The changes, according to MOH, will help bring health insurance back to its original objective to protect against larger healthcare bills. The ministry’s data shows private hospital IP policyholders with riders are 1.4 times as likely to make a claim, with an average claim size of 1.4 times that of those without riders.
Health Minister Ong Ye Kung described the overly-generous coverage in private insurance as a “classic buffet syndrome”, which drove up claims and insurance premiums. “Yet it is frustrating to see insurance companies continue to offer unsustainable terms, presumably competing for market share,” he said in 2024.
The new structure bets that skin in the game will change the behaviour on both sides. A $3,500 deductible for private hospital admissions will have patients thinking twice before opting for that private hospital stay. At the same time, doctors may think twice about recommending more expensive and additional treatments when a simpler one will do.
Structural shifts
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In theory, less overconsumption leads to smaller claims and lower premiums. However, the rider changes will still not address structural shifts. WTW’s research cited new medical technologies to be the top reason for increased costs, followed by advancements in pharmaceuticals and the little or the lack of cost sharing.
The rising number of cancer diagnoses illustrates the scale of the challenge. The latest Singapore Cancer Registry annual report also showed an increase in cancer diagnoses for those under 40. Between 2019 and 2023, there were 4,995 diagnoses, 34% higher than the 3,729 reported between 2003 and 2007.
The earliest period on record in the report, which is between 1968 and 1972, showed the number of cancer diagnoses for the same age group at 1,710, as highlighted by The Straits Times. The Singapore Cancer Society estimates that one in four Singapore residents is at risk of getting cancer by the age of 75.
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Straightforward win
In that sense, higher co-payments may not help make targeted therapies cheaper or slow tumour growth. So, who do the changes actually help?
In the near term, younger and healthier policyholders stand to benefit most, with lower premiums being a straightforward win. MOH’s own illustration shows a 40-year-old who previously couldn’t afford a rider can now add one under the new pricing.
Older policyholders, who are more likely actually to use their insurance, may find the calculation less straightforward. While they get to save on premiums, the higher out-of-pocket exposure per hospitalisation may offset that.
Again, using MOH’s example, a 60-year-old undergoing knee replacement surgery under the new structure would pay $3,330 more from his MediSave per episode than under the old rider, even after accounting for premium savings over three years.
Insurers are not certain if lower premiums can move the needle towards more sustainable healthcare. Consumers, on their part, are not fully aware of what the changes entail. All parties involved have more work cut out for themselves.
Ultimately, my grandmother’s instinct wasn’t wrong — getting sick in Singapore is expensive, and it’s getting more so. The IP rider changes are a meaningful intervention, but they’re fighting behavioural inflation in a system where most of the inflation is structural. Fixing the buffet syndrome is a start. Whether it is enough will only be answered with time.
