https://www.straitstimes.com/business/why-all-of-us-can-do-our-part-to-manage-healthcare-costs-in-singapore
2025-04-21
Chor Khieng Yuit
Senior Business
Correspondent The Straits Times
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SINGAPORE – Much has been said about the role of insurers, doctors and hospitals in managing healthcare costs, but individuals have a crucial part to play as well.
Mr Eddy Cheong, chief executive of insurance advisory firm Havend, observed that with the generous coverage of Integrated Shield (IP) plans, a rise in bigger claims can sway the claims rates, even though most claims could be smaller in proportion.
Rising healthcare costs are not going away, especially as Singapore is set to reach super-aged status by 2026, which is when 21 per cent or more of the population is aged 65 and above.
Medical costs tend to go up as people age, as chronic conditions such as high blood pressure and heart disease are more likely to develop.
Health insurance premiums also go up with age. Insurers typically charge premiums according to the age band, so as you get older and move into higher age bands, your annual premiums go up as well.
The Central Provident Fund Board’s healthcare financing website shows that premiums for IP plans, especially those for private hospitals, “rise substantially with age”.
The median annual premium for private IP plans across insurers is $2,930 for a person aged 61 to 65, while those aged 66 to 70 pay $3,850 – a jump of 31 per cent.
The premiums go up further as you reach the next age band, eventually hitting $9,080 a year for those who are aged 84 and 85.
Mr Louis Koay, a senior financial services director at Phillip Securities, said everyone has a role to play in managing healthcare costs.
If an individual overspends on insurance and makes excessive claims, overall healthcare costs will go up and that ultimately hurts everyone, as premiums become unsustainable.
“It is not about who bears the cost but about adopting the right mindset to prevent overconsumption,” Mr Koay added.
But it can be hard to tell whether a person is over-consuming or consuming sensibly.
Havend’s Mr Cheong said this is because when a patient needs medical attention, he understandably wants to have as thorough an examination or treatment as possible.
So insurance policies must be designed in such a way that they prevent doctors from recommending too many tests or treatments, he added.
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In this regard, the “as charged” model in private health insurance policies can lead to wasteful spending, noted Mr Richard Cooper, the business leader at Mercer Marsh Benefits Singapore.
“As charged” means the insurer covers the full medical bill, up to the policy’s annual coverage limit.
Mr Cooper said this feature could encourage consumers to opt for more expensive treatment or services without considering if the medical procedure is cost-effective.
Phillip Securities’ Mr Koay added that “as charged” contributed to wasteful spending in the past as patients did not have to pay a single cent for their hospital expenses.
But he noted that the Government’s introduction of a mandatory 5 per cent co-payment by policyholders means people are now more likely to think twice before they chalk up too many medical expenses. After all, part of the cost is borne by them.
Mr Cheong said individuals can avoid overtreatment by asking a key question of their doctors: “Is this treatment necessary?”
At the other end of the spectrum, there are people who have under-utilised their insurance policies. They might have an IP plan that allows them to stay in a private hospital or an A ward in a public hospital, but they opt for subsidised wards, B2 or C in public hospitals, for which MediShield Life would have been sufficient.
Central Provident Fund Board data shows that from 2020 to 2022, 57 per cent of Singaporeans and permanent residents who had paid for higher coverage with an IP, chose subsidised wards.
Mr Cheong said these patients are not making good use of their money because they are overpaying for something they would not be using.
Rather than buy the most comprehensive insurance plan, a person should choose a policy that fits his healthcare needs and budget, noted Mr Cooper.
Mr Cheong added: “Where would you most likely choose to be warded in the event of hospitalisation?”
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You need to understand your needs and consider if you can afford the policy in the long run.
This issue of affordability will crop up again when a person retires and loses a steady income stream.
Mr Cheong said a retiree needs to ask if he can pay the premiums for the IP plan over the next 20 years. Ideally, the retiree should have already set aside funds for his future medical expenses.
The CPF Board website states that the premiums for an IP plan for private hospital coverage can cost 2½ times more than MediShield Life over a person’s lifetime.
If an individual finds the premium amounts unaffordable, they may have to consider downgrading to a lower-class ward, Mr Cheong notes.
After all, Singapore has universal hospital coverage from MediShield Life. This basically guarantees every Singaporean and PR a basic level of medical care, Mr Cheong said.
He added that the premiums for MediShield Life can be paid for in full using MediSave, a personal healthcare savings account that all Singaporeans and PRs have.
That said, there are lifestyle choices that all of us can make to manage our healthcare costs.
Mr Cooper said we can do so by eating healthy, exercising regularly and by taking care of our mental well-being. These steps will reduce the risk of chronic diseases, and in turn, lower healthcare costs.
Regular check-ups and screenings can also catch health issues early, potentially reducing the need for more expensive treatments later.
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