Saturday, 15 October 2016

Health Insurance Task Force Report: Proposals to rein in health insurance costs unveiled

Panel suggests doing away with medical insurance riders
Guidelines for medical fees also among ideas by task force to tackle rising cost of insurance
By Salma Khalik, Senior Health Correspondent and Lorna Tan, Invest Editor/Senior Correspondent, The Straits Times, 14 Oct 2016

A task force set up to look at the rising cost of insurance in Singapore has suggested sweeping measures such as doing away with riders that enable insured patients to get away with paying nothing towards their own treatment.

It has also suggested that insurers have a list of preferred health providers that charge reasonable fees and offer their services to customers. Patients can still opt for other doctors, but this could affect the amount of their bill covered by insurance.

Medical insurance claims have been rising, and premiums for integrated plans, that sit atop MediShield Life, are set to rise. They had been frozen for a year, but are poised to go up once the moratorium is lifted next month. The Straits Times understands that premiums for private hospital plans could then rise by 9 to 15 per cent.

The task force, which was set up by the Life Insurance Association (LIA) of Singapore and included members from the Ministry of Health (MOH) and the Monetary Authority of Singapore (MAS), also suggested medical fee benchmarks or guidelines to reduce overcharging. Guidelines are currently not allowed here as they are seen as anti- competition.

The task force also proposed tweaking current practice to make it easier for insurers to raise suspected inappropriate or excessive medical treatments with the Singapore Medical Council, the professional watchdog.

The issue of riders, which cover the entire medical bill, clearly bothered the panel which noted that patients with riders run up bills that are 20 to 25 per cent higher than those who have to bear a share of the cost.

The task force suggested the six insurance companies offering IPs tweak their products so patients pay a share of the bill to prevent the "buffet syndrome", while ensuring that existing policyholders are not put at a disadvantage.

The task force, headed by Ms Mimi Ho of financial consultancy firm Regulatory Professionals, also urged greater consumer education so people can "actively manage their health and healthcare costs".

It said that co-payment by patients was a key tenet in its healthcare financing framework and it "helps to guard against over-consumption and over-treatment".

"The absence of any co-payment may encourage over-consumption by some patients and over-servicing or over-charging by some healthcare providers which will eventually increase healthcare costs and insurance premiums for all Singaporeans," it said.

On the issue of medical fee guidelines, it said it would continue to work with healthcare providers and IP insurers on ways to further improve fee transparency.

The ministry has recently started revealing the range of fees charged by private hospital and specialists for a large number of common procedures.

Recommendations to keep costs down
The Straits Times, 14 Oct 2016

More people making health insurance claims means that premiums have been rising over the years. Here is what the Health Insurance Task Force has recommended to keep costs down:

1. Establish a set of guidelines for medical fees, so that people can get a better estimate of how much their treatments should cost.

2. Make clearer the process through which insurers can raise issues such as inappropriate or excessive treatment to the relevant authorities.

3. Improve insurance procedures and product features. This includes:

• Using panels of preferred healthcare providers to manage medical costs through agreements on fees.

• Make sure co-insurance and/or deductibles are included in the product design, so that some co-payment is still necessary. This is to prevent over consumption.

• Get insurers to approve claims for treatment and bills before the actual procedure is carried out, so that issues of inappropriate treatment and high charges can be addressed from the start.

4. Educate consumers on their available options and the corresponding costs, so as to reduce information asymmetry.

Policyholders with riders run up higher treatment bills
By Salma Khalik, The Straits Times, 14 Oct 2016

Riders have been tagged as the bad boys of health insurance and blamed for pushing up healthcare costs. This is because patients who have them may not be concerned with the cost of their treatment, and some doctors, knowing that their patients have such cover, overcharge or over-service them.

Essentially, patients who have purchased riders do not have to pay anything for their medical treatments, as these riders take over what is normally the patient's share. Two in three people here have bought private integrated plans (IP) that sit atop MediShield Life, to cover themselves for non-subsidised treatments.

However, all IPs have a deductible - which is an initial amount patients pay before insurance kicks in - and a co-payment, which is 10 per cent of the rest of the bill which the patient also needs to pay.

Some patients take on additional insurance, called a rider, which pays for both the deductible and the co-payment. Half of those with IPs here have bought such riders.

Policyholders with riders have been running up bills that are 20 to 25 per cent higher than those who co-pay for their treatment, a study by the Life Insurance Association of Singapore revealed yesterday.

The Ministry of Health (MOH) frowns upon riders as it strongly believes that patients need to pay part of the cost of their treatment. It said in a statement yesterday that this "reflects the importance of personal responsibility for one's health and healthcare". It said: "For MediShield Life and IPs, co-insurance helps to guard against over-consumption and over-treatment, deductibles help the insurance focus on helping patients with the larger bills to ensure premiums remain affordable, and claim limits mitigate the risk of overcharging."

It is partly for this reason that while part or all of IP premiums can be paid for with Medisave, the premiums for riders cannot. Meanwhile, one in three residents here now has riders, compared with less than one in five in 2011.

The Health Insurance Task Force, whose report released yesterday hopes to rein in runaway health insurance costs, have urged the six insurance companies offering IPs to tweak their products so patients have to pay a share of their bills.

It said: "As these policyholders are insulated from the cost of their medical charges, they may lack the incentive to manage their health and medical costs, translating to higher insurance claims."

However, the task force said any change in design of their products should not put existing policyholders at a disadvantage.

Some 1.5 million face premium hikes for health insurance when moratorium ends
By Lorna Tan, Invest Editor/Senior Correspondent, The Straits Times, 14 Oct 2016

Around 1.5 million policyholders can expect to face premium hikes for health insurance once the moratorium on freezing Integrated Shield Plan (IP) premiums ends on Oct 31.

The Straits Times understands that the average premium increase will be between 9 and 15 per cent but the hikes are expected to impact only certain IPs, particularly those covering private hospitals.

This is because the number and dollar amount of claims made at private hospitals have shot up compared with those at public hospitals.

About 2.5 million Singapore residents have IPs. An estimated 60 per cent of them have policies covering stays in private hospitals, while the rest have plans that cover class A and class B1 wards in public hospitals. So about 1.5 million Singapore residents may be affected by the premium hikes.

The Life Insurance Association (LIA) said the average IP claim incidence rate has been growing at approximately 9 per cent a year.

It noted that the overall average bill incurred by IP insurers increased by 8.7 per cent for private hospitals each year from 2012 to 2014 compared with just 0.6 per cent for public hospitals.

During the same period, the average inpatient bill for private hospitals was almost double that for public hospitals and four times more than recorded at day surgeries.

The LIA statistics also showed that IP insurers paid out claims amounting to $488 million in 2014 alone.

Healthcare is expected to be the biggest cost in retirement and many people have ranked this as their top concern.

The LIA told The Straits Times yesterday: "We recognise that the current rate of escalating claim costs in Singapore is not sustainable and that when it comes to IPs, premiums would need to correspondingly be increased to keep up with the claim amounts for IP insurers to continue offering these policies."

It has been reported that two IP insurers have been making only marginal profits, with three racking up losses on such policies.

In May, French insurer AXA Life joined the IP market here as the sixth provider.

The LIA also noted while MediShield Life has led to some savings for IP insurers, these will be offset within one to two years by more - and costlier - claims being lodged.

The association released some recommendations yesterday, such as the pre-approval of medical treatment, to address the issue of escalating claim costs for IPs.

NTUC Income said it is reviewing its entire IncomeShield portfolio.

"At this point, we plan to increase the premiums of some plans in 2017. However, we are still working out the details, including the level of increase," it said.

IP rider premiums are excluded from the one-year moratorium. So far, at least two insurers - Income and Prudential - have increased their IP rider premiums.

Experts: Step in right direction, but transparency vital
By Linette Lai, The Straits Times, 14 Oct 2016

While the proposed measures to curb rising healthcare costs are a step in the right direction, much will depend on how insurers implement these changes, say industry experts.

They stressed the importance of transparency, especially in issues such as the appointment of preferred healthcare providers.

Yesterday, the Health Insurance Task Force released a 54-page report on managing the cost of health insurance in Singapore, which could rise in a few months for those on private plans integrated with MediShield Life.

Its recommendations include getting consumers to better manage healthcare costs by making them pay co-insurance or deductibles, and introducing guidelines for medical fees.

"A lot of patients are buying as-charged plans, and that causes them to be careless because then they are not concerned about the bill," said neurologist Tang Kok Foo, who runs Tang Neurology & Medical Clinic. "But they are very short-sighted, because the party is coming to an end."

Insurers end up shelling out on behalf of such patients, which in turn causes premiums for everyone in that category to go up in the long run.

There are also doctors who charge far more than they should, said Dr Tang, and having guidelines on medical fees would increase transparency and give patients a better idea of what they should be paying.

Currently, the Health Ministry publishes only the range of total operation fees at the 25th and 75th percentiles.

Panels of preferred healthcare providers set up by insurers can be a good way to keep costs affordable, said gastroenterologist Desmond Wai. Such panels would use fee agreements to manage medical costs. "But you need to have a transparent and fair system to see who can be on the list. It can't be a case where they pick you because you charge the least," said Dr Wai.

While the proposed measures are useful, he added, it could be difficult to curb healthcare costs because of Singapore's ageing population and advances in medical technology, which do not come cheap.

In general, efforts to keep healthcare affordable should include safeguards to ensure cost- cutting does not come at the expense of patients, stressed Tanjong Pagar GRC MP Joan Pereira, who is a member of the Government Parliamentary Committee for Health. "We have to balance cost-management measures with the need to maintain the quality of healthcare delivery."

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