LPPL Insurance Situations

Recently, our Health Minister launched four short social media clips to educate the public about health insurance, in particular riders for IP policies. The take-home message is that riders are expensive and get more expensive as the policyholder gets older. It may be better, especially for an older policyholder, not to buy riders or to buy cheaper riders. Of course, cheaper riders mean less coverage and more deductibles and co-payment. All very sensible. I urge you to watch the clips.

At about the same time, Singapore’s “Blogfather”, aka “MrBrown” aka “Kim Huat” also posted two clips to explain what some colloquial short forms mean. In the second of 2 posts so far, he explained what “LPPL” stands for¹.

According to him, LPPL stands for “Laugh Please, Please Laugh”. It can also stand for Log-Periodic Power Law in the field of economics and finance.

To this hobbit, it can also mean a certain location in the human body, namely “Longitudinal Perineum Permanent Location”.

For example, the government introduced the Cancer Drug List (CDL) in 2022. This was introduced ostensibly to empower the government to negotiate for better prices from drug companies and to discourage the use of certain cancer drugs for non-mainstream indications so as to curb rising costs of cancer treatment.

However, many IP insurers then quickly introduced riders to cover for the use of non-CDL drugs. Of course, such riders², while generating more work and income for some medical oncologists in the private sector, has the downstream effect of encouraging what the introduction of the CDL was meant precisely to discourage – more use of such drugs which will lead to an unnecessary and avoidable rise in prices and overall healthcare consumption and expenditure

The quick introduction of non-CDL riders by IP insurers effectively negates the policy intent of CDL. And we are back to square one and the government is caught in an LPPL situation. The only consolation is that such riders must be paid with cash.

Why does this happen and why do we allow it? This hobbit doesn’t have the answer. Or even if he thought he knew, he won’t say it here, that’s for sure.

The first thing to know is that we often (if not always) buy insurance because we want peace of mind. Peace of mind is a wonderful thing. But really, if you think about it, the flip side of peace of mind is fear. Fear and peace of mind are but two sides of the same coin. We buy riders for peace of mind, and we buy riders out of fear. The fear that in case we need these non-CDL drugs, we have no access to them and even if we had access, we can’t pay for them. So we buy these riders.

The IP insurers are making lots of money selling these LPPL non-CDL riders in return for giving us peace of mind, or feeding on our fear (depending on one’s perspective).

And as any psychologist will tell you, fear is a great driving force for animals with some intelligence (and that includes humans). The response to fear is a primal one, hard-wired into the human condition through hundreds of thousands of years of evolution, or adaptation, call it what you may.

While this hobbit really likes the Health Minister’s video clips on riders and that he is a great communicator, this hobbit is not sure the clips can countervail the power of fear and the natural response to fear. Especially when this fear and the response to it is also being actively cultivated and reinforced by many insurance companies and insurance agents who get to make a buck or two out of selling such LPPL riders.

Let us move on to another insurance-related matter that has garnered many eyeballs recently. While this matter is about a motor insurance claim, it is nonetheless medically-related.

It was reported that the Courts awarded $417,000 in damages in a traffic accident case. Unfortunately, this decision was arrived at some 5 years after the accident occurred, and only after the traffic accident victim had passed away. The son of the victim, who is his main caregiver for the many years the victim was incapacitated until his death, was the plaintiff.

The sheer callous temerity of the insurance company was most telling. In the opening paragraph of the Judgment³ given by the District Judge, it was stated, “This is a judgment that documents NTUC Income’s wholly unreasonably behaviour”. This hobbit has read quite a few Judgments before, but none has come close to such a resolutely damning statement right at the start of a Judgment document.

In summary, the case involved a person who was seriously injured by a traffic accident. This victim then made a claim against the driver that caused the accident.

It was noted by the Judge that NTUC Income effectively took over the defence of the case because it would have to foot the bill should the courts decide in the plaintiff’s favour.

NTUC Income efforts to deny the claim was akin to “the sort of casually impersonal stonewalling that some would associate with the worst administrative processes” (Judgment, para 3).

Some particularly galling examples of this impersonal stonewalling –

Claims for pain and suffering and amenities was denied because the victim was comatose and could not have appreciated any pain and suffering at all, even though the victim was intermittently conscious until his death (Paras 14 and 17, Judgment)
Claims for loss of income was denied, even though the victim was working at the time of the accident (Para. 34)
Claims for ambulance-related expenses was denied (Para. 36 of Judgment)
Claims for milk powder for the patient was denied because it was too expensive as the patient could have used a cheaper brand such as “Ensure”. (Para. 61 of Judgment). This hobbit is not so sure if “Ensure” appreciates such publicity from NTUC Income.

And if you think this unreasonable behaviour was arrived at because NTUC Income received poor legal advice, the judge made it clear that the lawyers were merely conveying their clients’ instructions. The judge added that the lawyers’ “advocacy was candid, well-organised and fully in line with their duties to the court”.

Against the backdrop of the furore that ensued, the CEO of NTUC Insurance (NTUC Income was rebranded as NTUC Insurance recently) issued an internal memo addressed to “colleagues”. This hobbit obtained a screenshot of this memo, in which he explained the company’s position and then signed off with “Cheers”.

This hobbit must say he has no clue what is there to be cheerful about.

I think the incident shows publicly that the local insurance sector is truly now in a new era of American-style climate of “delay, deny, defend”, which many doctors are already familiar with while caring for IP policyholders in the private sector. So far, the private patients in A1 and B1 class have largely been spared of such agony because IP insurers generally do not question or apply friction to claims for care delivered in restructured hospitals. But who knows what will happen in the future? This may occur sooner than we think.

This case also illustrates the inadequacy of scope in what is offered by the financial and insurance industry to adjudicate claims before it reaches the courts in the form of civil suits. Today, if someone is aggrieved by an insurer, he can take up his case with the Financial Industry Disputes Resolution Centre (FIDReC) which is a platform to adjudicate disputes involving financial institutions (which includes insurers).

However, this is a platform that is only open to the insured (i.e. policyholders who make claims) and their beneficiaries as well as to those parties who have a “customer relationship” with the insurers

It also only covers disputes of up to $150,000.

In this case, neither the victim nor the plaintiff (the victim’s son) is the insured. They don’t have a customer relationship with NTUC Income either. Strictly speaking the plaintiff is not even a beneficiary of the policy as well. What is more, the amounts accumulated over a four-year period far exceed $150,000. So he can’t use FIDReC and so, he has no choice but to sue. But not many people have the financial resources to mount a civil suit. And of course, there is a lot to lose if he does not win the suit. The plaintiff’s legal costs may be easily six-figures if the suit is protracted, and in a worst-case scenario, costs may be awarded against him, i.e. he has to pay for the other party’s costs too.

The plaintiff in this case has obviously weighed his chances, examined his financial resources and then decided to pursue the civil suit route.

As for healthcare-related or IP-related matters, the situation is even worse off in at least three ways.

FIDReC is not open to service providers that provide a service or goods to the insured. So, hospitals and doctors who experience unreasonable delays and denials of claims cannot use FIDReC.
FIDReC also only handles complaints when a claim has been made, and not before. So FIDReC does not handle issues such as pre-authorisation or how doctor panels are constructed, because no claim has been made.
FIRDeC also only handles disputes that are clinical in nature on a voluntary basis. When such a dispute occurs, IP insurers can choose NOT to participate, even if the policyholder has lodged a complaint with FIDReC.

To use a partially real-life example. A patient has an anal fistula abscess. The panel doctor seeks pre-authorisation but is denied. Inexplicably, the case manager suggests that he tries to manage the anal fistula abscess “conservatively” (doctors and nurses reading this, please don’t laugh). This advice to treat an abscess conservatively is not made-up. It actually happened.

If you think the insurer’s case manager should and could be held accountable for making medically unsound and unsafe suggestions and recommendations, you are wrong. Insurers and their employees are not regulated at all for making recommendations and decisions that impact on the clinical aspects of healthcare delivery to their policyholders. For all you know, the case manager has a degree in art history and has recommended the use of Chlorox bleach to treat strangulated piles, and he can get away with such an unsafe recommendation with no consequences to himself or the insurer that he works for. Actually, I exaggerate. I know a few art history graduates who know more about healthcare and medicine than many IP insurers’ case managers. Let’s not unjustly belittle art history grads. They are good people doing good work, which is more than what I can say for many case managers.

OK, this is where the real part ends. We go on to the hypothetical part.

Suppose the surgeon and patient agrees to surgically drain the abscess anyway (because as any 2^nd year medical student will tell you, abscesses must be drained – just in case any case manager is reading this and is confused). However, for reasons beyond anyone’s control, the 70 year-old patient with well-controlled diabetes gets pneumonia post-op and gets hospitalised for longer than expected, and the hospitalisation includes 2 days in the ICU.

The claim for the hospital stay is denied because the doctor and patient did not first try “conservative” treatment. The patient/policyholder then files a complaint before FIDReC. The insurer declines to take part in the FIDReC process citing that this is a clinical matter.

What is the patient, surgeon or hospital now to do? The total bill could be say, about $30,000. The aggrieved parties may think that well, the legal fees for bringing this to court alone could well be close to or exceeding $30,000. The surgeon may be fearful that should he pursue the civil suit route, the insurer may well remove him from the insurance panel after this. After all, no reasons need to be given for selecting or removing a doctor from the panel.

And so, all the other stakeholders are again stuck in a LPPL situation, with the insurer being the only party to benefit from such LPPL situations.

Whether we want to admit it or not, “Delay, Deny, Defend” works most of the time. Such is life. LPPL.

1 https://www.youtube.com/shorts/RCSvZUgOCgM

2 https://www.singsaver.com.sg/blog/best-ip-riders-and-supplementary-coverage-for-cancer-protection

3 https://www.elitigation.sg/gd/s/2025_SGDC_150

An Insurer Can Do Many Things

I read with interest this rather long opinion piece by an ex-ST journalist in The Straits Times “Some practical ways to rein in rising healthcare costs, premiums” (Claire Huang, 21 May 25, The Straits Times)

In particular, one section highlighting Integrated Plan (IP) insurer Great Eastern Life deserves scrutiny.

Let’s reproduce the section here,

“What an insurer can do”

“IP insurers are constantly looking for ways to sieve out doctors and hospitals that like to maximise profits.

In this area, Great Eastern Life might have found an achievable and pragmatic way out.

In October 2024, the insurer launched its own medical care concierge, where its in-house officers help match patients to doctors, based on their IPs.

These 10 officers, who are experienced in handling patients or are medically trained, are employed by the insurer and receive a fixed salary.

They first determine what benefits apply based on the policy the patient has, then they recommend specialists who are on Great Eastern’s panel.

Patients can also choose to seek treatment from specialists who might not be on Great Eastern’s panel.

In such an instance, the co-payment amount will logically be higher and some benefits may be moderated if the specialist is not on the panel.

The cost estimates and differences will be made known to the patient.

Those who opt for panel doctors will receive pre-authorised certificates and their claims will be guaranteed by the insurer.

Already, the scheme has worked for Great Eastern, whose concierge team has processed more than 1,100 policyholders so far.

Besides preferred doctors, insurers also have their preferred hospitals.

The preferred hospitals approach functions on the basis of the insurers’ bargaining power, which has grown as medical tourism here dries up.

Some insurers secure bill discounts for patients by agreeing to send these patients to preferred hospitals.”

Let this hobbit now comment and offer another perspective on this subject in addition to this piece of awkward journalism.

In particular this statement, “IP insurers are constantly looking for ways to sieve out doctors and hospitals that like to maximise profits”.

This is true to a certain extent. But then, to be fair to both doctors and hospitals, aren’t the insurers, as companies responsible for maximising shareholder value, almost always trying to maximise profits too? Why only focus only on doctors and hospitals? Should IP insurers also be sieved out when they maximise profits?

Anyway, in this hobbit’s opinion, let us look at some past behaviour and practices as well as the track record of GE to see if it is as good as it is made out to be by this article.

In the 2022 IP Providers’ Ranking Survey conducted by SMA which was published in the SMA News June 2023 Issue, GE did not do so well: (https://www.sma.org.sg/news/1953/June/SMA-Integrated-Shield-Plan-Providers-Ranking-Survey-2022).

In fact, of the 4 largest IP insurers, (Income, AIA, Prudential and GE), it regularly came in last on many fronts. The Survey involved respondents who were doctors. Out of a scale of 1 to 5 (5 being the best), it achieved an overall score of 2.5, which was only higher than the two smallest IP insurers: Singlife and Raffles (which has an employee-physician model). Overall, it was placed 5^th out of 7 IP insurers.

In terms of doctor-panel management, GE did pretty well in the 2022 Survey, in terms of inclusiveness and transparency of criteria for doctor selection, scoring 2^nd out 7.

But for 5 out of the remaining 6 questions asked, it ranked a poor and consistent 5^th place out of 7 insurers, above Singlife and Raffles but consistently below Income, AIA or Prudential. These 5 questions are: ease and timeliness of pre-authorisation, timely payment to doctors and appropriateness of fee scales and putting up obstacles to dissuade policyholders to see non-panel doctors.

Of course, one may say well, this is all about doctors’ perspective which may be biased. Well, let’s look at MOH data then.

Lest we think that panel management is something that GE is good at, and maybe that is the case in 2022, latest and official MOH data suggests otherwise: (https://www.moh.gov.sg/managing-expenses/schemes-and-subsidies/integrated-shield-plans/about-integrated-shield-plans/)

Let’s look at what happened in 2024 for the Big 4 IP insurers according to MOH data

Panel	No. of Private Specialists (Total)	No. of Private Specialists Who Left	No. of Private Specialists who Joined
AIA	594	25	12
GE	779	126	74
Income	807	37	93
Prudential	814	16	154

The data provided by MOH claim with this footnote/disclaimer:

“The higher private specialist attrition in 2024 was due to Great Eastern Singapore’s planned panel review. Great Eastern Singapore continues to maintain a large pool of private specialists on its panel”.

I would hazard a guess that this footnote was inserted at the insistence of GE but to be fair, one does not really know who wanted it to be there. But the MOH numbers speak for themselves.

Adding on new specialists is always a good thing for policyholders because it gives them more choice. But removing specialists may not be a good thing. It leads to loss of choice and more importantly, continuity of care probably suffers. 126 out of 779 is a turnover rate of 16%. The footnote only states that it was due to a “planned panel review”. The statement doesn’t state how often such planned panel reviews occur. Could it be yearly, or more frequently or less frequently? Anyway, if you remove 16% of specialists each year, you can effectively turn over the entire panel in 6.25 years, and that is assuming you top up each year with the same number of new specialists that you remove, which is not even the case here. The panel size actually shrank in 2024, because GE only added 74 private specialists while it removed 126. The panel size of GE for 2022, 2023 and 2024 were 764, 831 and 779 private specialists respectively.

As a policyholder, one should assess an IP insurer’s panel management not just on the absolute number of specialists and whether the panel size is increasing, but also the amount of turnover (number of specialists leaving and joining). The worst scenario is when panel size decreases and at the same time the panel experiences high turnover. You have less choice and continuity of care suffers as your preferred doctor is removed from the panel.

One can easily access MOH data from the link given above and see for yourself and come to your own conclusions as to which IP insurer is better managing their panels for the benefit of policyholders and not just for other reasons, e.g. profit maximisation.

Next, we come to look at some examples of how GE (or rather their appointed third party administrator, Adept Health) communicates with some of their panel specialists. Several specialists have surfaced essential copies of the same letter to this hobbit sent out in Aug 24. An excerpt from this letter reads

“XXH Privileges, Great Eastern (GE) is pleased to announce that XX Hospital (XXH) has been designated as the priority and preferred hospital for Great Eastern Life customers. This selection is based on XXH’s commitment to delivering exceptional care, which aligns with the goal of providing the best possible healthcare experience for the customers”

If the panel doctor does not play ball and admit GE policyholders to XXH, then they may receive another letter several months later. Excerpts from this letter (which this hobbit received with the doctor’s name redacted, so the doctor’s identity is unknown even to this hobbit):

“We have recently noticed that the clinic has not been prioritizing admissions to GE preferred hospitals, such as the XXH. This may result in non-compliance with our guidelines.

As a result, Dr. YYY name is currently removed from the Health Connect website.

If you are accredited, we kindly request that you prioritize admitting patients to GE preferred hospitals during this 3-month observation period.

Should you have any questions or require clarification, please do not hesitate to contact us.

Dr YYY, apparently appealed, because a month later, the TPA replied with an email. Again, excerpts from this email,

“Thank you for allowing us the time to review this matter.

Based on our PAC issuance data of Year 2024, we do observe there are patient admission from Dr YYY mostly at ZZ Hospital (You can refer to the PAC data captured at DA Adept records for your reference). As we are also informed by GE side of data (for non PAC cases) it was observed with similar trend as well.

We are open to understand more from Dr YYY if there are any challenges or concerns in supporting this initiative.

Please note that despite the temporary removal of Dr. YYY’s name from the website, Dr YYY still remains as a panel specialist under GE Shield. This change will not impact Dr. YYY’s PAC requests”.

Finally, Dr YYY was terminated from the panel recently by email:

“We regret to inform you that we’re serving this termination notice on our Health Connect Provider Agreement”. No specific reasons were given for the termination, but one can reasonably come to your own conclusions from the sequence of events and previous communication the reasons for the termination.

A few points are worth discussing here. As an insurer, it is free to source for the best deal from private hospitals, generally speaking. But as a doctor, I can tell you, there are hospitals and then there are hospitals. This is the same for restructured hospitals. There are things that SGH can do, that well, Sengkang General cannot support well as a hospital. There are complicated stuff that NUH can do, that NTFGH cannot. MOH acknowledges this as much – different restructured hospitals have different levels of capability.

And so it is too with the private sector. There are complicated procedures that XXH cannot support, that another private hospital can. Of course these better equipped and staffed hospitals are often more expensive. To simply say that one must admit their patients to a certain hospital just because an insurer has a special arrangement with that hospital ignores the complicated nature of medical practice and hospital capabilities, and may even promote unsafe clinical practice just to satisfy an IP insurer’s commercial interests.

Please also note in the above correspondence that the TPA did not once claim Dr YYY was expensive and did not follow GE’s fees schedules. The professional fees charged by Dr YYY was never highlighted as an issue.

More importantly is the whole idea of transparency. Has GE informed its policyholders in the first instance that panel doctors who don’t use their preferred XXH hospital will be penalised? And perhaps even eventually removed from the panel? One must tell the good news with the bad news. One should not only tell policyholders that they will get free parking and a free fruit basket etc if they go to XXH. They should also tell them that there is a risk of their preferred panel doctors being removed from the panel if they do not agree to being admitted to XXH, leading to a loss in the continuity of care.

In fact, the IP insurer should tell potential customers of their IP plans upfront that their choice of care is largely limited to certain preferred hospitals, or rather private specialists admitting to these preselected hospitals before IP policies are sold or purchased. Then folks shopping for an IP policy can then make an informed choice of which IP insurer to use or buy their IP policies from. What GE is doing is essentially selling a “bundled” IP product, with preferred specialists and preferred private hospital(s) bundled together. Nothing wrong with that, but they need to tell everyone upfront, including existing policyholders and potential customers who are seriously considering buying their IP policies. They can then compare the price of a bundled product with the price of another IP product that gives them more choice of not just doctors, but hospitals as well.

Back to the subtitle in the opinion piece in The Straits Times, “What an insurer can do”. There are many things that an insurer can do. Perhaps too many. This is because the clinical aspects of the IP sector are largely unregulated while the assigned regulator, the Monetary Authority of Singapore (MAS) is interested mainly in ensuring that an insurer is financially viable and does not go bust. Indeed, the insurer can do many things legally. But should they?

Now, based on the above information, would a hypothetical construct called “the reasonable lay-person” still buy an IP policy from GE? Perhaps he will, perhaps he won’t. This hobbit doesn’t know. Perhaps Ms Claire Huang may know and you can ask her.

How You Pay Affects How Much You Pay (and How Much Taxes We Pay)

Last month, DPM Gan Kim Yong and Health Minister Ong Ye Kung gave an interview to The Straits Times’ Ms Salma Khalik (Healthcare financing in Singapore: 10 Questions for DPM Gan and Health Minister Ong, 10 April 25). These are two persons who collectively have run MOH for 14 years and they really know what they are talking about.

But for the avoidance of doubt, the serious smart money is on the interviewer, Ms Salma Khalik, who has been covering health for ST since BC times (Before Clustering) and possibly even before there was Internet and the smartphone. This hobbit thinks only Senior Consultants can safely claim they were already born when she started covering health matters for ST.

A few things struck me in that interview, which includes lightning, since it was so near to the General Elections 2025 when the interview was given. The first notable point is that by 2030, the MOH Budget likely to approach the eye-popping figure of $30B. To revisit the first of Minister Ong’s two truisms of healthcare which he mentioned last year in Parliament (6 March 24) – the people always pay. This $30B will be paid by the taxpayers, since MOH Budget is mainly funded by government revenue.

Another important point made in the interview and also previously on other occasions is that one in two persons with Integrated Shield Plans (IPs) and riders opt for subsidised care.

These two points are worth mulling over especially in the context of Minister’s Ong’s second truism – How you pay affects how much you pay.

Personally and selfishly speaking, I do hope that people with IPs and riders do not opt for subsidised care. The logic is simple: – subsidies are always paid by every taxpayer, and that includes me. But if folks use more insurance to pay for their healthcare expenses, then the taxpayer pays less. It’s almost literally a zero-sum game because insurance is funded by policyholders and returns from investments by insurance companies using the premiums collected.

However, whenever folks do NOT utilise their IP entitlement and go to the subsidised classes, taxpayers end up paying most of the bill. Even for B1 class, taxpayers pay because B1 class is subsidised a bit. Only A class is unsubsidised.

The next question to ask is then why are so many people with IPs and riders opting for subsidised care? There are many reasons but one of the most often quoted reason is that they worry about difficult access to subsidised care after a hospitalisation or procedure. Current IP plans all cover the patient at the outpatient level only for a very limited period after a hospitalisation or a procedure. After the coverage expires, the patient has to pay the expenses himself. And once a patient opts for private hospital care or A or B1 care in the restructured hospitals, he will continue outpatient follow-up care with either private specialists or the private (unsubsidised) clinics in the restructured hospitals. Many such conditions are chronic ones and they require a long, if not life-long, outpatient follow-up and many people need subsidies due to the high cost of such long-term follow-up.

The end result is that many people then opt for subsidised care despite having bought IPs and riders so that they can avail themselves to these subsidies during follow-up.

To better understand this flight to subsidy safety among IP policyholders with riders, we can conceptually divide policyholders into three groups:

• Group 1: Folks who will always use private sector services for inpatient and outpatient care
• Group 2: Folks who will select between private sector and subsidised services depending on insurance coverage and subsidy policy
• Group 3: Folks who will always use subsidised care (basically, they didn’t really know what they were buying when they bought an IP)

For the avoidance of doubt, “private sector services” refer to services that are completely unsubsidised – private sector hospitals and clinics and also A class inpatient and private (unsubsidised) specialist clinics in restructured hospitals (RH) since the latter do not consume government subsidies.

The 2nd group is what concerns us today. As aforesaid, because of the bundling of subsidised inpatient care with subsidised outpatient care, many policyholders forgo the use of private inpatient services so that they can enjoy subsidised care during follow-up. And as our population ages, the follow-up of chronic conditions discovered during before or during an inpatient episode can be for a long time, if not life-long.

This results in unnecessary consumption of the MOH Budget (i.e. taxpayers money).

This policy has been in place for a long time because policy wonks are worried that folks will game the system. I.e. these folks want the best of both worlds: by consuming inpatient services paid for insurance and then using subsidised services when insurance coverage ceases. But in reality, as we shall see, this worry has been downgraded somewhat in recent years.

If one thinks about this again, by continuing with this policy or practice, many people end up using subsidised, inpatient services unnecessarily which generally speaking, are a lot more expensive to the taxpayer than outpatient services. Again, we have to remember it is better if policyholders finance their healthcare needs with insurance monies than with tax revenue.

However, if we truly allow patients to cherry-pick (by using insurance-funded inpatient services and taxpayer-funded subsidised services), then a problem will arise with the first and second groups. The attraction of subsidies is so great that some folks in these groups will migrate towards outpatient subsidised services.

There is already some pre-existing friction put in place to discourage this because one cannot choose the specialits of his choice in subsidised services, whether inpatient or outpatient. Also, appointment times for private SOCs are significantly shorter than subsidised SOCs. But this hobbit readily admits this friction or obstacle is not really big enough to prevent overconsumption of subsidised services. Further trade-offs may be therefore necessary.

Moreover, access to subsidised specialist outpatient clinics (SOCs) and services have been made much easier in recent years with the CHAS, Pioneer and Merdeka Generation benefits. It used to be that only polyclinics and A&E referrals will give a patient access to the subsidised SOCs. But now any Healthier SG family physician can make referrals to the subsidised SOCs and their patients will enjoy subsidy levels according to their CHAS, Pioneer, Merdeka Generation card status. This is what I mean when I say the worry of overconsumption of subsidised services have been downgraded somewhat in recent years.

This hobbit doesn’t have the data, but it would be good if someone with the data does a simulation on how much of the MOH budget is used to finance subsidised inpatient cases that come from IP policyholders who voluntarily downgrade at the inpatient level. These are the potential savings from that could have been realised if inpatient subsidies were not doled out to this group.

This hobbit would like to suggest that to reduce the number of IP policyholders voluntarily downgrading to subsidised services without using their IP benefits, it is worthwhile to just allow IP policyholders to choose a private service for an inpatient stay and then let them have the option of choosing subsidised SOC services when they go for follow-up. If the policy wonks are worried that this would lead to everyone choosing subsidised SOCs, then we can perhaps strike a compromise – we would limit this option to conditions that had been newly diagnosed (i.e. just before or during the inpatient stay) for the purposes of this inpatient or procedural episode.

For example, if a patient goes for a Total Knee Reconstruction (TKR) at a private hospital or as a Class A patient in a RH, but is diagnosed to have diabetes just before admission as he is being assessed by the anaesthetist, then he should be given the option after the operation to be followed up at the subsidised SOC at a RH. The subsidised SOC can then decide to follow-up this patient or discharge him to the polyclinic when his diabetes stabilises.

Today, certain RHs already allow for downgrading to subsidised SOCs after B1 or A class inpatient episode. But to further discourage unnecessary downgrading, we should maybe allow private hospital inpatients (not just RH’s inpatients) to use subsidised SOCs as well after IP coverage expires.

If the patient or IP policyholder is given this optionality of delinking outpatient subsidy from the inpatient episode, we can perhaps get more IP policyholders to use their IP benefits at the inpatient level and rely less on funding via subsidy, i.e. how much the government or taxpayer pays.

The Screwtape Letters (Satiric IP Version)

(With apologies to CS Lewis and “The Screwtape Letters”)

My dearest Wormwood,

I bring you great felicitations from the High Command of the Infernal Insurance Conclave. Your sterling efforts in beguiling the masses and policy wonks have caught the eyes of our Dark Lords there. In particular, the pronouncement that IP policies, (in no small part due to your powers of subterfuge and persuasion) will not be fully portable has gained us valuable breathing space and time.

High Command has given me the most pleasant task of informing you that you have been promoted within the Conclave Lower Ranks to Senior Beguiler Class 2. Our whole family is proud of you, and we are at this very present moment celebrating this news with a salubrious portion of a dead (and unsuccessful insurance claim) policyholder’s flesh and a generous pour of a physician’s blood, toil, tears and sweat. As you can see, even in hell, there can be moments of mirth. And greater mirth there will be, when you return from the frontlines battling those damned policyholders and physicians, while keeping the policy wonks on your side. The 3Ps: Policy Wonks, Policyholders and Physicians. Just keep the Policy Wonks on your side, and you will be fine against the piteous Policyholders and the pathetic Physicians.

By IPs remaining non-portable, we stay immune to the forces of competition and the free market once the unsuspecting customer has bought a policy and has developed pre-existing diseases. It is said that healthcare is an example of market failure. Post-sale IP without portability, and hence competition-proof, is proof of this adage. And yet they still fell right into it. Please forgive me if I sound uncharacteristically gleeful.

We must now press our advantage with our potent miasmatic concoction of deceit and duplicity. On one hand, we will continue our sorrowful and specious tale of not being successful or sustainable as a business, which will gain us much unmerited sympathy from all the silly people in high places.

On the other hand, and with some luck, we will continue to have a low claims ratio, while paying ourselves more and more in the form of management expenses and distribution costs (i.e. commissions). Our ostensibly pitiful tale will be bolstered by the fog of “change in reserves and other expenses”, which will vary a lot from year to year and which nobody can explain clearly why this is so.

Our self-gratifying efforts in terms of ever-increasing management expenses and distribution costs can only be thwarted internally – when those morons on the investment side fail miserably to deliver any returns on their investment activities, and even, Our Father Below forbid, make losses.

But this is only half of the equation. It is imperative that you continue to bring legions of souls to feed the all-consuming IP behemoth that in turns funds our lavish lives. We do this by exposing our multitudinous targets to the coalface of their insecurities and fears, knowing fully well that in the end, half of them who have bought IPs will never make a claim, even when they fall sick in the hospitals. They still opt for the subsidised care funded by public monies, which in turn are mined off the bent backs of our burnt-out taxpayers.

This beauteous state of affairs can only be sustained by ensuring that their fear of not having access to subsidised care after discharge from private care remains palpably intimidating if not paralyzing.

Nearly 70% of the population have bought IPs. Can we do better? 80%? 90%? Delirious joy awaits us if we can hit these higher numbers, which will lead to more and more remuneration and commissions for ourselves.

However, it is my duty to remind you, my dear nephew, that you must never confuse the Policyholder with the Patient. For indeed, while they are physically the same being, the two cannot be more different. The IP Policyholder is a prey that has been captured; a resource that can feed our ravenous appetites for material gratification as long as he pays his insurance premiums every year, while the Patient is someone who has fallen ill and will do exactly the opposite as the Policyholder. The Patient will consume the very same monies that we have so successfully leeched out of the Policyholder. We compete for policyholders. We do NOT compete for patients. Policyholders are good news until they become patients, because patients are bad news. We have great affection for the would-be or pre-policyholder, but we have no mercy for the patient. That is why the Dark Lords of the High Command of the Conclave always publicly say “Our first responsibility is to the Policyholder”. Nobody talks about Responsibility to the Patient.

We must stay the course of limiting access to those pesky physicians. Once again, I recall with great pride and fondness my classmate in the Abyss Academy, Slubgob’s role (now Lord Slubgob) in introducing the idea of preferred physician panels. What genius! This was a turning point in our battle with the Forces of Light. The only thing “preferred” about these panels is that we prefer them to be as small as possible. Indeed, the policy wonks did put pressure on us to increase the size of these panels slightly initially after they were introduced and we did so to superficially appease them. But as long as these panels remain, we have all the aces in the game of limiting access. We also continue to increase the friction in gaining access to these panels for physicians, and obscure our true intent by remaining completely opaque on the criteria that we use to bestow (with that obligatory whiff of sovereign disdain) on a physician a place on our panels. (If truth be known, sometimes we just flip a coin and let the Fates decide). Do remember, that you must make sure a physician knows it in his bones that he exists on our panels at our whim and fancy. If need be, sometimes he must be made to grovel to keep his status as a panel doctor. Like patients, show no mercy to them either. For panel physicians who show no less than perfect obeisance, drop them.

The true power of panels is that they scythe through that most hated and oft-quoted construct called the patient-doctor relationship. The Conclave doesn’t say so publicly, but it finds the concept of the patient-doctor relationship abhorrent and gnaws at the core of what the Conclave stands for, which is lucre.

With panels, we can dismantle old patient-doctor relationships and replace them with transactional claims and disbursements between policyholders and physicians that are completely controlled by us. With panels, we, the intercalators, have surreptitiously become more powerful than whatever detestable direct bond that physicians thought they had with their patients. With panels, we march on with our plans to obstruct and obfuscate.

Finally, we have to stay alert to the powers of the regulators. Fortuitously, they remain somnolent and oblivious to the cries for regulation with regard to the clinical aspects of IPs. We must keep up with our veneer of commitment to participating in whatever mediation or remedial processes the policy wonks have come up with, as long as our participation remains discretionary.

We must once again use our powers of deception and misdirection to keep the current state of non-regulation under the shroud of pseudo-adjudicatory forums. For once we are compelled to participate and follow decisions made by external parties on matters concerning what is appropriate clinical care that should and must be funded by us, we are then regulated, and in truth, quite done for. However, it would be remiss of me not to remind you that we must also keep up the illusion of sincerity and guise of congeniality by participating in some cases which we are most likely to win the debate, while refusing to take part in those many cases where the facts are patently against us.

Please give me an update next month on your continued training in the field of regulatory capture and your masters dissertation on this same subject. Until then, I remain,

Your affectionate uncle,

Screwtape

Hobbitsma’s note:

For the avoidance of doubt, this is satire. All characters mentioned in this post are fictional.

CS Lewis (1898 to 1963) was an Oxford professor in English Literature. He wrote many books, including The Chronicles of Narnia. The Screwtape Letters is a Christian Apologetics fictional novel written by him and dedicated to JRR Tolkien (his contemporary and good friend from Oxford, who wrote Lord of the Rings) and it is written in a satirical and epistolary style.

“First published in February 1942, the story takes the form of a series of letters from a senior devil, Screwtape to his nephew, Wormwood, a junior tempter. The uncle’s mentorship pertains to the nephew’s responsibility in securing the damnation of a British man known only as “the Patient”.

By 1999, the novel had 26 English and 15 German editions, with around half a million copies sold.” (https://en.wikipedia.org/wiki/Screwtape)

Hurray to Income’s Outcome

If the Income-Allianz deal was subjected to a vote by Singaporeans or Income policyholders, then the outcome would probably be that the deal should be called off. Despite all the clarifications and reassurances from the Board of Income Insurance and NTUC Enterprise, the man in the street never quite warmed up to this proposed acquisition.

As a policyholder myself of an integrated shield plan (IP) sold by Income, I am also happy that the deal has been blocked by the government. Income’s Outcome is good to me.

But the revelations made by the MCCY Minister Mr Edwin Tong on 14 Oct 2024 in Parliament is nothing short of a bombshell to this hobbit IP policyholder. The capital reduction or extraction that came with the acquisition by Allianz was never made public before that. It is not peanuts we are talking about here, but $1.85B!

What is more interesting is that Income Insurance first announced that they were in discussions with Allianz on 14 June 24 and exactly four months later, on 14 Oct 24, Income announces that they respected the decision of the Government to not approve the deal.

In these four months, between the initial announcement of 14 June and the announcement of 14 Oct, Income Insurance made four announcements on its website with regard to the proposed acquisition. None of them mentioned anything about capital extraction.

If you read the Minister’s speech carefully (Paras 41 to 43 of https://www.mccy.gov.sg/about-us/news-and-resources/speeches/2024/Oct/Pre-conditional-voluntary-general-offer-by-Allianz-for-Income-Insurance ), it is very clear that the Income Insurance Board have missed the wood for the trees in terms of fulfilling the social mission of Income Insurance and serving public interest.

The Income Insurance board has 12 directors, of which 10 are independent. It is noteworthy that on the press release dated 27 July 24, it was stated that all 12 directors approved the proposed transaction.

(https://www.income.com.sg/about-us/corporate-information/press-releases/further-information-on-the-pre-conditional-volunta)

Which really brings to mind what were these 12 experienced and intelligent individuals thinking of when they approved the deal?

In addition, there was also a Board “Steering Committee” set up to recommend to the full Board with respect to this proposed acquisition. It consists of a majority of independent directors and was chaired by an independent director. This Committee is supposed to ensure that “the interest of policyholders and shareholders were considered, in evaluating the transaction”. Did they have public interest and social mission in mind in addition to considering the interest of policyholders and shareholders when the evaluated the proposed acquisition?

What were the members of this Steering Committee thinking when they (presumably) recommended to the full Board to approve the transaction?

It is also reasonable to think that for the deal to have gone through the board approval of Income Insurance, the support of its largest shareholder, NTUC Enterprise would have been obtained before the deal was made public. NTUC Enterprise owns 72.8% of Income Insurance. The NTUC Enterprise Board and Executive Directors are all very experienced people, including a few very senior union leaders and ex-politicians. Indeed, NTUC Enterprise and its Chairman have defended the deal on at least two occasions (25 and 300 July) and these were made public through press releases by NTUC Enterprise.

Therefore, there were at least three levels of approval or concurrence that were probably obtained: Income Insurance (Board) Steering Committee, Income Insurance Board of Directors and NTUC Enterprise Board. Did these three bodies take into consideration the issues of

capital extraction
fulfilling its social mission
public interest?

If they did, then how did they and MCCY arrive at such divergent positions (Paras 41, 42 and 43(ii) of Minister Edwin Tong’s speech in Parliament on 14 Oct 24):

Here are the excerpts of the Minister’s speech as taken from the MCCY website:

“41 First, we find it difficult to reconcile the proposed substantial capital reduction, soon after the transaction is completed, with Income’s representations to MCCY during the corporatisation exercise that it was aiming to build up capital resources and enhance its financial strength.

i) As I had explained, as part of that exercise, Income had sought and obtained an exemption to allow it to carry over a surplus of S$2 billion to the new corporate entity.

ii) The proposed capital reduction runs counter to the premise on which the exemption was given

iii) If not for the Ministerial exemption in 2023, Income Co-op’s accumulated surplus of some S$2 billion would have gone to the CSLA after being wound up, to benefit the Co-op movement in Singapore as a whole.

iv) MCCY has not seen any arrangement within the present transaction to account for the estimated S$2 billion surplus that was carried over to the new corporate entity, due to the exemption. There is no clarity on how this sum will be directed towards advancing Income’s social mission.

42. Second, MCCY is not satisfied that Income will be able to continue fulfilling its social mission after the proposed transaction.

i) There are no clear binding provisions or structural protections in the deal to ensure that Income’s social mission will be discharged.

ii) It is also not clear what Income might do after the capital extraction, for example, to adjust or trim its insurance portfolio, and what impact this could have on policy holders.

iii) NE has stated that it intends to maintain Income’s social mission. MCCY accepts that NE is making this commitment in good faith. But MCCY is not confident that NE’s intentions, or the assurances Income gave earlier to MCCY, can be upheld”.

Para 43(ii) further states “As such, it is the Government’s view that it is not in the public interest for the transaction, in its current form, to proceed”

What this hobbit would give to be a fly on the wall when the Income Steering Committee and Board met to discuss, recommend and approve the proposed acquisition.

This blog discusses primarily about health matters so let us get back to health matters, in which Income plays an important role as a big provider of IP policies and the impact that it has on doctors who provide services to their policyholders.

Anecdotal evidence suggests that Income was a very decent IP provider in the past. They respected the MOH Fee Benchmarks in its entirety, unlike many other IP insurers: as long as you charged within the lower and upper limits, Income would reimburse.

But things have gotten worse recently. Some private specialists claimed that the change coincided with the appointment of a Third Party Administrator (TPA) to handle IP claims. Some say it all began when Income ceased to be a cooperative and got corporatized. We may never know if these claims and theories are true as it is very difficult to prove causation in such matters.

Also, the extended panel (EP) practices of Income is apparently quite different from how other IP insurers run their EPs. Some private sector specialists have opined that it is not popular with both policyholders and doctors. Apparently, in contrast to other IP insurers’ EP policies and practices, the Income EP features more friction and more disincentives.

Well, now that the deal in its present form is effectively deader than the dodo bird, this hobbit hopes that the Income Board and Management can refocus their energies on making their IP Plans better managed, giving their policyholders (e.g. me) a better deal and more choice of healthcare providers.

On the larger front, it was only as recently as September 2023 when the Monetary Authority of Singapore (MAS) classified Income as one of the four “domestic systemically important insurers” (effective 1 Jan 2024). In other words, Income is actually one of the Big Four in the local insurance scene, together with AIA, GE and Prudential. Income has the scale, and resources to innovate, stay profitable, look after its policyholders well and at the same time also fulfill its social mission and serve public interest. Let’s hope that happens now as we put this unpleasant episode behind.

IPs: We Need A “Policy Reset” Here Too….

Recently, the Health Minister described the intense competition that exists between Integrated Plan (IP) insurers as “a race to the bottom”.

He was speaking at the Securities Investors Association (Singapore) or SIAS’ 25^th Anniversary Members’ Night on 12 July 24. This was extensively reported in the press. https://www.straitstimes.com/singapore/ip-insurers-risk-a-race-to-the-bottom-as-they-compete-to-win-market-share-says-ong-ye-kung

The context of this race to the bottom analogy is that IP insurers “have been offering very attractive terms to encourage sign-ups and win market share. This includes IPs that promise no claim limits, and riders to protect policyholders from co-payment” which contributes to the buffet syndrome occurring downstream. The outcome for IP insurers is that “with escalating claims, insurance companies are hardly making profits on their health insurance portfolios”

The minister further opined that “we may be in a health insurance vicious cycle, of overly generous insurance policy design, buffet syndrome leading to more non-critical or even unnecessary tests and treatments being prescribed, which in turn leads to bigger bills and higher premiums for all. We are chasing our own tail, and everyone is just getting worse off eventually”.

This hobbit largely agrees with what the Minister has said. However, this race to the bottom is largely of the IP insurers’ own making. Nobody asked them to offer as-charged plans or first-dollar coverage riders. You made the bed you now lie in.

While it is easy to blame doctors and patients for the buffet syndrome (the more “professional” term for this in health economics is “moral hazard”), it should be stated here that the Minister himself has said this is “human nature”. With the exception of this mythical hobbit, doctors and patients are humans. Can we change human nature resolutely and permanently? Probably only with great and sustained effort. If it were not so, there will be world peace and everyone will have a healthy lifestyle. But instead, we have to wage war against diabetes and now against instant noodles as well.

More importantly, doctors’ professional fees as a component of the total hospital bill have been decreasing over the years. In other words, in terms of dollars and cents, the doctor is NOT the main beneficiary of this buffet syndrome. Private sector specialists who have been out there for some time now often remarked that their professional fees have fallen from about one-third of total hospital bills 15 years ago to about 25% or even 20%. Hospital component of bills have increased significantly. But since there are so few private hospitals out there, they have pricing power and IP insurers cannot or aren’t willing to pressurise them to lower their charges. Hence, IP insurers continue to pay for lobsters and steaks found in inpatient bills while they hire armies of case managers to ask doctors stupid questions and deny insurance claims from policyholders.

But these are at best peripheral questions. Ultimately, the Minister’s observation that “with escalating claims, insurance companies are hardly making profits on their health insurance portfolio” needs to be reflected upon. Against this backdrop, there are a few noteworthy points that bears highlighting:

The implementation of the MOH fee benchmarks a few years ago means it is very difficult for private specialists to overcharge. There are a several imaginative ones that over-service and multi-code. But with MOH Claims Management Office now in place, it will be even harder for these shenanigans to occur going forward. And as aforesaid, with doctors’ professional fees becoming a smaller and smaller component of total bill size, the key factor responsible for growth in total bill size must lie elsewhere. This is borne out by statistics released by MOH: the Compounded Annual Growth Rate (CAGR) for Median Total Private Bill Sizes from 2007 to 2021 was 4.3%. The CAGR for median private hospital bill size was 4.5% for the same period while the CAGR for Median Total Private Doctors’ Professional Fee was only 2.7% (as reported in The Straits Times on 14 June 2023). This is a point that no IP insurer or facility operator mentions, much less acknowledge.

The claims ratio in Singapore was 73% during the Covid years of 2019 to 2022. In the few years preceding this period it was 75% (2016 to 2019).

The claims ratio is the percentage of insurance premiums that is actually paid out to healthcare providers when claims are made. In USA, Obamacare demands that the claims ratio must be at least 80 to 85%. If IP insurers cannot make money with a claims ratio that is only 75% or less, then it stands to reason that the other costs are too high. Other costs would include distribution costs (i.e. commissions etc.) and management costs. Another factor could be too much of the premiums collected are parked in reserves. Some IP insurers also made large investment losses. https://hobbitsma.blog/2024/04/26/the-quest-for-value-based-insurance/

And here’s the rub – it was observed that “about half of holders of IP and riders actually end up using subsidised healthcare in public hospitals”. In other words, half of the IP policyholders did not utilize the IP benefits they paid for but instead went back to subsidised healthcare so as to be subsidised by the government (which in the end means largely subsidised by taxpayers).

So, this hobbit asked an old friend who has migrated to Australia a long time ago and is now involved in insurance oversight and regulation work Down Under. He was very absolutely floored when he found out that IP insurers cannot make money when only half of those who are insured actually make claims when they require healthcare that is insured by the policies they had bought.

He remarked wryly that any commercial insurer in the real world would love to be an IP insurer where only half of the entitled policyholders actually made a claim and the claims ratio was around 75% – This is the closest to “insurance heaven” one can get. But that is the “real world” we are talking about, not the world or narrative that IP insurers would like the public and the government to believe – which is it is very difficult to make money when claims ratio is 75% and only half of the entitled policyholders actually make claims.

The numbers speak for themselves: A 75% claims ratio implies there is a lot of headroom for the insurers to manage the issue of increasing bill sizes and the insurers are getting a free lunch out of half of their policyholders since only the other half make claims that they are entitled to with their IP policies.

This race to the bottom is therefore really a well-cushioned race for the insurers. The proof is in the pudding in that no one has dropped out of the race yet. If we are to believe that capitalism still works, (i.e. the efficient deployment of capital) there should have been some blood on the streets by now with insurers exiting this race amid this vicious cycle. But we haven’t even seen a bruised buttock yet in this well-cushioned race, let alone any IP insurer packing their bags.

But in the larger scheme of things and policy intent, we must still return to the original purpose of having an IP industry. Letting and having IP insurers remain viable as a business is not an end in itself from the national perspective. The whole purpose of the IP industry is that IPs is a health financing tool for the majority of Singaporeans, based on the principle of risk-pooling. The whole idea of the IP industry is to serve the public, not the insurers or healthcare providers.

From the looks of things, the conclusion must be that the IP framework has failed as a risk pooling and healthcare financing tool when IP insurers find it hard to make money even with such odds stacked in their favour. (i.e. Only half of entitled policyholders actually make IP claims and the claims ratio is at best 75%)

Maybe it is time this sector undergoes a big “policy reset” as well, to borrow and paraphrase a term that was used by our new Prime Minister in his first National Day Rally.

Income’s Outcome Is Likely To Be Worrisome

A Brief History of Medical Indemnity Cover in Singapore

Younger doctors may not know this. There was a time when all doctors in Singapore had to buy their own professional medical indemnity plans. MOH or MOHH did not arrange for coverage for public sector doctors. Whether you were a medical officer or private sector specialist, you bought your plans through SMA, who acted as the agent for these providers.

Prior to 1999, there were two providers: MPS (Medical Protection Society) and MDU (Medical Defense Union). There both originated from the UK. They actually were not licensed by the local regulatory authority (i.e. Monetary Authority of Singapore, MAS) to sell policies locally. These medical indemnity plans or policies were issued directly out of UK and SMA was paid some fees in the process for the administrative work done.

MPS still exists today and the arrangement between SMA and MPS is still largely in place. However, in 1999, MDU decided to pull of Singapore for reasons best known to themselves. They had struck an agreement with MPS whereby MPS will continue to offer coverage to ex-MDU customers for a fee. In an article written by Past SMA President Goh Lee Gan in the September issue of SMA News in 2002 titled, “The Inside Story of UMP Singapore”, he said he received the news of MDU’s pulling out and handing over of their business to MDU on the rather auspicious date of 9 September 1999 or 9/9/99.

The SMA leadership then decided that it was imprudent to have only one provider for medical indemnity services in Singapore (and a foreign-based one at that) and decided to introduce another provider. This came in the form of the largest medical indemnity provider in Australia at that time – UMP.

However, UMP’s presence in Singapore was very short-lived because back home in Australia, quite a few court judgments went against doctors (especially in its home state of New South Wales [NSW]) and these cases came with huge damages awarded. UMP was declared insolvent and went into provisional liquidation. It was subsequent revivedly with government funds to the tune of A$260M accompanied by tort reform. But the end result was that UMP could only operate in Australia and UMP’s presence in Singapore lasted only 2 years. It has to be said in that short period, there was no evidence that UMP’s business in Singapore was unviable.

Once again, the Singapore medical profession faced the prospect of having only one foreign-based professional medical indemnity provider. This time, SMA approached NTUC Income. In the aforesaid SMA News article, it was reported, “A/Prof Goh spearheaded the venture with NTUC Income, and held discussions with Mr Tan Kin Lian, CEO of NTUC Income, about providing medical indemnity cover for doctors”.

And so, since 2002, NTUC Income (or should I say, Income, since the prefix of “NTUC” was regrettably dropped in 2022 when NTUC Income was corporatised) has been a medical indemnity provider in Singapore.

The market share of Income in providing medical indemnity cover is probably very small and the profits attributable to this business line, if any, are probably insignificant to Income. Many doctors may not even realise it is a provider, but it’s there: (https://www.income.com.sg/commercial-insurance/medical-indemnity-insurance)

The negotiations between Prof Goh and Mr Tan obviously went well because in 2002, NTUC Income stepped into the breach to ensure that medical profession was not subject to the crutches of a potential monopoly situation. The impact of this strategic move should not be taken lightly, because should the remaining, foreign-based provider also pull out, or raise its premiums to very unaffordable rates, then healthcare provision in Singapore will be at peril. This was the situation NSW faced in 2002 when UMP folded which left thousands of doctors without cover. The NSW government of the day had to use public funds to bail UMP out, so that doctors could continue to be covered and healthcare could continue to be delivered.

In short, NTUC Income did “national service” in 2002 and continues to do so even today.

The Deal

In this historical light, this Hobbit, like many others, received the news that Allianz was buying 51% of Income Insurance for $2.2B with much discomfiture, if not apprehension.

Since then, the Chairman of NTUC Enterprise, Mr Lim Boon Heng has come up with several reassurances that things will be alright. These include “NTUC Enterprise will continue as an active shareholder of Income Insurance to keep it to its purpose and deliver social commitments to its policyholders” (24 July, “Income will still provide affordable insurance for lower-income customers after Allianz deal: NTUC Enterprise chairman”, CNA).

However, not all are convinced and the logic is simple. A 51% stake is a majority or controlling stake. It is no coincidence that Allianz wants 51% and not 49%. It intends to control the way the acquired entity is run. Unless there is some written contractual term in the acquisition document that enables the minority shareholder to influence or demand that the majority shareholder behaves or acts in a certain way, the majority shareholder will call the shots. These contractual terms are commonly called “reserved matters” in which e.g. despite Allianz having a 51% share of the company, minority shareholder NTUC Enterprise can compel Allianz to manage Income Insurance in such a way that Income Insurance will continue to “deliver social commitments” and “still provide affordable insurance for lower-income customers” beyond the $100M committed for 10 years from 2021 (as stated in the Clarification issued on 25 July 24)? We are already in the second-half of 2024….

The Clarification on 25 July also states that Income Insurance will “provide access to insurance for seniors, people with mental health concerns and those with special needs, such as Down Syndrome and autism”. That sounds good. But it remains to be seen at what price such coverage will be given and if there are any strings attached. The devil is in the details, as the saying goes.

Anyway, if there are such reserved matter clauses in the agreement, let’s see it. If not, this hobbit will take such reassurances with a large pinch of low-sodium chloride (Healthier SG and our Health Minister promotes the use of low-sodium salt, so this hobbit has to follow too).

In any case, this hobbit speculates that should this deal go through, it is unlikely that Allianz-controlled Income Insurance will continue to provide medical indemnity services. I don’t think German-origin Allianz is in the business of doing national service in Singapore, unlike NTUC Income, which has its (although now probably severely-mutated) DNA in Singapore’s labour movement. In any case, Medical Indemnity is not mentioned in the aforesaid Clarification.

Nonetheless, this hobbit declares that he does not obtain medical indemnity cover from Income and so, even if it does cease to cover such services, he will not be adversely affected in the short term.

Me and My Incomeshield

On a personal note, this hobbit is more concerned with his Integrated Shield Plan (IPs), which he had bought from NTUC Income years ago and continues to pay the premiums. This hobbit is probably not alone in the situation he has found himself to be in.

Let’s do another recap of the history of Medishield and IPs. In 1990, Medishield was introduced to cover B2 and C class inpatient bills. In 1994, IPs were introduced. Actually, this hobbit isn’t sure if the term “IP” existed then. But in any case, insurance products providing cover for restructured hospitals’ B1 and A class services were introduced. This happened at about the same time when the government took away inpatient healthcare benefits from civil servants. This was in the Jurassic age when all NUS medical graduates were bonded and employed directly by MOH itself as civil servants (except for a small group of graduates who were directly employed by NUH to serve out their bond).

After our inpatient medical benefits were removed (in return for 1% more CPF employer contribution), many of us bought Income’s Incomeshield products. If my memory doesn’t fail me, there were only two products: Incomeshield A and Incomeshield B. The former covered A class charges while the latter covered B1. An IP product to cover private hospital charges had not been yet created then.

It is important to note that NTUC Income virtually enjoyed a monopoly in this product segment from 1994 to 2000. This hobbit, like many of his contemporaries, did not have a choice between providers. It was either buying NTUC Income’s Incomeshield or self-funding for inpatient services.

It was only sometime between 2000 to 2002, that two other providers were introduced to provide IP or IP-like products: AIA and Great Eastern.

In other words, it is not unreasonable to think that there are now large numbers of people who had bought Incomeshield A and B in those years where NTUC Income was the only provider of IP products and now continue to be their policyholders. They are probably now in their fifties and sixties. If they had not switched out of Income when they were younger, they are probably stuck with Income now, because by now, many of them would have developed medical problems and no other IP insurer will take them as policyholders because of their pre-existing disease(s).

And so, just as you are about to more likely claim from Incomeshield plans when you are now in your fifties and sixties, you are now also faced with the prospect and uncertainly of Income being controlled by a for-profit foreign insurer whose loyalty, and indeed fiduciary duty, is to its shareholders. Post-acquisition, will my Incomeshield premiums still be affordable? Or will they go up significantly, because the majority shareholder needs to recover its $2.2B investment and also to profit-maximise?

It also doesn’t help that Allianz’s record is not entirely spotless. (https://www.reuters.com/business/finance/allianz-pay-6-bln-over-structured-alpha-fraud-fund-manager-charged-2022-05-17/)

In this hobbit’s opinion, in all likelihood, this Income deal will prove to be a bad outcome for many Singaporeans, but a good deal for the investment bankers, management consultants and lawyers paid to see the deal through.

The Sure and Quiet Death of Duty of Care

As reported in The Straits Times, MOH recently published data that showed Integrated Shield Plans (IPs) varied widely in terms of coverage and lifetime price (Integrated Shield Plans lifetime premiums vary widely across insurers, MOH comparison shows” (1 July).

This is hardly surprising and shows that there is some form of competition between insurers and collusion does not exist, which is good.

However, as Saw Swee Hock School of Public Health Associate Professor Wee Hwee Lin noted, “This is clearly useful for people to review their existing insurance policies but with caveats. It is not possible for people with existing medical conditions to switch providers.”

Price is easy to understand, but coverage less so. As journalist Ms Salma Khalik noted in the above article, “To confuse matters further, the lowest coverage may not come from the insurer charging the lowest premiums”.

Understanding coverage requires much more technical knowledge and research effort than comparing price or premiums.

Or for that matter how insurance companies operate.

To understand this, the hobbit would like to point you to another Straits Times article published on 19 June 2024 written by a CEO of a financial advisory firm, “When it comes to financial advice, do your own homework” (by Chuin Ting Weber). This hobbit must confess that he has found this to be one of the most illuminating articles published this year. Here is what she wrote,

“The truth, or the whole truth?

Financial advice, like medicine and law, is a licensed profession, Professionals know more than the people they serve. Often, clients don’t know what they don’t know. This knowledge asymmetry imposes an ethical responsibility on a financial institution (FI) and its representative to go beyond basic honesty, to care about their clients’ interests.

How far this responsibility goes, however, depends on the standard applied. In Singapore, FIs are held to the “suitability” standard (emphasis mine); financial products recommended must be appropriate to the consumer’s financial situation and goals…..

….However, this still falls short of a higher “fiduciary” standard adopted by some countries. A fiduciary must make recommendations in the best interest of the client, even if it means decreased remuneration for the FI or the adviser”.

She then gave the example that a retiree seeking a stream of income was given a recommendation by a financial adviser or FI to buy an insurance product when she should have gone for a higher CPF Life payout by getting the retiree to top-up her CPF Retirement Account. Recommending her to buy the insurance produce was not untruthful, but “the more complete truth” would be recommending her to consider topping up her CPF Retirement Account.

She adds “If fact, FIs can even argue that their advisers should not do that (recommending the retiree to top up the CPF Retirement Account). Because while their responsibility towards the consumer (i.e. the retiree) is on a suitability basis, their responsibility towards shareholders is on fiduciary basis”.

After reading this article, this hobbit was deeply troubled. But this also explains why the medical profession is often at logger heads with the insurance companies and the twain shalt never meet (at a place of peace) given the gulf in fundamentals.

Doctors owe a duty of care to our patients. This is to be found in the SMC Ethical Code and Ethical Guidelines. In reality, duty of care is really fiduciary duty in medical-speak. That means we must do our best and put the interests of our patients before our own interests.

On the other hand, Financial Institutions (all insurance companies that sell IPs are FIs licensed by the Monetary Authority of Singapore) puts the interests of its shareholders above that of its customers. As aforesaid by Weber – the FI owes a fiduciary duty to its shareholders but not to its customers/policyholders; it only has to offer “suitable” insurance products to its customer, which may not be in their best interests.

When “suitable” is not good enough

Contrast this to an actual case that went before SMC and the Courts. In 2017, a prominent private sector oncologist was suspended by the Courts for 8 months after an appeal was filed for a SMC case. In fact, the Courts said that had it not been for the long delay by SMC to hear the case, the suspension would have been 16 months.

What did this oncologist do to be punished so heavily? Answer: He had “wrongly held out false hope” to the family by claiming that there was a 70% chance of the cancer patient responding to medical chemotherapy and for not offering surgery as the preferred option for treatment of the patient’s cancer.

That is not to say that chemotherapy was quackery. In this case, chemotherapy was an accepted form of treatment. It was just that surgery was supposed to be better and it wasn’t offered as an option for the patient to consider.

Now if the standards of regulation for FIs were applied to this oncologist, he probably would have gotten away with offering chemotherapy as the (only) option although he may be still found to be guilty of giving the patients’ family false hope.

This is because while surgery was the better option, chemotherapy cannot be considered to be unsuitable; similar to the logic behind the example given in the abovementioned Straits Times’ article – topping up of the CPF Retirement Account was the best option, but recommending the retiree to buy an insurance policy was also “suitable”.

We owe a fiduciary duty or duty of care to our patients, while FIs and financial advisors and insurance agents only need to offer something that is suitable. Which is also why Weber recommends that when it comes to the matter of financial advice, do your own homework!

A wise crack may counter that isn’t it the same with subsidised healthcare in our public healthcare institutions (PHIs)? As a subsidised patient, one has no right to choose their own attending specialist physicians. The hospital will just assign you a specialist. It’s your good luck if you get assigned the professor or Head of Department. Tough luck if you get assigned an Associate Consultant instead. Certainly, an Associate Consultant is “suitable” (because he is indeed a specialist), but he or she can hardly be considered to be the best option the PHI can offer.

Well, there is a difference here. If the case turns out to be complex and beyond the abilities of the AC, he is also duty bound to seek the input of a more senior specialist or even refer the patient to the more senior specialist. This happens at no extra cost to the subsidised patient. If the case is simple and does not warrant the input of more senior specialists, then it can be argued that the outcome is likely not to be significantly different whether the case is handled by an AC or a SC.

The FI test of suitability is a tradeoff between enriching self (the shareholders of the FI and/or the financial advisor) and doing what is best for the policyholder. This is in contrast to the duty of care or fiduciary duty that we owe our patients whereby enriching oneself at the expense of the best interest of one’s patient is NOT allowed.

The triumph of the standard of suitability

Now let us look at another real-life example in the form of an incident involving medical oncology that has happened recently. A medical oncologist was dropped from a preferred provider of an IP panel. No reasons were given, as usual. Any IP insurer will tell you that they don’t have to give any reasons whatsoever for including or dropping a doctor from their panels.

This oncologist began to reflect over why was she (and her colleagues in the same practice) dropped by the insurer. She had heard from reliable sources that her group’s rates were quite reasonable and in fact, she hadn’t raised her rates for 5 years.

She surmised that the reason she was dropped was that she had sometimes used cancer drug treatments which are not on the MOH’s Cancer Drug List (CDL) on a few patients after conventional drug treatments had not worked. She is a domain expert in her area and often gets referrals from other doctors for difficult and complex cases. When the usual options are not effective, she would try something not on the CDL if the patients had bought riders that explicitly allowed for such use (Class A to E of Non-CDL Treatments) as described in the circular issued on 2 September 2022 by the Life Insurance Association, Singapore (LIA). In some of these cases, due to the high cost of treatments, she has often given discounts as well.

If what she suspects the reason behind her being dropped by this insurer is true, then this is a good example of what can happen when fiduciary duty meets the test of suitability. She had tried doing what she thought was best for the patient, given the patient’s dire situation and what the patient’s IP policy is supposed to cover. But by doing so, she will suffer financially going forward because she is no longer a panel doctor with this insurer, i.e. her patient’s best interest has been served at a loss to herself.

On the other hand, the insurer, despite providing coverage for non CDL treatments, may also be sending out a message to other panel doctors that they do not encourage doctors from trying their best (even when it is permitted under the terms of the policy) but instead should just do what is suitable and sufficient, and that the interests of the insurer come before the patient.

The suitable slope to perdition

The future of medicine in especially the private sector will therefore be a contest between a doctor trying to fulfill his duty of care/fiduciary duty to the patient and also funders of healthcare such as insurers trying to impose a lower standard of “suitability” on doctors. The balance of power is clearly on the side of the insurers because they control the funding and they are also accountable to no one on how doctors are chosen to be put on or dropped from preferred provider panels.

In the short term, this is not a bad thing because if everyone just dishes out suitable care, healthcare costs will probably be lower and therein lies the temptation. But in the long run, the patient will suffer as doctors align themselves with their funding masters – the insurers. This is because the obvious knowledge asymmetry between insurers, providers on one side and the patient/policyholder on the other side is so great that it is not easy for the patient/policyholder to discern he has been given just “suitable” care instead of the best care that owing a fiduciary duty/duty of care requires.

Clearly, in the face of the enormous power and financial resources wielded by FI insurers that are only expected to operate on the standard of suitability, doctors in the private sector must align themselves with the insurers to survive. The tenet of duty of care that we teach in medical schools and to our young resident doctors must eventually yield to such great a countervailing force (of the insurers and their test of suitability) when many of them leave for the private sector.

And before we know it, we may already be well on a fast and slippery but surely suitable slope to perdition.

POSTNOTE (Dated 23 Aug 24): since the publication of this post, a lawyer, presumably linked to the case involving the oncologist that was quoted in this article has contacted SMA more than once with regard to what he or she considers to be a factual error in this post. This lawyer (with reference to the Disciplinary Tribunal’s findings and the C3J’s Decision) has stated that the use of the word “preferred” is incorrect to describe surgery as an option and that the adjective used should be “viable” instead.

There are a few things that need to be stated or restated here

This hobbit was merely quoting the mainstream media (aka The Straits Times) when he used the word “preferred”. Instead of asking lowly me to correct this word, maybe the mighty Straits Times should be asked to make this correction instead. (The news article was published in 2017 and written by Ms Salma Khalik). https://www.straitstimes.com/singapore/health/prominent-cancer-doctor-ang-peng-tiam-given-8-month-suspension-by-supreme-court

All readers should also note for historical reasons, this hobbit is known as “hobbitsma”. But really, this hobbit has been an independent blogger for years and this is clearly stated in the first post on this wordpress platform. So while certain equally old coots in SMA know how to contact me (usually by smoke signal or using the middle-earth equivalent of a mail pigeon), SMA doesn’t tell me what to write or not to write.

Finally and most importantly, the main subject matter of this post is comparing the test of suitability with the duty of care or fiduciary duty doctors owe their patient. And really, it doesn’t matter whether surgery is “viable” or “preferred”. The crux of the matter is that under the duty of care he owes the patient, the doctor would be found wanting if he had not offered surgery as an option, whether surgery was viable or preferred is irrelevant to the outcome at the SMC or C3J level. On the other hand, under the test of suitability, the doctor would probably be found to be OK if he had only offered chemotherapy as the only option offered because chemotherapy is a “suitable” option. Under the test of suitability, one does not have to offer ALL suitable options; the doctor has to offer only one – and that was the thrust of the ST article by Weber.

Therefore, the key point of this hobbit’s discussion that affects the outcome of this case is NOT whether surgery is a viable or preferred option, but which test was applied or is applicable – Duty of Care or Test of Suitability.

So, really, this Postnote is unnecessary. But I have to write this to get my life back. Maybe it is about time to retire and sail off to Valinor