Drop in private hospital Integrated Shield Plans due to rising premiums

The number of Singaporeans and permanent residents with private hospital Integrated Shield Plans (IPs) has declined, as has the proportion of older people with any type of IPs, according to a report by The Straits Times based on data from the Ministry of Health (MOH).

The proportion of individuals with the highest tier of IPs, which covers treatment in private hospitals, fell by 5 per cent – from 40 per cent in 2021 to 38 per cent in 2023. Additionally, between 2020 and 2023, 2.2 per cent of people over the age of 60 gave up their IPs and reverted to the basic MediShield Life.

These individuals, who were previously paying higher premiums for IPs that cover public hospital treatment as private patients, likely opted out due to soaring premiums and the inadequacy of MediSave to cover the annual payments. The MOH stated that the proportion of people with private hospital IPs in the age group above 60 was significantly lower compared to other age groups.

MediShield Life covers subsidised treatment at public hospitals, while additional IP coverage allows for private care. Currently, more than 70 per cent of the population has opted for additional IP coverage. There are three tiers of IPs: the top tier for private hospitals, and the second and third tiers for public hospitals in A and B1 classes, respectively, where patients can choose their attending doctors.

IP premiums, paid annually with MediSave up to an age-based cap, increase with age and rise faster in later years when expensive hospital treatments are more likely. Depending on the insurer and plan, premiums can exceed $10,000 a year for those aged 80 to 90, with cash payments often starting around the age of 60.

As premiums escalate, many older individuals reassess their IP choices. Over a lifetime of 100 years, the most expensive IP could cost a person $323,900, according to MOH data. Despite some older individuals giving up their IPs, younger people are increasingly opting for them, with a 1.1 per cent rise in IPs sold to those aged 60 and younger between 2020 and 2023.

Health Minister Ong Ye Kung recently highlighted the issue of escalating healthcare costs, warning against overly generous claims reimbursements that lead to higher diagnostic tests and treatments, subsequently driving up premiums for everyone. Despite the high premiums, Mr Ong noted that about half of patients with IP and rider protection still use subsidised public healthcare when hospitalised or undergoing day surgery. These patients, he suggested, could have saved on premiums by relying solely on MediShield Life.

Senior Minister Lee Hsien Loong echoed this sentiment, cautioning against the pitfalls of insurance-fueled runaway healthcare costs. He emphasized the need for a balanced approach involving government subsidies, medical insurance, and individual co-payment to prevent unsatisfactory outcomes driven by wrong or perverse incentives.

As premiums increase with age, the trend of downgrading IPs, unless ongoing medical treatment is required, appears to be a growing reality for many older Singaporeans.