IP premiums are spiralling out of control – Who is to blame?

Posted 28 January, 2018 by Surely
in Opinion

Recently, TODAYonline published an article about the state of healthcare insurance.
Like every Integrated Shield Plan (IP) customer, the author experienced a premium raise in the past year and decided that she should write about the unsustainable increase in healthcare insurance in the future.

Her conclusion?
More insurance is not good; the insurers and the consumers should do more.
It is time to press the panic button!


Her button is bigger than ours!

Her button is bigger than ours!


While parts of the article make sense, it does not explore the issue completely.
Although healthcare insurance consists of the insurer and consumers only, the cause of premium hike involves more than these two parties.

The increase in IP premium is caused by medical cost inflation in the private hospitals.
And that is an irrefutable fact.
Private hospital bills had ballooned by 8.7% from 2013-2016 while public hospital ones had increased by 0.6% only.

Who are the parties responsible?
And should they be blamed for creating this insatiable hunger in the beast we call IP?
You are about to find out.


Insurance Companies


The most obvious tortfeasor.
Insurance companies force us to pay extra so they must be the culprit.

The article suggests that since the insurers have created the IP riders that pay the entire hospital bill (inclusive of deductible & coinsurance) and induced the buffet mentality in the consumers, the insurers are to be blamed.
The author is forced to shift the blame to the consumers when she realises that the partial cover rider is available but is shunned by the public.

As a result, insurance companies increase the premium for everyone which peeves every IP customers.
One insurer starts to price its rider based on claim experiences which we lauded due to the positive impact on the future of healthcare insurance.

Are insurance companies to be blamed?


Time to fire some shots!

Time to fire some shots!


Sure, they have sold full cover rider that encourages excessively medical spending but can you really blame them for that?
The partial cover rider tanked in the past despite having discounts.
History and human nature indicate that it will fail again (we will talk about in the next part).

There is practically not much more for insurance companies to do because
1) They are price-taker as the hospital sets the bill.
2) If the consumers do not respond to their offerings, what can the insurers do?

At the end of the day, insurance companies are essentially companies.
Companies exist to make a profit.
If they are to be responsible for raising the prices to safeguard their bottom-line, we are simply blaming them for being companies and not charities.

Blaming the ones who raise the prices is an easy route to take.
Given how tied their hands are, it is really unfair to blame the insurance companies.




The next natural target is the consumers

Consumers should not claim so much.
Consumers should take up partial hospital rider.
Consumers should be going for cheaper alternative instead of pricey private hospital.

Instead of using the word “consumers”, let us use “we”.


We should start a #wetoo campaign.

We should start a #wetoo campaign in view of the victim-shaming.


We shun the partial cover rider because we want to insure ourselves properly.
We must have the best treatment available because we love us.
We also hate waiting for 4 months for an appointment because it may be the difference between life and death.

None of us should be blamed for the basic instinct that we all have – to survive.
It is human nature to demand the best treatments in the shortest possible time.
After all, we just want our health back and to live to see another day.

If being human is a sin, go ahead and blame us for being one.


Private hospitals


First, the public hospital and by extension, the government must be praised for keeping the cost low over the years.
At 0.6%, they have done really well in light of the problem of an ageing population.

How about the private hospitals?
Their bill sizes have increased by 8.7% over the recorded period.
Surely they got to take responsibility for that right?

Unfortunately, that may not be clear.
Did the medical supplies increase in price?
Have the hospitals recommended no-value diagnostics like what the article implied?
Did staff cost escalated by the same percentage?


It will be great if our learned reader can tell us more about the cost of medical supplies.

It will be great if our learned reader can tell us more about the cost of medical supplies.


We do not know whether the private hospitals have been raking in profits at the expense of its customers.
If that really has happened, should they be blamed entirely?

If we take a moralistic stance and chide them for maximising their profits, it is hypocritical not to blame ourselves.
After all, it is only natural for us to look out for ourselves and for companies to do the same.


The Government


This is a party that is absolved of any blame in the Todayonline article.
That makes us wonder if the article has been edited.
After all, the only mention is the one positive thing that MOF is going to do.

Yes, that is right.
The government has done absolutely nothing so far except to direct a Taskforce to study the issue.

Did we mention that this problem has lingered since 2012?
Even if we excuse the government of slow execution due to the complexity of the problem (we don’t), we cannot look past their role in allowing the private medical cost to be inflated to such an extent in the first place.

MOH is going to implement medical fee guidelines this year.
But do you know that such a thing existed in the past?
Singapore Medical Association (SMA) had recommended a range of fees in the past but stopped publishing it in 2009.
And you wouldn’t believe the reason why they ceased doing so.

Because the government outlawed it.
We shit you not.
This is the proof.

In the name of anti-competition, CCS had disallowed SMA to continue publishing its recommended fee structure.
If MOF is going to reintroduce the same, what does it tell us about the initial ruling?
And this is not the first time the government has taken its eyes off the healthcare industry.


Oh wait, they are the one doing the policing.

Oh wait, they are the Police.


We have learnt our lessons in the previous hospital bed crunch.
We realize that only a private hospital IP plan allows us instant access to medical attention.
In a way, we stop trusting the public sector’s ability to provide the medical service that we crave.

The distrust in government hospitals to provide timely service, coupled with the free hand given to the private ones to set its own price, cumulated to our precarious situation today.



The Difference-Maker should the one responsible.


One role of the government is to look out for the interest of the public when the free market fails to.
For example, a covered walkway is very much desired by the population but no single person or company is going to do so because it makes no sense at all on an individual or commercial basis.

In the healthcare industry, this is exactly what is happening.
The consumers have little incentive to resort to lesser medical treatment.
Insurance companies and private hospitals can set the prices as much as the market (and government) allows them to.

The only party that can effectively make a difference is none other than the government regulator.
They cannot eliminate medical inflation due to our ageing population but they can definitely manage the rate of increase.

That is why we pick the regulator as the main culprit for the premium hike.
The one party who has the incentive and ability to do something has not been proactive about it.

And we are all paying the price for their oversight!


Wrapping up


We are not finger-pointing at the government because it is a populist thing to do so.
In fact, we love the fact that government hospital cost is kept low over the years.
We also applaud the government’s effort to increase hospital beds in the recent years to address the shortage issue.

Likewise, when it comes to private medical inflation, the government can not be a mere bystander.


Always remember this.

Always remember this.


The government can restore faith by managing the medical cost in the private sector and improving turnaround time in the public hospital.
The insurers and private hospitals are already working together to reduce financial stress on the claim.
We can do our little part by going to the public hospital when the situation allows us to, while not demanding for the 5th diagnostic tests & 7th second-opinions.

We believe premium will continue to increase in the future but it can be managed at a reasonable rate.
That is if all parties work together hand in hand.
For that to happen, the one that can make the most difference must take the lead.

The ball is in your park, Mr Gan!

www.ClearlySurely.com aims to eradicate the knowledge gap between consumers and Life Insurance. Our Vision is that one day, every Man, Woman, and Child will be properly insured.

We believe that we have a part to play too in containing healthcare insurance premium.
Stay tuned as we are working something out.

  1. Sinkie

    I’ve discussed this with colleagues & relatives since 2009. There are no innocent parties … all bear some responsibility. But only govt has ability to set the tone of framework & regulation.

    S’pore govt has adopted a light-touch “self-regulated” market-oriented approach, as it doesn’t believe in interfering too much in commercial business principles, and it’s focus all along has been on maximizing industry profitability & GDP. This may change in future if more & more lashback from consumers especially from the increasing elderly population.

    But even then it will be limited — most probably a ban on full cover riders, i.e. principle of co-payment & deductible cannot be insured away.

    In this way, consumers will be forced to be more prudent in demanding for expensive healthcare services. As more & more patients face a limit on claims, medical specialists will also tone down their recommendations for the latest & most expensive drugs / procedures.

    BTW, all the numbers are there for review / investigation e.g. profit margins of insurers & hospitals for A-class or private, mortality & morbidity rates, median appointment waiting times, outcomes for A-class patients versus C-class patients for same diagnoses / illness. There are senior people in the industry & govt with very good picture of what’s happening.

    But there are lots of vested interests — what’s good for some parties will be bad for others, and vice versa.

    1. Clearly

      Hi Sinkie,

      Spot on. Because it is never an easy solution, we think that the correct way is to have all parties working together to try and find a long term, sustainable solution.

      We may never get there, but since no system is perfect, we believe that small but consistent improvements is preferable to large but unrealistic paper goals.


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