Views

More needs to be done to rein in health insurance costs

Rising premiums will impact major part of population

Insurers have started raising premiums for Integrated Shield hospitalisation plans (IPs) by as much as 37 per cent.

This move will hit many people given that around 66 per cent of the population have such policies.

The increases so far apply only to IPs that cover private hospitals.

However, the market talk is that NTUC Income's premium increase may not be confined to the highest-class IPs as its claims experience appears to be broad-based.

The three insurers that have raised premiums - AIA, Aviva and Prudential - say the hikes are necessary to make it commercially viable for them to continue offering the cover.

Industry watchers say it is only a matter of time before the other IP insurers follow suit.

IP premiums were last revised in early 2013, but claims have shot up significantly since then.

The average IP claims incidence rate - the rate at which policyholders make valid claims on their insurance plans - has been escalating at about 9 per cent a year.

Larger medical bills, greater healthcare consumption and the increased use of newer and costlier procedures have sparked the increase in medical costs - and IP claims.

RECOMMENDATIONS

In an effort to rein in escalating costs and claims, the Health Insurance Task Force made some recommendations, including setting medical fee benchmarks or guidelines and encouraging insurers to include co-insurance and/or deductible features in their products.

This is because with full-coverage riders, there is no guard against a potential "buffet" style of consumption by consumers and medical practitioners.

Other recommendations include a list of preferred health providers that charge "reasonable" fees.

These are worth looking at and need to be taken seriously by all stakeholders before the problem spirals out of control.

There is also a need for greater consumer education, so people can actively manage their health and healthcare costs.

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