OYK is concerned.
7h ·
Great Eastern recently suspended the issuance of pre-authorisation certificates for admissions to Mount Elizabeth Hospital and Mount Elizabeth Novena Hospital. I would like to provide
Ministry of Health, Singapore’s perspective on this issue.
Let me state at the outset that this issue affects patients on private insurance plans who intend to receive care at private hospitals. More than 90% of acute inpatient care in Singapore is delivered in our public hospitals, including those who opt for unsubsidised wards. Patients at our public hospitals are not affected by Great Eastern’s latest actions.
That said, I have been expressing my concern about the state of private insurance and private healthcare for some time. The current trend is not sustainable. Private health insurers and private hospitals have gotten themselves tied up in a knot, to the detriment of all stakeholders, including patients.
How did this knot come about?
A big factor is insurance design. Insurers know that policyholders are worried about incurring an unexpected huge hospital bill, so they launch insurance products that offer generous coverage to win customers and market share. These include ‘as-charged’ or no limit coverage, and riders that will protect almost to the last dollar.
But when someone else (in this case insurers) is footing almost the entire medical bill, the healthcare provider-patient dynamic changes, and there is the tendency to use more than is necessary. It is just human nature. This is backed up by data: the likelihood of a patient with rider making a claim is 1.4 times that of a patient without. The size of the claim is also on average 1.4 times that of a patient without riders.
As insurance claims escalate, insurers find that premiums can no longer cover claims, and they responded in two ways. First, introduce more safeguards into the claims process such as panel arrangements with doctors, including now, suspending pre-authorisation for selected hospitals with higher claims.
Second, raise premiums. Premiums for riders have risen sharply over the past few years. As a result, many policyholders, especially seniors, have terminated their rider policies. They realised that it is not worth paying almost ten thousand dollars or more of rider premiums every year, when they are mainly worried about a few thousand dollars of deductibles or residual payment.
Policyholders are naturally unhappy that they are paying rising premiums but with more restrictions. Healthcare providers are finding it more cumbersome to make claims. Insurers are struggling to stay viable for their health portfolios. As for Government, with all these developments, we can see that more patients with private insurance are opting for subsidised public health care. As it is, public healthcare accounts for around 80% of hospital beds in Singapore but provides care for 90% of all inpatients. It will come under increasing pressure.
No one is happy.
Policyholders, insurers, doctors, and hospitals are all caught in this knot. What can be done to untie it?
MOH has intervened in a few ways. First, we introduced fee benchmarks to guide pricing and guard against over-charging. Since 2018, we have introduced benchmarks for private professional fees. Today, more than 90% of cases fall within the surgeon fee benchmarks, compared to 80% in 2018. Average annual growth in private surgeon fees has moderated from 3% from 2010-2018 to 0.4% from 2019-2023. We are now studying the possibility of going beyond professional fees, by introducing more benchmarks for hospital charges, to guide fee setting by private hospitals.
Second, we are enforcing against a small minority of doctors who make errant claims. We have taken action against a few doctors, putting them through a refresher course on fee setting, or even suspending them from claiming MediSave and MediShield Life.
Third, we need more private hospital options, especially affordable ones, like Mount Alvernia Hospital. MOH is therefore exploring the possibility of a new not-for-profit private hospital. However, even if the decision is to proceed, this will take a few years.
But all these actions will not be sufficient. Ultimately, private insurers need to take a hard and realistic look at their product design, particularly those of riders.
To be fair, they have made some effort. Most insurers offer more affordable rider alternatives, which may not fully cover deductibles or have a bigger co-payment component. The premiums for such alternatives can be half that of premiums for riders with the most generous coverage. Financial advisors need to present these more sensible options to policyholders.
But more importantly, these riders can help to dull the incentives to over-service and over-charge, while still providing the additional protection against large cash co-payments that policyholders value. It will help focus private hospitals and private doctors on delivering value and ensuring affordability for their patients.
In the longer term, patients seeking care in private hospitals will find that they are getting a better deal than the current situation, which is clearly unsustainable.
Every stakeholder needs to do its part, so that step by step, this knot can be gradually loosened and untied. The recent moves by insurers may be disconcerting, but we need to see them against this broader context and the need to set the private healthcare financing system on a more sustainable footing. Otherwise, everyone loses. MOH will be facilitating this untying process.
