MOH addressing rising healthcare costs, but cannot control commercial insurance decisions: Rahayu Mahzam

[SINGAPORE] The government is tackling the root causes of rising healthcare costs and offering measures to cushion the impact, but must be mindful about intervening in the commercial decisions of private insurance providers, said Minister of State for Health Rahayu Mahzam.

On Wednesday (May 6), some Members of Parliament (MPs) had asked about insurance pricing after some insurers raised base Integrated Shield Plan (IP) premiums, diluting expected savings from required changes to IP rider specifications.

“(The Ministry of Health’s) general practice is not to intervene in insurer’s commercial decisions such as the setting of premiums,” Rahayu said.

From December 2021 to December 2024, private hospital IP premiums have been rising at an average annual rate of 8.6 per cent; private hospital rider premiums were up at a yearly average of 17.2 per cent.

Rahayu acknowledged that some private hospital IP and rider plans were recently repriced, but said policyholders can still save by switching to new riders.

Yio Chu Kang SMC MP Yip Hon Weng noted that households may still need to pay more for healthcare overall, even with cheaper riders, due to continued increases in base premiums. He asked whether the ministry would impose clearer limits or review triggers on premium increases.

Rahayu said that these increases reflect underlying healthcare cost increases, which are led by an ageing population, more expensive technologies for medical treatments, pharmaceuticals and manpower, as well as over-consumption and over-servicing issues.

In response, her ministry is getting the most cost-effective products, putting in levers such as fee benchmarks and clinical guidance to ensure that appropriate care is provided, and taking enforcement action against errant healthcare providers, she said.

She also highlighted the rider reforms, as well as the ongoing development of not-for-profit hospitals. These measures, taken together, will help to curb cost increases, Rahayu said.

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She added that artificially limiting private insurance prices will not be sustainable for providers in the long run.

If they do not reprice their plans, they will not be able to make payouts, and this could ultimately harm policyholders through reduced benefits or even market exits, Rahayu continued.

MOH has introduced fee benchmarks and panel arrangements to cool down the costs attributed to doctors’ fees.

It is reviewing the need and feasibility of implementing benchmarks for other cost components, Rahayu said, in response to West Coast-Jurong West GRC MP Hamid Razak, who asked whether it has studied other components of bill sizes such as facility and consumable costs.

Dr Hamid also raised concerns that, “with entrenching panel behaviors by insurers, that we are also limiting the access to equitable healthcare in the private sector”.

Rahayu said that empanelling members allows insurers to limit costs to “those who fit their structures”, in a market reaction to a cost pressure for insurers.

It is part of a multi-prong approach, to keep healthcare affordable, she said.

Non-constituency MP Andre Low also flagged that, besides higher healthcare costs, insurers’ administrative costs could also contribute to higher premiums.

Noting industry-wide reforms to lower such costs, he asked whether MOH has considered policy levers to incentivise passing down cost savings to consumers.

“We engage the insurance providers quite regularly, but we are very mindful about where we intervene, especially because they need to be competitive,” said Rahayu.

“There is a commercial dimension to it, which we feel that we should respect.”