there is a lot of negative stigmatisation, everyone gets what they want – the KTV hostess and operator gets paid by the client and in turn the client gets what he wants – varying degrees of physical (maybe carnal even) and emotional satisfaction.

Contrast this to the insurance industry. This industry is ostensibly here to serve their policyholders. But in so-called serving their policyholders, they have elaborate systems, contracts and processes designed to deny certain policyholders what they have actually paid for and now need. It appears they do so by relying on technicalities that few laymen would understand when they bought the policies. The interesting thing is, these insurance companies’ practices are probably deemed acceptable by the authorities, which is why no relevant regulatory authority has yet commented on the abovementioned series of letters in the ST Forum.

If you asked this hobbit, maybe the insurance industry should be the one that comes under police supervision instead of the nightlife sector.

Life can be legal, and also not fair. Get used to it

Happy 56th National Day

Personal Beliefs and Professional Positions

Hobbits are by nature fun-loving folks who firmly believe in the sacred value of liberty. The freedom to choose is a fundamental right hard-wired into every hobbit’s brain; unless that right is circumscribed or taken away by law. For example, you are not at liberty to choose whether to wear a mask or not once you step out of your home.

So this hobbit firmly believes that everyone has the right to choose for oneself to be vaccinated or not, and one’s children as well. We should also be allowed to choose what vaccines we want to be vaccinated with as long as the vaccines have been approved for use. Of course, with choice, comes responsibility. We have to face the consequences of our choices, be they good or bad.

Among doctors, there is a wide range of opinions and beliefs when it comes to Covid-19 vaccination. As individuals, they are entitled to their personal beliefs. And they are entitled to make choices and decisions arising from these beliefs. A doctor can choose to be vaccinated or not. We cannot take that right away from an individual, just because he happens to be a doctor.

But things may get a bit edgy when you propose a position to the public in your capacity as a doctor on something related to healthcare or a medical service or product. This hobbit believes you should be evaluated and judged in your professional capacity as a doctor.

In short, as an individual you can have almost complete liberty in choosing your personal beliefs, but not so when as a doctor, you choose your professional positions.

Take the recent two incidents involving a few doctors for example. Last month, 12 doctors penned an open letter on the risks of Covid-19 vaccination for children. They asked that traditional “killed” virus vaccines be used on children instead of the mRNA vaccines. 11 of the 12 doctors subsequently retracted the letter, including the author of the letter. The letter was addressed to “all parents deciding to vaccinate or not to vaccinate their child”. Many experts have since spoken out debunking the contents of this infamous letter.

In their retraction, these 11 doctors said “We like to withdraw all our humble ponderings, as some of our thoughts may be misunderstood by some laypersons. We will henceforth ponder in a more professional and private forum”.

This hobbit shares the same concern as the eleven doctors who retracted when it comes to “laypersons” – they need to be protected. Within the medical profession and the boundaries of civility, fellow doctors can discuss and argue different positions and viewpoints about certain contentious topics in medicine. In our careers as doctors, we have all seen robust discussions between learned colleagues on many subjects at different fora, ranging from the simple grand ward or morbidity and mortality rounds to international scientific and medical meetings.

Some positions forwarded by some doctors at times can be based on the most flimsy and unmeritorious of assumptions, but these arguments and propositions will be quickly disposed of by the majority of their peers armed with better knowledge and experience.

Unfortunately, this luxury of discernment frequently does not happen when the public is involved, simply because the public lacks the requisite knowledge to discern on highly technical matters.

It is for this reason that medical advertisement is tightly regulated in Singapore. Other than Over-The-Counter (OTC) Drugs, one is NOT allowed to advertise medicines to the public. You will not see advertisements like what you see in USA for example, where one will see many prescription drug advertisements targeted at the public.

However, in Singapore, advertisements involving prescription drugs can be found in materials that are mainly meant for doctors, dentists, pharmacists and nurses. For example, advertisement and marketing materials for prescription drugs can be found in the SMA News or SMJ.

The underlying logic here is that these professionals (and the students being trained for these professions as well) have the capacity to discern the issues therein. Hence the advertising restrictions targeted at these groups can be more relaxed. The piece of legislation called Medicines (Advertisement and Sale) Act reflects this thinking.

Well, it appears that three of the 11 doctors are now having another go at trying to dissuade people from getting vaccinated at mRNA vaccines even when they had said they wanted to “ponder in a more professional and private forum”. There is now another open letter by five doctors (of which three are from the original group of 11 doctors who retracted earlier on) asking the vaccination to be delayed for adolescents, especially males. Again, the experts have come out to debunk their argument which is based again on the most rickety of scientific foundations. Seriously folks, even though one death is too many, you cannot formulate a public health vaccination policy based on one death in which causality to mRNA vaccines is not even established.

The unwanted effects of these two episodes by a few doctors are:
• many members of the public are getting confused
• the vaccination programme is undermined
• experts have to make the effort to repeatedly debunk unmeritorious arguments forwarded by just a few doctors. A waste of their time and purportedly causing insomnia to one of the experts.

It is true that we have imperfect and incomplete information about Covid-19 and the vaccines. But the hard truth is that we still need to make decisions now based on imperfect and incomplete information where the benefits outweigh the risks to a community. And we certainly cannot make or defer making decisions based on theoretical possibilities that are NOT backed up by current data or extensive experience.

If you think about it, these doctors, in the process of publicly lobbying certain positions, are also trying, indirectly or directly, to persuade and advise the public to also believe what they believe – that mRNA vaccines should not be used.

This kind of persuasion can be likened to offering a form of health education or medical advice. Of course health education is part of the service a doctor is expected to give in a professional capacity. But this education must be of a certain quality befitting a doctor, since the public places a certain premium on information offered by doctors.

The Medical Registration Act, Section 53 (1)e states that if a doctor is found by a Disciplinary Tribunal “to have failed to provide professional services of the quality which is reasonable to expect of him” then he can possibly be punished.

To this hobbit these “professional services” would include unsolicited health education and medical advice where there is no pre-existing patient-doctor relationship. Doctors indirectly influencing the public to take or not take vaccines through the public lobbying of authorities to take a certain public health policy direction would also constitute health education and giving of medical advice.

This brings us back to be the principle that both the individual patient and the public need to be protected. We all make mistakes as doctors telling patients wrong things once in a while. But when there are repeated attempts by the same people to forward a position that is neither backed up by current scientific evidence nor an opinion from a respectable body of peers then something needs to be done.

To sum up, everyone is entitled to their opinion as individuals. Every doctor is also entitled to his profession opinion in the course of an academic or professional discussion with his peers; just be prepared to defend the opinion and failing which, understand well in advance that that position may be demolished within the medical community.

But every doctor is NOT entitled to push his professional opinion or position to the patient or the public when the position is not supported by science or a respectable body of peers. That would be unprofessional if not irresponsible.

After all, being licensed to practise medicine doesn’t mean you are licensed to practise quackery as well.

What this hobbit would really want to see is that these doctors (who are trying so hard and repeatedly trying to dissuade people from taking the mRNA vaccines in some way or the other) to meet in a professional forum with a few members of the MOH Expert Committee on Covid-19 Vaccination. The two sides can argue their case in a Zoom meeting and thousands of doctors can login to this meeting to decide for themselves which side has the stronger case. Perhaps the SMA or Academy of Medicine can organise such a forum. Stop this “open letter” business that can potentially muddle the minds of the public; meet up and argue your case out professionally doctor to doctor, based on scientific research and evidence, and let your peers judge you. If you really know your stuff, you should be able to convince a big segment of a learned audience who can then take up your case and promote your cause.

10 more issues for MHIC to ponder about…

It was heartening to see that the MOH is getting down to some serious business with Integrated Shield Plans (IPs). It was announced and reported[1] [2]that the Multilateral Health Insurance Committee (MHIC) will embark on four specific four workstreams:

  • Claims complaints process so that claims that IP insurers unfairly treating policyholders and doctors can be addressed
  • Look into the composition of insurance panels and the pre-authorisation process
  • Improve transparency across the board, including better itemised billings and publishing data on claims and premiums
  • Examining the issues from a patient and consumer-centric viewpoint and see how improvements can be made from this perspective.

However, this hobbit hopes that the MHIC will resist the temptation to just address superficial issues and move on. This is especially so when we still have a pandemic to fight and people in the healthcare sector are just exhausted both physically and emotionally after more than a year of living dangerously.

It would be naïve to think that if we can just increase the size of the panels and get the insurers to reimburse more and then everyone will live happily after. In the real world, even if you kiss the frog and it turns into a handsome prince, the prince will stall fart and burp loudly from time to time.

It is therefore encouraging to hear that MOH is considering the issue of IP portability. This is a key strategic consideration in the process to make the IP sector more free-market through competition between IP insurers. Currently, because a IP policyholder often cannot change IP insurers because of non-coverage of pre-existing diseases, the competition landscape for the 70% of the population who have bought IPs is rendered sclerotic.

In addition to the issue of IP portability, there are other hard questions that this hobbit hopes the MHIC can answer:

1 What is the desired market penetration for IPs?

Today, almost 70% of Singapore residents have IPs. Is this desirable when only 35% of Singapore beds are private, A and B1 beds? This question needs to be answered clearly and quickly. Even as we speak the market size for IPs is increasing rapidly. The Business Times reported “As at end-March 2021, 20,000 more Singaporeans and permanent residents (PRs) were covered by Integrated Shield plans (IPs) and riders which provide coverage on top of MediShield Life”.[3]

2 Should there be so many IP insurers?

As the SMA Position Paper on Troubled IPs stated – there is loss of economies of scale and duplication of costs when there are too many IP insurers. The Straits Times (ST) Forum writer Wong Sheng Min further suggested on 13 May 21 that “transferring the IP portfolio to a single, not-for-profit entity”. This hobbit thinks not-for-profit maybe a bit drastic.

Since IPs are products that bought on an annual basis MAS and MOH can come together and handle a tender exercise. Insurers can submit tenders to take over the IP portfolio. To avoid over-concentration of risk, perhaps two or three insurers with the most competitive tender submission can be awarded the right to sell IPs.

3 Should IPs be an insurance product bought on a yearly basis?

One of the key problems with the IP sector is a disjunction of expectations between the policyholder and the insurer. The IP contract is an annual one between the policyholder and the insurer. The insurer understands and behaves as such. However, this is often not the case with the policyholder. When a person buys an IP from an insurer, he doesn’t think of it as an annual contract. He is in it for the long haul and barring the unforeseen, he does not expect to ever change his IP insurer. So he gets very upset when he realises the terms of his IP may be varied from year to year or even in a matter of days, as some IP insurers tell their policyholders they can vary the terms and conditions of the IP policy by just giving the policyholder 30 days’ notice.

One of the key advantages of having a longer term IP or even “life” IP such as Medishield Life (MSL) is that of “front loading” of premiums. When a person is younger and earning a good pay, he can pay more premiums. These premiums can be used to fund claims later down the road when the policyholder is older and maybe retired.

Perhaps we can have this as well and IPs can be sold in blocks of 10 years or even 20 years with front loading of premiums. The insurers can therefore receive more premiums earlier in exchange for giving up the right to change terms and conditions at will.

4 Are IP contractual terms too loose?

The Aviva episode (whereby it was able to withdraw coverage for diagnostic scopes) highlights the issue that current IP contractual terms are probably worded too loosely so that policyholders can be adversely affected while insurers stay faithful to the wording of the contract.

LIA likes to make the case that the system is working because Aviva was made to revert to their original position of coverage of diagnostic scope.

Let this hobbit be blunt, I take little comfort that Aviva can be persuaded to do so. Will Aviva or other insurers behave responsibly in the future? There is no guarantee. I will sleep a lot better if contracts and laws are tightened instead. We should not mistake or conflate persuasion with the force of contracts and legislation.

5 What is the desired claims ratio or loss ratio?

Today, only 75% of premiums are used to pay healthcare providers. Even LIA in its position statement has said that this is a issue that should be explored further. Perhaps MHIC can come up with a desired claims or loss ratio?

6 What is the desired premium growth rate?

In the Singapore Actuarial Society paper, “Medishield Life 2020 Review, SAS Comments”, it was noted that premiums grew at a Compound Annual Growth Rate (CAGR) of 10% between 2016 to 2019. Claims grew at 11% while management costs grew at 16% and distribution costs (i.e. commissions) grew at 15% for the same period.

In the long run, costs cannot grow faster than premium growth. MHIC should come up with a sustainable premium growth rate and all major cost components must not exceed this premium growth cap.

7 How do we address the two “pre-existings” in the IP industry?

There are actually two “pre-existings” in the IP industry. There is the concept of pre-existing diseases which we are all familiar with. IP insurers attach great weight to pre-existing diseases and usually do not cover pre-existing diseases of policyholders when a new policy is bought.

On the other hand, IP insurers do not care much for the other “pre-existing” – pre-existing patient-doctor relationships which have enormous value in healthcare to patients, doctors and healthcare policymakers. In the implementation of preferred provider panels – IP insurers often seek to yank (or maybe inadvertently yank) policyholders from their existing doctors and introduce new panel doctors to them.

This great distortion in how IP insurers view pre-existing diseases vis a vis that of pre-existing patient-doctor relationships needs to be addressed urgently and comprehensively by the MHIC.

8 What is the role of claim-based insurance in IPs?

Two letters to the Straits Times Forum  on 12 May 2021 highlighted the shortcomings of claim-base insurance. One was from no less the Chairman of the now-disbanded Health Insurance Task Force (HITF), Ms Mimi S. Ho.

Claim-based IPs are being introduced by several insurers now. Please note that all IP insurers are members of the Life Insurance Association (LIA), which in turn was a member of the HITF. The LIA endorsed and supported the Recommendations of the HITF when they were published. Claims-based insurance is simply a pricing mechanism or penalty that loads up your future premiums once you make a claim at a private hospital (even when you bought a private hospital IP). It is similar to what is practised in the motor insurance industry whereby once you make a claim, you lose a substantial portion of your no-claim bonus when you renew your policy.

In the current claim-based IP context, there is no penalty or loading up of premiums if you choose to go to a restructured hospital (RH).

There are two main problems with claim-based IPs. The first, as highlighted by Ms Ho, is worth quoting here,

“The task force rejected claim-based pricing as it was agreed that it is not right to incentivise policyholders to avoid seeking medical attention for fear of a premium increase.

Untreated medical conditions may lead to more serious, and more costly, health issues later on.

Policyholders should make health-related decisions based on medical needs, not a fear of premium hikes.

Claim-based pricing is a pricing mechanism. It is not a product feature. Mr Tan (Mr Tan Ooi Boon, ST Invest Editor) seems to think policyholders can shop for claim-based pricing like shopping for motor insurance.

Unfortunately, older policyholders or people with pre-existing conditions cannot easily switch health insurance companies.

The root cause of rising health insurance premiums can be attributed to advancement in medical care, increased use of diagnostic testing and higher demand for medical procedures resulting from greater consumer health awareness.

Claim-based pricing is an expedient solution because it aims only to alter consumer behaviour – when in fact consumers may not have the necessary knowledge to exercise judgment – without addressing the root cause of rising medical cost.

It is also not viable in the long run, because it undermines the fundamental principle of insurance – that of pooling similar risks of a group of similar individuals”.

She concluded by recommending that both Monetary Authority of Singapore (MAS) and MOH should ban claim-based IPs.

The second problem was highlighted by the author of the other letter, Lim Kah Wee “Claim-based insurance may lead to strained public healthcare sector”.

Claim-based IP will push policyholders to seek care back at the RHs simply because they are incentivised to do so – future premiums do not go up to a different and more expensive tier when you seek care at a RH. Premiums do go up when a policyholder seeks care at a private hospital.

Does MOH and the RHs really want more private patient business for the RHs? That is a question best answered by MOH and the RHs. But judging from my experience, appointment and waiting times are really going through the roof even for private patients at the RHs. This is more so during this pandemic when efficiency is very suboptimal because of infection and disease control measures that have been implemented to battle the scourge of Covid-19.

Also, from an IP sustainability point of view, should IPs be subsidised by government through these “voluntary downgraders” (which this hobbit has mentioned in earlier posts)? Claim-based IPs sanctions, if not rewards “voluntary downgrading”.

9 What is the role of Third Party Administrators (TPAs)?

Several IP insurers have made use of TPAs to manage their claims process. There is nothing wrong with that in-principle. But once again, TPAs are not regulated or licensed entities in Singapore, unlike insurers or doctors and ultimately the licensed entities must be held accountable for what the TPAs do. Also, how are the TPAs’ costs accounted for in IPs? Are TPA costs part of management costs (they should be) or part of the claims ratio (Which means healthcare providers are being paid even less than what the claims ratio suggests)? What is MAS’s stand on the reflection of TPA costs in the data submitted to them by IP insurers?

Which brings us to the last point…..

10 What is the role of Monetary Authority of Singapore (MAS) in IPs?

Contrary to what my crazy wizard friend, Gandaft the Demented, told me, MAS does NOT stand for “Mostly Absent and Silent” when it comes to the IP industry.

MAS is very important to the IP industry. It is the licensing authority for insurers and therefore holds very important and powerful cards in the game of IP sustainability. The role of MAS is as important as MOH, which licenses doctors and hospitals. Yet, strangely, while MAS was a member of the HITF, it is NOT a member of the MHIC. It is absent in the MHIC. This is regrettable.

There is a feeling that regulation of IPs is done in silos. The medical part of it is done by MOH while the financial aspects of it is carried out by MAS. MAS appears to look at the IP business just like any other insurance business. It should not, because no other insurance business sector involves 70% of Singapore residents and very sizeable CPF monies used to indirectly fund IP payouts through Medishield Life. Therefore, IPs deserve special attention from MAS. But the fact that it is not even a member of the MHIC when it was a member of the HITF, is baffling if not disconcerting.

This hobbit feels that the two aspects of healthcare provision and financial viability are actually greatly-intertwined and must be viewed together holistically. One cannot talk about financial sustainability without understanding what is happening at the medical or healthcare service provision level and one cannot just talk about ensuring good coverage and provision of healthcare services by IPs without also looking into the financial aspects of IP in detail.

If we are truly serious about examining the whole IP milieu comprehensively and improving the IP industry, then MAS must not take a backseat (or have no seat at all) in the MHIC but instead play a leading role in it.

As the word “multilateral’ in MHIC suggests, surely there must be some room in the MHIC for MAS to play a (big) role?

[1] Claims complaints process to be studied by panel for Integrated Shield sector, Business Times, 10 May 21

[2] MOH to study if feasible to make IP insurance fully portable, The Straits Times, 11 May 21

[3] New sales in Singapore life insurance sector up 29% to S$1.25b in Q1, Business Times, 11 May 21

A Serial Nobody

On 19 May 21, World Family Doctor Day was celebrated around the world. Just three days later, ‘social influencer’ Calvin Cheng puts out a Facebook post in response to a statement released by 12 doctors.

The Facebook post stated, “What are GPs?

They are general practitioners who got a degree in medicine, who then either chose not to specialise in a certain field, or were not good enough to be chosen to be specialists. So they became GENERALISTS.

They look after small every day illnesses, and once an illness or disease is too complex for the, they refer them to the real experts, a specialist”.

First, let’s get back to the original statement put up by the 12 doctors. The statement questioned the safety of mRNA vaccines, in particular, for children; and advocated the use of “killed” vaccines instead. The statement was frankly, not based on current evidence and without much merit. In any case, the proper and usual word in this context for “killed” is “inactivated” or “deactivated”.

Next, there are specialists in the list of 12 doctors, including specialist physicians and surgeons, and also GPs.

So plainly, Calvin Cheng got the facts wrong.

By Calvin Cheng’s measure, GPs are GPs either by choice (“chose not to specialise”) or they were not good enough to be chosen to be specialists. They are also not “real experts” and only look after “small, every day illnesses”. In other words, to him, GPs are inferior doctors by choice or by lack of ability.

Well, that would mean the following people are inferior doctors:

  • Our Manpower Minister, Tan See Leng, was a GP for many years. And a very well trained one, with a M.Med (family medicine) and FCFP, the highest academic qualification given by the College of Family Physicians Singapore (CFPS). He went on to run IHH, one of the largest listed companies in Malaysia and Singapore with a market capitalisation well in excess of S$10B.
  • The founder, and Chairman of Raffles Medical, Dr Loo Choon Yong, is a GP. He is a veritable billionaire, owning about half of Raffles Medical. The market capitalisation of Raffles Medical is currently about $2B.

On the other hand, the company Calvin Cheng co-chairs, Retech Technology Co Ltd (listed on ASX, the Australian Stock Exchange) has a market capitalisation of about A$65 to A$70M. The company was listed a few years ago at 50 cents. It is now languishing below 30 cents.

So who is Calvin Cheng?

Here’s what can be found about him from publicly available sources:

  • He is 46
  • He was educated at Oxford University
  • He started his working life by running model agency franchises, and later founded an agency called Looque Models Singapore
  • He was also President of Association of Modelling Industry Professionals Singapore (AMIP)
  • He was a Nominated MP from 2009 to 2011
  • He was appointed a member of the Ministry of Communications and Information’s (MCI) Media Literacy Council (MLC) in 2012. He held this appointment for four years (two 2-year terms). The MLC is supposed to “promote civility and responsibility on the Internet”.

In 2011, the Competition Commission of Singapore (CCS) fined 11 modelling agencies for price-fixing; according to the Wikipedia webpage for Calvin Cheng ( –

“On 23 November 2011, several model agencies, including Looque Models, were fined for price fixing. Cheng profited from the higher agency commissions, claiming in defense that the goal was to raise wages for models. The CCS ruled that Association of Modelling Industry Professionals Singapore (AMIP) engaged in anticompetitive price-fixing, resulting in customers paying more and having a considerable and adverse impact on the market. The Competition Commission of Singapore (CCS) noted in its decision that as president of AMIP, Cheng played a central role by instructing AMIP members how to mask the collusion to evade detection and complaints. Cheng appealed, claiming that statements in the decision were damaging to his character; the appeal was dismissed because he had not been personally fined”.

For a more detailed account of this distasteful affair, one can go to:

And despite this incident in 2011, he was appointed to be a member of a prestigious government committee, the MLC, in 2012. This shows Singapore is indeed a land of second chances. But he didn’t take the appointment well. This can be seen by the fact that he later made some very controversial comments about terrorists’ children while he was a MLC member.

So as you can see, we really don’t have to take this chap seriously. Even though he was a NMP and a MLC member. This hobbit would like to suggest that deep down he knows that after being a NMP, he has become a serial nobody. So he tries to get attention by passing provocative comments in order to generate attention and responses from the community he attacks. In other words, he is a troll. He is a discredit to the parliamentary institution of NMP. As for his Oxford pedigree, well, Oxford also has a tradition of producing comedians, like Rowan Atkinson and Hugh Grant. Calvin Cheng is still a comedian, albeit a bad one.

Anyway, today, an unusual letter to The Straits Times Forum has been printed. It has no less than five signatories, although only two were featured: MOH and CFPS. The other three signatories mentioned were SMA, Academy of Medicine Singapore and Chapter of Family Physicians. The letter was meant “to address the misinformation in recent social media posts containing inaccurate statements about general practitioners”.

The letter went on to describe how GPs are trained and Family Medicine is recognised as a proper clinical discipline, and how GPs play essential roles in healthcare.

More damningly, the letter ended with this paragraph, “When writing about issues in the public sphere, we expect effort be made to check the facts. In a civil discourse, this is the responsible thing to do”.

Most readers will suspect strongly who this letter is referring to: – the person who was propagating misinformation in an irresponsible way as part of an uncivil discourse. Interestingly, the letter did not mention a person’s name. This hobbit thinks there is a reason for this: the letter is referring to a serial nobody whose name is not even worth mentioning.

Ring Of Inevitability

While it is not enshrined in the Constitution, I consider it my fundamental right as a citizen to be able to sit down in a coffeeshop or hawker centre every morning and have my kopi-O. So when this is taken away from me, I take it that we are in lockdown mode.

Of course this lockdown is not as tough as last year’s CB and Tightened CB. It’s a lot looser this time around. I can still go to my barber, see my dentist and see a show at the cinema. It’s a very ‘loose’ (as opposed to tight or tigher) CB, if it is a CB at all. Unlike what some people say, you can still have a little fun with a very loose CB.

But somehow the wordsmiths have failed us this round by not coming up with something catchy to describe what we are in (like CB and tightened CB). Instead, they have come up with a term like “ Phase 2 – heightened alert”. (Face-palm++).

I take umbrage at the use of the word “heightened”. The use of this word is very insensitive to us short people. As a halfling, I feel I am targeted if not discriminated against whenever I see the word “height” or “heightened” being used. Why can’t people use other terms like “broadened alert” or “widened alert” or just  “light lockdown”? Which is why this hobbit really hopes this country will have a short(er) prime minister soon, who can stand tall, I mean stand-up, for us short fellows.

To avoid the use of this very vexing word “heightened”, I will call the current phase as “loose- lockdown phase” or “LL phase”. “LL” sort of describes rather well how I feel now.

Many friends have asked this hobbit how should we respond to this new LL phase. Well, it’s obvious – just follow law. Stay at home if you can. Cook at home, eat home, work from home etc. Don’t go anywhere unless necessary and if you do, wear your mask and bring your TraceTogether along.

But beyond legal compliance, others have asked – how should we respond intellectually and emotionally?

Some chaps ask rather difficult questions like –

  • Could this LL have been avoided?
  • Could we have closed our borders earlier to countries that were having an exploding number Covid-19 cases?
  • Could we not have this LL phase now?
  • Could we have diversified our foreign labour sources and not take just from one region in the world, just like how we now have four taps to meet our water requirements? Isn’t there just too much risk concentration?
  • Should we have segregated high risk and low risk travellers in Changi Airport like what a Straits Times Forum writer said a month ago prophetically ( (hobbit’s postscript: obviously the writers of the official reply dated 21 April didn’t think so –
  • Should we have better anticipated double mutation strains like B.1.617 are far more infectious than the old Covid-19 strains, considering what was happening in their place of origin?
  • Do we really need to do Routine-Rostered Testing (RRT) for all healthcare workers (HCWs)? Do we not trust our PPE, infection control measures and vaccination to protect our HCWs?

In short, these nasty questions centre around two themes – what lessons can we learn from this setback and are we managing this current wave correctly?

One angsty dwarven banker even asked – between keeping foreign labour coming in to support the construction, process and marine sectors (and helping with economic growth), and now the LL phase – which has a larger effect on the economy and emotional, mental and social well-being of the citizens? What is the trade-off we are talking about? The dwarf remarked – these policy wonks love talking about trade-offs all the time, but somehow nobody is talking about trade-off between keeping the process, marine and construction sectors going and what we are suffering now for four weeks.

I will be honest, having grown up in a fun-loving, carefree, beer guzzling shire in Middle-earth, all these questions are terribly complicated and distressful to me.

But a wise elven wizard helped this hobbit see the light when he commented on this statement:

“These cases all originated from imports because all borders are porous. All it takes is one case to cause an outbreak, and no country can seal itself off totally. At the minimum, citizens and residents must be allowed to return home”. (MOH Facebook Page, 15 May 2021)

He said, “this means it was all inevitable. Just like the Mother of All Clusters (MOAC) in the dorms last year. That was nothing we could have done. MOAC would have happened anyway. Similarly here. It was pre-ordained that we need to have those foreign workers coming in to support the process, construction and marine sectors. Thus we need to take the risk of these imported cases coming in, even though we know that it takes only one case to cause an outbreak”.

He added, “It was also predestined that the super-infectious B.1.617 strains would have led to the Changi Airport and TTSH clusters and probably now the tuition centre/schools clusters as well”.

He concluded, “Everything was preordained and predestined and hence inevitable. We made the right calls, no error of judgment was made. This is the way”. (In an elven accent – not Mandalorian)

Yes, it was all inevitable. And once we accept this explanation, a lot of other questions are also answered or become moot as well. It’s like you are playing an online role-playing quest game, and your avatar discovers this powerful magic item (more like you paid bucket-loads of money for it) that gives your avatar enormous benefits. Example – you discover the Amulet of KNN – which renders your character immune to psychic attacks, -8 to mace attacks, +5 to dexterity score and +50 hit-points.

The elven wizard then introduced me to this magic item called the Ring of Inevitability. He fished it out of the pocket of his Cloak of Non-culpbability; the Ring burnished under the midday light and I was immediately desirous to obtain it.

He whispered to me that once the wearer has the great magic item called the Ring Of Inevitability, he will be immune to questions such as “if only we had….?”, “Could we have…?”, “Could we not have….?” etc., etc. from all those around him, including himself. Such tiresome questions become inconsequential once we wear the Ring of Inevitability.

And he was right. Once I bought the Ring of Inevitability from him and wore it, I was happier and more peaceable immediately. I no longer asked myself all these vexatious questions and could accept the current LL phase with the kind of equanimity that Sir William Osler described. I also dismissed such questions from those around me as irrelevant and even irreverent to me, the mighty Ring-wearer. I felt l have become invisible to obnoxious questions as they passed right through me. I no longer took umbrage to these questions anymore as I became as invisible to these questions as the Nazgul Ringwraiths of the Second Age in Middle-earth.

I didn’t even feel LL at all about this LL phase anymore. Gosh, I hadn’t felt so good since I was given fentanyl by my anaesthetist for a procedure years ago…..

Before he left, the elven wizard grinned and said, “You should consider taking the Cloak of Non-culpability as well. The Cloak makes all accusations against the wearer hollow and ineffectual. It goes extremely well with the Ring of Inevitability”.

Note: for the avoidance of doubt – this post is a satire.

The Hobbit’s Guide To The Highlights Of LIA’s Position Paper and Industry Responses On IPs

After SMA’s Position Statement on Troubled IPs (29 March), the Life Insurance Association (LIA) responded with 2 and a half documents:

  • Industry Response dated 29 March 21
  • (Updated) Response dated 31 March 21 (This hobbit gives discount, count this as half document)
  • Position Statement (1 April 21)

Talk about overkill.

If you have trouble following their chain of thought and writing, this Hobbit will now give you an easy to understand informal guide to the highlights of these documents. Unless stated, the quotes refer to the Position Statement dated 1 April 21. Quotations are given in italics.

Highlight #1: What Has LIA Got To Do With Cost Containment?

Page 1, Last Paragraph lists the various cost containment measures: panels, copays and pre-authorisation, fee benchmarks to nudge positive changes in healthcare providers’ behaviour.

Page 2, Paras 5 to 7 states:

“The question really is, what balance should be struck between various cost containment measures?

The honest answer is that LIA Singapore and individual insurers do have a definitive answer as to what the right balance of measures is”

It will need to be an iterative process, because there will be trade-offs between the interests of policyholders, patients, and healthcare providers that all parties need to accept. Insurers are in the middle trying to seek the best balance to this equation in a sustainable manner”.

Please note that all the containment measures mentioned involve policyholders, patients and healthcare providers. They do NOT involve insurers. Insurers are just “trying to seek the best balance”.

Hello, dude, how about containment measures involving direct action by insurers, such as cost cutting insurers’ commissions and management costs?

In a newspaper article, the LIA spokesman further added, “Insurers agree that we should control our own costs but we don’t really think there’s a lot of fat in our expenses to be cut,”. [1]

Ownself say ownself got little fat, with no substantiation. This is really quite laughable and not worth the paper it is printed on. It’s like an alcoholic saying “I don’t booze too much”.

If every stakeholder also just say categorically, “we don’t really think there’s a lot of fat in our expenses to be cut” then everyone can just suck thumb, drink coffee and nothing will get solved. 

So these guys are still in denial that they are part of the problem. Sorry, but the Singapore Actuarial Society (SAS) has numbers to prove otherwise. Bloggers such as life finance also think insurers are a big root cause of the problem of IP sustainability.

Highlight #2: Possible Anticompetitive Behaviour By A Trade Association

Industry Response (29 March 21) (Page 2, Para 2)

The upper bound of the MOH Fee Benchmark range for a procedure can be up to five times of the lower bound4 . As such, proceeding per SMA’s suggestion without calibration may lead to substantial cost increases and further premium increases for policyholders.

Industry Response (31 March 21) (Updated) (Page 2, Para 2)

The average ratio of upper bound to lower bound for surgeon fee benchmarks is 1.84 . As such, proceeding per SMA’s suggestion without calibration may lead to cost increases and further premium increases for policyholders.

Position Statement (1 April) (Page 3, Last Para)

“Given that the upper bound is, on average, 1.8 times of the lower bound, setting panel fees at the upper bound of the MOH Fee Benchmarks will likely lead to escalation in claims costs and, as a consequence, premiums.”

These are very serious statements to make in the face of countervailing evidence; in particular, with respect to that of the high probability, if not inevitability of premium rises.

The SMA has, in its Position Statement on 28 March, called for all IP insurers to respect the full range of the MOH Fee Benchmarks instead of clustering their reimbursement fee scales around the lower end of these Benchmarks. The SMA further stated that one IP insurer (NTUC Income?) was in fact able to reimburse the full range of the Benchmarks, i.e. as long as panel doctors charge within the range of the Fee Benchmarks they will be paid as such.

It is therefore surprising to see the above quotes from LIA stating that premium rises are very likely?

How did LIA which can be considered a trade association of sorts, come to this conclusion when already a major IP insurer (NTUC Income) can reimburse up to the upper bound of MOH Fee Benchmarks without increasing premiums and in fact apparently generated a profit in 2019?

This statement by LIA therefore essentially tries to exclude or at least diminish the possibility that an IP insurer can respect the full range of benchmarks without raising premiums when an alternative reality already exists.

Therefore, this statement can be construed to either be encouraging IP insurers to set their fee scales to cluster at the lower end of MOH fee benchmarks and not to reimburse using the full range of MOH fee benchmarks or persuading IP insurers to raise their premiums should they respect the entire range of fee benchmarks, even when they may not have to do so in order to achieve profitability. The latter is clearly against consumer and even public interest, especially when about 70% of Singapore residents have bought IPs.

Declaring that increasing premiums as the preferred or most probable solution when other options and alternatives already exist can be considered to be an indirect form of price-fixing by a trade association such as LIA.

Relevant regulatory authorities may want to look in this possibly anti-competitive behaviour by a trade association.

Highlight #3: The Truth is OUT, Panels Are Really About Fee Control, not Quality Control

Page 2 Para 10 states “the underlying concept of a panel is to use the insurer’s bargaining power to negotiate preferential rates from healthcare providers in exchange for higher volumes. This is the way panels work in the employee benefits space in Singapore, and in multiple markets overseas. It is no different from the use of group procurement in industries outside healthcare. So long as a reasonable fee is left on the table for the doctor, and savings are passed on to policyholders in the form of lower premiums, this is a reasonable approach to take. Insurers are playing the role we should in stretching the healthcare dollar for policyholders.”

Bluntly put, as the above quote shows, panels are about fee control. But with IP insurers’ fee scales already clustered around the lower end of the Fee Benchmarks, how much lower do these IP insurers (sans one) want to go? Obviously they intend to bargain Panel Doctors to the bone and go below the benchmarks. If not why have panels when prices are already at the lower end of Fee Benchmarks?

So for those specialists who think short term and want volume now, be warned that you may be squeezed and squeezed on price later on. This reminds this hobbit a little of what Churchill said about appeasers and crocodiles.

The LIA has repeatedly claimed that larger panels will increase prices. Page 2 Para 4 states “Removing panels as a control measure means that insurers would have to seek other ways to compensate. These would likely take the form of increased premiums, increased co-pays, and/or stricter application of pre-authorisation.”

This statement has perplexed many doctors. If the insurers already control the fee scales, why would larger panels necessitate increases in premiums and co-pays?? In such an environment, overcharging is almost impossible and fee scales already cluster at the lower end of the Benchmarks. That leaves overservicing as a possible problem which can be easily solved by audits, hopefully independent audits.

So the real issue here is again, that with larger panels, insurers cannot bargain with doctors to offer their services at ever lower and lower prices. Larger panels do not by themselves contribute to higher premiums, especially if the services offered are clinically indicated and when insurers already control reimbursement rates.

In fact, as one smart observer mischievously commented, “if larger panels entail higher costs and premiums, then no panels will have no costs and lower premiums”.

A more subtle reading of this LIA claim is that perhaps insurers want to shift work back to the Restructured Hospitals (RHs). When panels are large, a policyholder can easily find a specialist. When panels are small, the policyholder may just give up and go back to RHs. There is nothing wrong with this, if MOH wants more work for the RHs.

This is already happening. As of 1 April 21, a major IP insurer revamped its offering to that of claims-made premiums. There are several premium levels a policyholder can pay. If he claims less he pays less. Nothing wrong with that. But it also states that if you seek care at private hospitals and the claims exceed $1000, your premiums (or premium level) go up. But if you go to a RH, your premiums go down one level (unless you are already at the lowest level then your premiums can’t go down anymore), irrespective of how much the claims are.

Again, nothing wrong with that as an incentive to control claims cost by insurers, because this hobbit is neither for or against RHs or private specialists. But good luck to our already very crowded RHs with long waiting times. One must also question if this is in-line with the government’s policy intent of having private hospital IPs in the first place.

Highlight #4: The Smoke Grenade of Enforcement

Page 3 Para 1 states “the fee benchmarks do not include an enforcement mechanism”. LIA goes on to say in the next para, “This issue of enforcement can be addressed through the appointment of panels, within which doctors sign on to enforceable contracts, and are therefore legally bound to charge within the agreed fee range”.

This really takes the cake, folks. Doctors and facilities get paid by an IP insurer AFTER a service has been rendered and resources consumed. What is there to enforce?

All the IP insurer has to do is state up front their fee scales and state they will NOT reimburse above this scale. This is not a situation whereby the doctor already took the IP money and the IP insurer is trying to claw back the money and therefore need some enforcement mechanism.

The IP insurer just pays up to its fee scale and the doctor cannot do anything much. What are the chances the doctor will sue and get more money than what is stated upfront on the fee scale, and more importantly, what are the doctor’s chances of winning such a law suit?

In fact, doctors and facility providers are the parties that really need an “enforcement mechanism” to ensure insurers pay up and pay up promptly, not the other way around!

Highlight #5 : Five Is NOT Equal to ALL Seven

LIA gives us some interesting data in Annex A, which hopefully the regulators can verify, because doctors and policyholders can’t. More Interestingly, it only has five out of seven IP insurers’ data, which means it is an incomplete picture, unlike SAS’s data which is based on all seven insurers.

It shows, as LIA has claimed, that insurers do pay above Fee Benchmarks some times. But obviously panel doctors are paid less than non-panel ones generally.

But the fact remains we do not know who these two omitted insurers are. Until data from these two insurers are out, it is not possible to draw conclusions at the national level, which is the most important thing for a meaningful discussion to take place. After all, these two omitted insurers may be large players with very sizeable market shares and therefore data presented in Annex A may be therefore significantly skewed.

 Highlight #6: Medishield Life’s Claim Rates May Be Excessive

Page 4, Para 6 states

“That IP claim rate trends are similar to Medishield Life’s claim rates trends are not surprising and implies nothing about whether or not the claim rate inflation is excessive”

SMA benchmarked the IP claims rate to that of Medishield Life’s (MSL) because that is the best SMA has at hand. By making this statement, LIA is suggesting that MSL Claim Rate may be excessive, even though MSL has features such as copayment and deductibles in place to address overconsumption.

Since this involves MSL, the government should come out and explain its position and understanding of the situation  – whether the MSL Claims Rate is excessive or not. It can either agree with LIA or refute it. Either way, this should be done and the public will be better informed for it.

Highlight #7: The Second Smoke Grenade of Longer Analysis Periods

Page 4, 3rd Last Para:

“Based on aggregate amounts, cost per claim has not risen in recent years . However, IPs have been around for many years now, and 2016-2019 is a relatively short part of this history. We should therefore take a longer-term view to understand the fuller picture”.

LIA went on to then analyse data from 2010 to 2019 (instead of Singapore Actuarial Society’s 2016 to 2019) and concluded “cost per claim rose very sharply from 2010 to 2014” to justify why recent rises for claims were more moderated (~ 10%). The longer dataset was used to justify that increases in management costs and commissions were actually more moderated over time (Page 6, Figure 2).

When it comes to prices and costs, recentness is everything. Can you imagine trying to recruit a person for an executive opening and saying he is offered the post for a salary of $2500 because that was the salary given for that job in 2010? The candidate will laugh at you.

Or the government saying property inflation isn’t so bad because over the last 10 years, the rise was moderate? Potential property buyers take reference from recent price increases, not what happened in 2010.

In fact, why stop at 2010? Maybe if we extrapolate back to 1965, the Compound Annual Growth Rate (CAGR) for management costs will drop to 1%. Who knows? And if you go back to when Sir Stamford Raffles landed in Singapore, the CAGR will drop to 0.3%.

As the saying goes, no need to talk about the time when policeman wore shorts. For issues such as costs and prices, it is here and now. Or the recent past few years at best. The older the data, the less relevant it is to addressing today’s problem on costs and prices.

Highlight #8: If 10% is bad, 15%/16% is worse!

Page 5, Para 2:

“The key question, which remains unanswered, is whether a 10% CAGR in claim rate is appropriate and manageable. The implications of continued claim rate inflation of this magnitude are potentially serious”.

The hobbit agrees that 10% CAGR may be actually bad.

As a first step to achieving sustainability, all cost components must have a CAGR that is less than the premium CAGR. Claims rate CAGR is now 11%, just 1% more that premium CAGR. We can talk about lowering the premium CAGR to less than 10% when cost components are approximate at the premium CAGR.

This is why a 15% to 16% CAGR for commissions and management costs is even more unconscionable and needs to be tackled aggressively and immediately.

So I don’t know what LIA is trying to say. Especially the LIA spokesman with his/her “there’s not a lot of fat” statement. There is a lot of fat in a 5 to 6 percentage point gap between commissions/management costs and premium CAGR!

Highlight #9: Rolling 3 Year CAGR from 2013 to 2019

LIA uses the tool of 3-year Rolling CAGR to bolster its argument that the phenomenon of “Growth in management expenses and distribution costs have generally lagged that of claims” (page 6, para 3), and this trend reversed in 2017.

It further stated in the next para. One possible explanation is that insurers started implementing the HITF recommendations, and incurred management expenses for doing so. At the same time, the implementation of these recommendations may have had the effect of moderating claims growth. If this is true, then on an overall basis, the HITF recommendations have had the beneficial effect of moderating overall cost growth”.

Except that this is not necessarily true. A 3-year Rolling CAGR includes data from the previous two years. For example, 2015 data actually includes data from 2013, 2014 and 2015, hence the term 3-year Rolling CAGR. It is important to look at absolute numbers but it is also important to look at the trend. As the saying goes “The Trend Is Your Friend”

The HITF Report was published in October 2016, which means that its recommendations will only have had any efficacious effect with effect from 2017 at the earliest, if not 2018.

Taking a closer look at Figure 3 on Page 7 will reveal that 3-year Rolling CAGR for Gross Claims have been falling quickly since 2015, and 2015 Includes data from 2013 and 2014. Whereas Commissions have been rising since 2017 (which includes data from 2015, and Management costs also rose sharply since 2018, which includes data from 2016.

In other words, the recent trends of declining 3-year CAGR for claims and the unfavourable trends for rising 3-year CAGR trends for commissions and 2016 for management costs started before HITF recommendations were implemented.

Chew on that, folks

Highlight #10: Will New IP Entrants Ever Reach Economies of Scale?

Page 6, Last Para:

“Another factor to consider is that 2016 and 2018 saw new entrants into the IP market. As new entrants have relatively small portfolios, they will tend to have higher management expenses as a fraction of premiums. In addition, distribution costs are higher for policyholders in the first year of a policy, as considerable work is involved in the inception of IP policies.”

The IP market is at a high of 70% market penetration already. Will more Singapore Residents buy IP such that the market penetration goes up much further? This hobbit thinks not.

In other words, new entrants will continue to have “relatively small portfolios” unless it can gain market share from other established players. This is unlikely unless these established players do not defend their turf and roll over and let the new players take their cheese.

The distribution costs (i.e. commissions) may come down as policies age, but certainly management costs will not come down much in this scenario.

This hobbit is glad that LIA has stated that they will share their findings on this matter “publicly”. Let’s wait and see then.

Highlight #11:  The Policyholder Should NOT Be Paying For Lack Of Economies Of Scale And Other Inefficiencies

Page 7, Para 2:

“it may not be appropriate to directly transplant Obamacare regulatory requirement of an 80-85% loss ratio to the Singapore context”.

LIA goes on to give several reasons why this is so, such as lack of economies of scale among local insurers when compared to USA ones and that health insurance premiums are much higher in USA.

It is true USA insurers are larger and have economies of scale. But unlike Singapore, there is practically no “voluntary downgrading” effect in USA. As stated in Parliament and SMA Position Statement, voluntary downgrading inadvertently consumes public healthcare resources and subsidises the IP insurers. This actually means that IP insurers already have more fat built into the system than American insurers.

American healthcare is one of the most litigious in the world and legal costs are factored into the premiums. On the other hand, we are nowhere as litigious as America and again IP insurers benefit from this.

In addition, Singapore is well known for our efficiency and cost-effectiveness. So why should we settle for a system that is even less efficient than the notoriously inefficient American healthcare system (i.e. less than 80 to 85% gross claims or medical claims ratio)?

This should again draw the spotlight again on the fact that perhaps there are too many IP insurers in a slow-growth market. Policyholders are in fact paying higher prices in a market that is not truly free, i.e. policyholders with pre-existing diseases who are stuck with the same insurers, and paying for insurers’ inefficiencies arising from their lack of scale.

Highlight #12: Who Is The REAL Misleading Party?

The LIA Industry Statement has a whole section devoted to this on page 2:

Misleading analysis should be avoided

“It is important that organisations put out objective analyses which avoid biased conclusions. In this regard, we find SMA’s analysis of insurers’ costs and claims costs to be misleading. Claim increases are the main driver of premium increases. LIA Singapore will fully address this in due course, along with more detailed comments on the rest of SMA’s position statement”.

If one reads the LIA’s Position Statement, LIA makes no serious attempt to prove that SMA has misled anyone in the SMA Position Statement. LIA has not managed to debunk the SAS data in any way. The SAS table remains correct down to the last digit and LIA did not contest the table’s figures when it could have. SMA’s numerical inferences (in the last two rows of the table, absolute & increase and CAGR) therefore remain consequently 100% correct.

What LIA has done is to offer an alternative perspective using a longer timeline (from 2010 instead of 2016) and to use 3-year Rolling CAGR. This hobbit has already addressed these two points earlier on. When we look at prices and costs, the importance of recentness is paramount. Please don’t tell me my kopi-O in SGH Houseman Canteen cost only 50 cents 20 years ago. That’s irrelevant to the pain or prices people are facing today.

In a valiant attempt to levy a false accusation against SMA, the LIA claimed that SMA’s position was that management costs and commissions were the main reasons why premiums were increasing. The SMA made no such claim. What the SMA said was “We (i.e. SMA) suggest that the IP industry should take a hard look at how it justifies its management and commission costs as the first step in ensuring the IP industry is sustainable” (SMA Position Statement, Para 26).

This was repeated again in Para. 27: “Instead of repeatedly lamenting that healthcare providers and policyholders are to blame for the losses incurred by some IP insurers through overconsumption, overservicing and overcharging, IP insurers should take the necessary steps to explore cutting their own management and commission costs to enhance the sustainability of the IP sector”

The biggest component of premiums is claims, but the biggest contributor to the lack of sustainability are the fastest growing components – management costs and commissions.

By conflating cost composition and unsustainability, it is LIA that is misleading.

In summary, SMA and LIA can argue whether using data from 2016 or 2010 is better, but there is nothing misleading about SMA’s analysis. The internal validity and external validity of SAS’s numbers and SMA’s elaboration on them remain intact and congruent.


This hobbit will end with this parable:

There was once a manager who wanted to buy lunch once a month for his team: a monthly team-building lunch for his five-member team.

He gives $100 to the office pantry aunty to do so. The aunty buys $75 worth of food and drinks for the team. She spends the rest on transport, such as taking the bus or even a taxi or car-hire services, which is of course necessary. The manager is kind and tells her to spend some of the remaining $25 on herself for a meal, which she duly does, such as buying a cup of tea and a bowl of noodles for lunch at the coffeeshop. Then, this aunty goes from eating noodles to economy rice (2 meats + 2 vegetables) and consumes more of the remaining $25. The manager doesn’t think much of this and thinks it fine too.

After a few more months, the manager finds out the pantry aunty is now treating herself to more and more things, such as a beer and even gourmet burgers and is taking premium car-hire services.

Finally, after a few more months, the pantry aunty now tells the manager that $100 is no longer enough, and she wants $110. But the amount actually spent to buy food and drinks for the five-member team remains at $75. Alternatively, the pantry aunty says she can live with $100 but then tells the manager that only $65 will be spent on food and drinks for the five-member team, down from $75.

What shall the manager and department do with this pantry aunty?

[1] Having more doctors on IP panels may lead to higher premiums: Life Insurance Association, The Straits Times, 2 April 21

A Commentary on SMA’s Position Paper on Troubled Integrated Shield Plans (IPs)

It is not every day that SMA hits the front page of three newspapers: The Straits Times, Business Times and Lianhe Zaobao. But that’s exactly what happened on 29 March 2021 in response to the abovementioned Position Paper. The paper was already released to SMA members I think about a day earlier.

The reporting on 29 March focused on “Future SMA Initiatives” which involves ranking of IP insurers and setting up of a SMA Complaints Committee for IPs and Health Insurance.

But this Hobbit thinks this this is not the real main thrust of the paper.

The main narrative of the paper is how and why we got to where we are, and draws a BIG question mark on whether IPs, the way it is structured, sold and managed, is sustainable at all.

Blameworthy or Blameless IP Insurers?

The first point made in the paper is to debunk the narrative that doctors and patients are the chief cause for overservicing, overcharging and overconsumption that are seen more commonly in as-charged plans and comprehensive first-dollar riders. They are bad, but the SMA puts a large part of the blame back at the IP insurers who first offered these insurance products. SMA is right. The IP insurers narrative of assigning blame to doctors and patients is like saying the cigarette companies are complaining about rising rates of lung cancer amongst smokers and blaming the smokers for this and that the cigarette companies who created and sold the cigarettes are themselves blameless.

The HITF Report Recommendations

The SMA clearly draws the line in the sand with how it sees the Health Insurance Task Force (HITF) Report’s recommendations vis a vis LIA.

In her letter to the ST Forum on 18 March, The Life Insurance Association’s Executive Director, Ms Pauline stated that “The HITF, which included the SMA, recommended a suite of measures to do so, including panels, pre-authorisation, fee benchmarks and co-pays”, in an apparent attempt to infer what the IP insurers are doing has/had the blessings of SMA through both parties’ membership in the HITF.

In this Position Paper barely 10 days later, the SMA resolutely states (para 18) “the SMA council wishes to make clear that it is unable to support the way how the LIA and many of its members have implemented these recommendations”.

It is clear that from SMA’s perspective, LIA and many of its members have misinterpreted and misapplied the HITF recommendations. Which party is right here? This is a point that is worth mulling over.

The Cookie Monster

This is going to take a bit longer to explain but please bear with this Hobbit. The HITF was formed in 2016 and the Report released in October 2016. Buttressing this Report is a 26-Page “LIA Study On the Cost Of Health Insurance In Singapore” (Annex D of HITF Report). It is with this study that LIA made the case that healthcare costs with respect to IPs were increasing at an alarming pace and measures to control this increase were urgent and necessary. The Study used data mainly from 2012 to 2014, a three-year period or a Compound Annual Growth Rate (CAGR) over 2 years.

Now what did this LIA Study actually say?

For the study period, it showed that IP inpatient bill sizes increased by a CAGR of 8.1% vs 2.1% for A class beds in Restructured Hospitals (Page 8: Table 1). According to LIA, this 8.1% is a very bad thing.

The Study then broke down the inpatient bill further into Room and Board Charges, Surgery Charges and Implant Charges (Page 11: Chart H). The CAGR for the same period (2012 to 2014) for the three categories were 8%, 10% and 13% respectively for private hospitals. The corresponding figures for A class were 4%, 1% and 0%. Doctors are responsible for surgery charges and 10% CAGR was held up to be a very bad thing as well.

So this was the starting point or platform for the HITF which the LIA had constructed in 2015. They obviously did their homework and credit must be given when credit is due.

Unfortunately, they stopped their homework after the HITF Report was published. Or at least if they didn’t, they chose to ignore some very significant and odious trends that were building up post-LIA Study (2015) and post-HITF Report (2016).

They probably thought everyone bought their “Insurers are sibeh cham” narrative. As recently as 18 March, in the aforementioned letter to ST Forum, Ms Pauline Lim mentioned, “(the HITF measures) are collectively intended to address overcharging, overservicing and overconsumption of healthcare services”. She was implying clearly that the HITF recommendations (implemented in the manner that LIA’s members see fit) were necessary because the three evils of overcharging, overservicing and overconsumption still existed.

Then came the Singapore Actuarial Society’s 100 mega-ton warhead “SAS Comments: Medishield Life 2020 Review” document (  which was published just in January this year. The Review used more recent data and a longer period covering 2016 to 2019.

It countered LIA’s claim that (at least in this period) there was overcharging, because Average Payout Per Claim went down by 1% (not up!) over this period.

It also completely countered LIA’s claim there was overservicing because the claims incidence rate for IPs (9%) was actually 1% lower than for Medishield Life (10%). It is noteworthy that this is a good comparison because Medishield Life (and Medishield before this) is well designed with copayment and deductibles being a part of the product design as compared to the as-charged and comprehensive riders being offered by IP insurers in the past

Overconsumption = overcharging X overservicing.

If there is neither overcharging nor overservicing, then it is nigh impossible to have overconsumption.

But hang on folks. There is more.

From the table given in SAS’ Comments (Page 20: Table A4), it can be inferred that the CAGR in Management Fees (16%) and Commissions (15%) were growing at much faster rates than that of Gross Premiums (10%) and Gross Claims (11%).

Gosh, how the tables have turned! The 16% and 15% are much higher than the numbers used in the 2015 LIA Study to justify their call to control doctors’ fees (10% for 2012 to 2014)  through fee benchmarking and over-provision of services through panelling and pre-authorisation. This hobbit won’t say it’s disgraceful, but these figures collectively interpreted are pretty embarrassing for LIA.

In case anyone thinks that a few percentage points do not make a big difference, please note these are COMPOUNDED rates, and they tend to have a multiplicative, explosive effect with time. This can be seen by the fact that Gross Claims increased absolutely by 35.9% over four years (when its CAGR was 11%) and Management Expenses increased absolutely by 56.6% (when its CAGR was 16%). A five-point CAGR difference translates into an absolute 20.7% difference over a four-year period. And this absolute difference will increase more rapidly with time as long as the gap exists.

As it turns out, the SAS Comments paper have revealed why there seemingly aren’t enough cookies in the jar – there is a cookie monster helping itself to more and more cookies. And the greatest irony is that the one party complaining most loudly and frequently about not enough cookies is the cookie monster itself!!!

Expensive Tradeoff Between Risk-Pooling And Cost Of Running IP

Another snippet is that that Gross Claims accounted for 75% of gross premiums collected. This means for every four dollars collected, one dollar goes to non-healthcare cost items. Insurance, at its core, is a construct that is supposed to extract more funding efficiency through risk-pooling. But if the “funding efficiency” is only 75% (i.e. only 75% goes to healthcare providers to pay for healthcare), one must wonder is this risk-pooling worth the bother at all. In the Affordable Care Act (i.e. Obamacare), it is mandated that 80% to 85% of premiums must go to healthcare providers, so as to maintain a baseline efficiency in the system. This is also why SMA calls for a 85% to 90% Gross Claims figure to be imposed on IP insurers so as to “instill cost discipline”.

One Payor To Rule Them All

Which leads us to the last point SMA was trying to make – the prospect of a single-payor system that can extract far more efficiency than the current IP sector involving seven players. In 2019, $363M was spent on management costs and commissions. This is a huge sum. If a single payor can run the whole IP system for say $63M, that is $300M in savings. This hobbit is told $300M is the ballpark figure a ‘smaller’ restructured general hospital receives in operational subsidies a year. In other words, the savings so gained can be used to fund another general hospital the size of KTPH or maybe even NTFGH. Alternatively, the money can be put into Medifund to help poor patients in the subsidised healthcare sector. This hobbit can think of no better single payor system operator than MOH. If MOH can run Medishield Life, it can certainly run IPs.

The counter argument to all this is that market competition is good and market forces must be allowed to play themselves out. But as experience has shown, the IP market is hugely imperfect as policyholders cannot freely switch IP insurers once they have pre-existing disease(s). That is why IP insurers can raise their share of the pie in terms of management costs and commissions with relative impunity.

Bad Apples and Dirty Linen

Finally, we come to some of the concerns raised about SMA’s big pushback against IP insurers. People are concerned that with SMA’s Position Paper, the LIA, its members or just their sympathizers will push back with horror stories of unethical doctors overcharging, overservicing etc. In other words, they will publicise all our bad apples and wash our dirty linen in public.

There are some 2000 specialists in the private sector and there will always be bad apples to show and dirty linen to wash. In fact, this hobbit knows quite a few examples too. But that is NOT the point. No matter how many bad apples we have (and this hobbit would like to think there are but a few) and dirty linen to wash, they are ALL encapsulated in the 11% CAGR in Gross Claims. That’s it.

This 11% is just one percentage point higher than the CAGR for Gross Premiums. It means that Gross Claims growth is very close to growing in tandem with Gross Premiums, which is the first precondition to making the IP environment financially sustainable. Now contrast this 11% to the 15% to 16% figures for commission and management costs and one will quickly realise who is the main culprit in this whole issue of IP sector being unsustainable.


The 15% to 16% CAGR for commissions and management costs makes IP unsustainable. Period. Extracting more friction through pre-authorisation, higher deductibles and copayment when using non-panel doctors or having highly restrictive panels won’t address the root cause of the problem. Reimbursing doctors at even lower rates than now may help, but at current rates how much lower can you go? MOH might as well throw in the towel and concede defeat to LIA and its members by withdrawing its Fee Benchmarks if the IP insurer fee scales go any much lower than now.

The SMA Position Paper highlights the findings of the SAS Comments on Medishield Life, and points the way to where we should look for solutions. With payout size stable and claims incidence rate for IP being 1% lower than Medishield Life, the focus of efforts to make IP sustainable must now be on the IP insurers themselves.

The numbers don’t lie….

The 6ME FDW or Maid Check-up

The recent case of the tragic death of a Myanmese maid has led to calls for doctors to be tasked to report cases of maid abuse. Actually this requirement already exists, in small print, in the current form after the doctor ticks off the results for the VDRL and pregnancy tests:

“If you notice signs of abuse, refer the helper immediately to the Police or MOM for help”.

It was also noted that “the doctor had seen bruises around the maid’s eye sockets and cheeks, but Gaiyathiri (the late maid’s employer) claimed that the victim fell down frequently as she was clumsy” (CNA website, 25 Feb 2020; Myanmar maid’s death: MOM reviewing how doctors report potential abuse). It was also reported that Gaiyathiri turned down the doctor’s suggestion for further tests on the victim’s swollen legs in case of underlying conditions.

MOM said “Nothing adverse was flagged to the authorities’ attention on either occasion (when the doctor saw the deceased maid)”.

This hobbit is all for doctors’ playing a greater role in the detection of foreign domestic worker abuse. But to go beyond the present state of affairs, we need to answer a few questions.

The first question that needs to be answered is whether the doctor is supposed to detect abuse in this statutory medical examination using clinical examination or forensic examination methods?

Let us first talk about statutory medical examination. A statutory medical examination is simply a medical consultation and physical examination (and sometimes includes investigations) to demonstrate that the examinee is fit for a purpose as required by law (i.e. statute). Examples include heavy vehicle examination, pilot examination etc. The Six-monthly medical examination (6ME) for foreign domestic worker (FDW) required by MOM is another such example.

The purpose of this examination when it was first instituted was to detect if a FDW was pregnant or if the FDW had contracted sexually transmitted diseases. These questions can easily be answered objectively and in a binary fashion (yes or no) by simple laboratory tests.

Detecting abuse was a later addition to the 6ME that was added on only a few years ago. The case for detecting physical abuse is slightly different. There are no simple laboratory tests with binary outcomes for physical abuse. It is a matter of judgement and therefore more subjective.

Every doctor is trained to conduct a clinical examination. However the clinical examination is based on certain assumptions of a social compact between the patient and the doctor. A clinical examination entails history-taking and physical examination to elicit clinical signs and symptoms. Undergirding this is that the patient must cooperate by telling the truth. I think all doctors would have had the unfortunate experience of being waylaid to some extent by patients not telling the whole truth after many years of practice.

A forensic examination is different. The underlying principle here is that the doctor is trying detect some crime that has been committed. The patient should preferably cooperate with the doctor but the forensic examination is not dependent on this cooperation. After all, a forensic medical examination is a comprehensive examination looking for injuries and taking samples that may be used as evidence in a police investigation and any subsequent prosecution. Doctors will have to be trained to perform forensic examinations if this is the standard expected of them in the 6ME.

It would be helpful if MOM can state if they expect doctors to conduct a clinical or forensic examination when they carry out the 6ME FDW.

Be it clinical or forensic examination, a key point is that the employer or any other person should not be present, if the intent is to detect abuse. However, there is no such stated requirement now, despite the fact that the doctor is to refer the maid to the Police or MOM if the doctor notices “signs of abuse”. It is hard to do a proper examination to detect abuse when the criminal may be right there standing next to the abused. The doctor is also not empowered by statute to confirm his suspicions of abuse by ordering tests.

A second and equally difficult question is how will a doctor be judged? If there is truly abuse and a doctor missed it, to borrow a legal term, what is the “burden of proof” that will be applied to the doctor?

There are three common standards used:

  • Prima facie, i.e. enough evidence to support a case
  • On the balance of probabilities
  • Beyond reasonable doubt

Is a doctor supposed to report abuse because

  • There is just some evidence that the event happened? (“prima facie”)
  • More likely than not that the event happened (50.1% probability that something happened)
  • Very strong evidence that the event happened (beyond reasonable doubt)

If the doctor is informed beforehand what is the applicable standard, then the doctor will also likewise respond appropriately to the standard expected of him or her.

The third question is that of costs. Presently, a 6ME costs anything from the region of $25 to $45 (depending on whether you use urine or blood to detect HCG). In reality, most doctors do nothing more than a cursory physical examination and the whole process takes 5 to 10 minutes or so. A detailed clinical examination (let alone a forensic one) will entail far more time and resources than what is presented committed to the 6ME. It would also mean employers have to probably pay a higher price for the 6ME. But if society is determined is stamp out maid abuse, then it must be so.