Portability of Integrated Shield Plans could exacerbate rising premiums
HEALTH insurance portability, or the ability to freely switch your health insurer with few or no exclusions, sounds ideal. But for Integrated Shield Plans (IPs) the issue of portability is far from simple or straightforward.
IP portability could well exacerbate the trend of rising premiums, which already seems unrelenting. Today IPs’ “as charged” benefit design, which is seen to drive overconsumption of healthcare and excessive claims, is blamed for the plans’ poor profitability and increasing premiums.
But depending on what is proposed, IP portability could open up more vulnerabilities for the seven IP insurers. The Ministry of Health (MOH) is expected to complete its study on IP portability within the year. For now, a discussion paper by the Singapore Actuarial Society (SAS) envisions three possible scenarios of how portability could play out. In short, the conclusion is – the more generous or liberal the portability terms, such as coverage for all pre-existing conditions, the higher the premiums.
An actuarial conference hosted by the SAS on Monday (Aug 26) featured a panel discussion on “portability dilemmas” of Shield plans. Panellist Dr Jeremy Lim, associate professor at the National University of Singapore, put it bluntly. Most people, he said, have no clue about the specifics of their IP’s benefits. Instead, premiums are “overwhelmingly the factor driving the call for portability among the public”.
“Just like essential goods, people want (costs) to be slow and steady with no increase in premiums... They trust the brand, the people or institution behind the brand – until proven otherwise. And the ‘until proven otherwise’ quite unfortunately pops up at premium increases that the public doesn’t see as being fair.”
I’m in that predicament. I would like to switch IP insurers – not because benefits are significantly better elsewhere or the services of my current insurer are poor. After all, I have yet to make any claim and, hence, the service quality is untested. But my insurer has a relatively smaller pool of policyholders; its history of underwriting performance is spotty and the premiums it charges for the same age band are higher than other insurers. MOH’s recent publication of premiums paid by people for IPs over their lifetime confirmed my suspicion; my insurer is consistently among the most costly across all plan types.
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Rather than IP portability, the industry would do better to take a hard look at what other levers can be pulled to dampen claims and costs. The government may well have to step in to spearhead measures. The Cancer Drug List, for instance, has proven effective in tamping down cancer claims as it limits eligible treatments to drugs on the list.
MOH has also begun to crack down on excessive charges by doctors as evidenced in its recent enforcement action against six doctors for excessive or inappropriate Medisave or MediShield Life claims.
But no doubt, the proverbial elephant in the room is the “as charged” plan design. Riders already mandate a co-payment, but this may be insufficient to curb overconsumption or shore up the plans’ profitability. Doing away with the “as charged” design completely will surely cause an outcry. But there may be room for insurers to design alternatives with sub-limits to give policyholders more cost-effective options.
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Whatever course of action is proposed, there should be ample public consultation among all stakeholders in the healthcare ecosystem. It is in all stakeholders’ interest that health insurance remains sustainable and affordable.
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