Forum: Sustaining affordable healthcare is a shared responsibility
To ensure a sustainable healthcare ecosystem, all parties need to play a part in making quality healthcare affordable and accessible. Insurers and patients are payers of healthcare services. Healthcare providers who recommend treatments and charges must do so responsibly to manage healthcare inflation.
The year-on-year increase in medical costs is untenable, and Integrated Shield Plan (IP) insurers will continue to be proactive in introducing measures to ensure patients continue to receive quality care while balancing the collective needs of policyholders to keep premiums affordable.
Ultimately, policyholders bear the brunt when medical and claims costs escalate. This is why IP insurers regularly review claims data and update their practices, measures and controls to ensure a sustainable healthcare system.
Pre-authorisation and panel doctors were among measures recommended by the multilateral Health Insurance Task Force in 2016 to address escalating healthcare costs.
Pre-authorisation is a service – not a contractual clause – that gives policyholders assurance that their treatment will be covered when deemed fair and medically necessary. Not all IP insurers offer this service, and, where it is limited to selected hospitals, it is often due to cost or implementational considerations. The absence of pre-authorisation does not restrict a policyholder's choice of healthcare provider.
Besides pre-authorisation, policyholders may apply for an electronic letter of guarantee as a waiver of deposit, reducing the need for upfront payment.
Panel doctors provide quality treatment at pre-agreed rates, and policyholders may enjoy additional benefits such as lower co-payments. The introduction of panel doctors has reduced instances of over-treatment and over-charging, helping to ensure a more sustainable healthcare system for all.
Despite rising premiums, the total IP portfolio continues to operate at single-digit gross margin and sometimes at a loss. The insurance industry is committed to policyholders' interests and to communicate any changes to benefits and coverage.
We urge all parties – including doctors, hospitals, government agencies and patients – to work collaboratively in managing healthcare costs to ensure continued access to quality healthcare in Singapore.
Chan Wai Kit
Executive Director
Life Insurance Association, Singapore
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- Straits Times
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Pre-authorisation is not required for emergency situations, where immediate medical attention is needed. Mr Alex Lee, president of the Singapore Actuarial Society (SAS), said those who still decide to go to the two hospitals for treatment will have to foot the bill out of their own pockets first and claim it back later. Mr Lee added that GE may reimburse the claim if it is deemed as reasonable. This will be no different from the scenario in which the policyholder has received pre-authorisation for the medical procedure. However, the insurer could also reject the claim if the treatment is excluded under the policy conditions, he said. Mr Kyith Ng, senior solutions specialist at insurance advisory firm Havend, said these GE policyholders will have to face the uncertainty over whether their insurance will cover their hospital expenses and how much of the bill it will cover. 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There are some GE policyholders who are contemplating whether to switch to another insurance provider. They can do so if they do not have pre-existing illnesses, which will exclude these medical conditions from any new insurance coverage. One policyholder who wishes to remain anonymous told The Straits Times that his entire family uses Mount Elizabeth hospitals. He is thinking of switching to another IP insurer but is concerned about any exclusions that will not be covered. He told ST that GE should not impose such restrictions on existing policyholders and that these restrictions should only apply to new ones. Of the seven private insurers that offer IPs, Income and Singlife do not offer pre-authorisation for medical procedures. The other four, AIA, Prudential, HSBC Life and Raffles Health, do but Havend's Mr Ng said there is no certainty they will continue to do so. 'What GE does may make the other insurers wonder if they can do the same,' he added. 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There are situations where individuals will need to pay medical costs upfront, though this is not always so, Mr Ng noted, adding that they just need to ensure they have an adequate amount to supplement those needs. Otherwise, they may be compelled to use the money set aside for other purposes, like their children's education or their own retirement. 'The money has to come from somewhere.' So, by setting aside say $20,000, individuals know how much money they have for such exigencies and will not have to take the money from their other financial funds, Mr Ng said. However, Associate Professor Walter Theseira from the Singapore University of Social Sciences, said it is not efficient for most people to maintain 'substantial funds in cash for medical needs', given that these are infrequent and large. He said the point of having more comprehensive insurance is to reduce the need to maintain funds just for medical purposes. If insurance does not give individuals such assurance, 'it is not of much value as an insurance product'. The Ministry of Health (MOH) has said it is engaging with GE to better understand the impact of its decision to suspend pre-authorisation certificates for Mount Elizabeth hospitals. In its reply to queries from the media on June 19, MOH said IP insurers 'would have to ensure that policyholders continue to be able to access the full benefits of their policies in accordance with the terms and conditions for claims, as stated in their policy contracts'. SAS' Mr Lee said GE is not in breach of contractual obligations. This is because 'issuance of Certificate of Pre-authorisation is at Great Eastern's discretion', according to the policy contract that SAS has sighted. According to GE's website, the insurer states that it has 'observed that, over the past few years, certain private hospitals have been charging significantly more for similar treatment or the same clinical outcomes'. Mr Lee noted that by withdrawing pre-authorisation for the two hospitals, GE hopes that it will help address 'the issue of rising charges from the two hospitals'. Prof Chen from the NUS Business School said that GE is prioritising healthcare providers that offer high-quality care and better cost management, specifically those that are more cost-effective and transparent about pricing. Having looked through the financials of all the IP insurers which filed their latest 2024 results with the Monetary Authority of Singapore, Havend's Mr Ng said he can see that GE is 'trying to control the cost levers' within its control. The insurer posted an underwriting profit in 2024 of $4.8 million, after making an underwriting loss of $44.9 million in 2023. This makes GE one of the three IP insurers which turned in a profit in 2024. The other two are Prudential and AIA. Three other IP insurers, Singlife, Income and HSBC Life, widened their underwriting losses while the last one, Raffles Health, narrowed its underwriting losses. Mr Lee said that insurance, especially in cases requiring little or no out-of-pocket expense, strengthens policyholders' sense of affordability. Demand induced by this stronger sense of affordability can drive up medical costs, he noted, adding that this never-ending cycle of medical cost inflation can be broken if the sense of affordability gets meaningfully dampened. However, Mr Lee pointed out that there are other factors such as shortage of medical professionals, supply chain disruptions and medical innovations that will drive up medical inflation. He added that if medical costs continue to rise, insurers will have no choice but to raise premiums because there is hardly any pricing buffer left in the rates being charged. 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