Why change policy on co-payment for Integrated Shield riders only now?

By March 9, 2018Current

TL;DR – Should have done so a lot earlier.

If you are just about sign up for a new rider to your integrated shield plan, you will not be able to find a rider that covers the entire co-payment amount, so that you don’t have to pay anything regardless of the bill size. Instead, you will have to pay at least 5% of your medical bill. There will be a cap on the co-payment amount each year.

If you already have one of those “full riders”, you may or may not affected. It depends on whether your insurer changes the terms of your existing policies. So… if you already have one of those “full riders”, don’t get too worried… yet.


Even with full-riders, you still pay for your medical treatments

A lot of people who read that news got quite angry. They ask: Why is the government squeezing Singaporeans? Medical treatments can be very expensive. Without those full riders, Singaporeans might end up having to pay huge medical bills. Has the government no heart?!

But that’s the wrong way to think about it. There’s no such thing as free medical treatment. EVEN with “full riders” where you don’t need to co-pay, you are still paying for your medical treatment.

Huh? How come leh?

Because you have already paid all that premium. And also, the moment you claim, your premiums go up. Today’s payout for your claims is tomorrow’s premium.

Think about it. Insurance companies aren’t charities. They must somehow make money when selling those riders. So if you claim, they must somehow get back from you more than what you claimed. That means even with “full riders”, it really doesn’t mean that you don’t have to pay for your medical treatments.

So, this change in policy doesn’t significantly change how much you have to pay for your medical treatments. It just rearranges when you pay for it – with no co-payment, you pay for your medical treatment way before it, and keep paying way after it. With co-payment, you pay for some of it before, some of it shortly after the treatment, and a little of it for some time after the treatment.

But. Why change?

Because, according to Minister of State for Health Chee Hong Tat, the zero co-payment feature of these full riders has resulted in a “buffet syndrome”, leading to over-consumption, over-servicing and over-charging of healthcare services. He cited some examples of over-consumption and over-servicing, which he described as “disturbing”:

  • A full rider policyholder made claims for 12 nose scopes in a year, without clear medical need
  • Another policyholder who underwent an expensive surgery for a small breast lump removal that cost S$70,000 in doctor fees alone, when there was an equally effective alternative procedure at S$5,000
  • Patients who were admitted for gastritis or piles, and then referred to many other specialities ranging from dermatology, ophthalmology and ear nose and throat, for additional scans and tests racking up to S$25,000 for a hospital stay in less than 24 hours

And because of the over-consumption and over-charging that came about because of “full riders”, premiums for medical insurance have risen. Rider premiums have increased by up to 225%. And even people who don’t have full riders are also negatively affected. Over the last two years, Integrated Shield Plan premiums had risen by up to 80 per cent, with older policyholders and those on private hospital plans experiencing higher increases.

Over-consumption, over-servicing and over-charging of healthcare services will lead to faster and larger increases in overall healthcare expenditure. That is not sustainable. MOS Chee said:

“These increases will ultimately be borne by all Singaporeans through higher medical fees, insurance premiums and taxes, which all of us will have to pay directly or indirectly”

And that’s why the government has decided to do away with “full-riders” where policyholders do not co-pay.

Should have done so earlier

It’s a good move. One that the government should have done much earlier.

Or rather, the government should never have allowed full riders that where policyholders do not need to co-pay at all. But because the government allowed it, and only acted now, we have already wasted much resources to unnecessary medical procedures, resources which could have been far better spent. That is why I’m upset with the government.

I’m also upset with the government because I think this move alone doesn’t solve the root of the problem. The root of the problem, I think, is doctors overcharging, and prescribing treatments which patients don’t need.

If we have to co-pay, we might be a little bit more cautious about how much we spend on healthcare. But if a doctor says you need a certain procedure for a certain price, would you really bargain with the doctor? Worse, what if it puts you off an actual procedure you need because the doctor quotes a very high price? So, you cannot really blame patients who probably don’t know better, or trust the professionals more.

To solve the root of the problem, we can’t let market forces run on their own. The Health Insurance Taskforce have made some very sound recommendations:

  • Panels of preferred healthcare providers set up by insurers. These preferred healthcare providers should have a good track record of recommending only necessary treatments which are fairly priced
  • Fee benchmarks so that patients can assess if they are being charged fair rates
  • Educating consumers on what is available and the likely cost so that they make more informed choices

Actually, once upon a time, the government had fee benchmarks. They removed those because those were deemed anti-competition. I hope that the government will realise that they made a mistake. Market forces are good. But some times, the market fails. The medical industry is one where often the market fails. That’s when the government needs to step in.

Making sure everyone co-pays some amount is one good step in the right direction to correct the market failure. More needs to be done. And soon.



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Author CRC

Working on a startup is a scary crazy process. To destress, I write random stuff.

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