MPs suggest regulation for Integrated Shield plans

Health Minister Gan Kim Yong.
PHOTO: MPs suggest regulation for Integrated Shield plans

SINGAPORE - Integrated Shield Plans (IPs) ought to be regulated by the Government to prevent profiteering, said several MPs on Wednesday as they raised concerns about these private insurance health-care plans.

One of them, Mr Sitoh Yih Pin (Potong Pasir), urged it to go further and take over the running of the standardised B1 plans, which are set to be rolled out next year, along with MediShield Life.

Get private insurers out of the B1 segment of the market, he said. The reason: They are unlikely to offer competitive benefits if the B1 plan is standardised across the board.

Currently, two-thirds of Singaporeans are on IPs, which are optional plans run by private insurers for hospitalisation in higher-class wards and private hospitals.

Their place and relevance have come under scrutiny now that all Singaporeans will be covered by MediShield Life at the end of next year. MediShield Life will provide hospital coverage for everyone in C and B2 wards.

The MediShield Life Review Committee, which came up with the MediShield Life proposals, recommended that the five private insurers offer a standardised B1 ward IP and the Government has accepted this recommendation.

Expressing the fears outside the House, Dr Lily Neo (Tanjong Pagar GRC) yesterday said insurers might "cherry-pick" the young and healthy to take on enhanced benefits at attractive premiums, but divert them to MediShield Life as they age.

They would do this by raising premiums at an age policyholders are more likely to make claims.

It is also likely that those who have run out of their Medisave money to service the private plans will end up downgrading from IPs to MediShield Life coverage, she added.

Insurers "stand to reap actuarial profits... at the expense of MediShield Life", she said.

To combat this, Dr Neo suggested that the Health Ministry extract a share of private insurers' actuarial profits.

Ms Denise Phua (Moulmein-Kallang GRC) went one step further, and asked the Government to play a regulatory role so that those with pre-existing conditions "would not be at the mercy of for-profit providers".

About 60 per cent of Singaporeans have bought IPs in various forms, which shows significant public interest, she noted.

"Persons with pre-existing conditions should not be deprived of the choice of upgrading to a B1 ward, because of either unfair risk-loading practices or private insurers' lack of interest to cover this target group," she said. "I ask the ministry to offer the standard IP for all, regardless of health conditions."

But Mr Sitoh was the boldest of all: Private insurers should concentrate on providing products for A-class and private hospital services, and exit the B1 segment altogether, he suggested.

"If you think about it, we'd want several providers for a certain product so that through competition, innovation and differentiation between providers, the consumer can benefit.

"But once a product is standardised, there is very limited, if any, scope for competition."

He added that the B1 ward is a "uniquely restructured hospital product", as it receives a 20 per cent subsidy. Most private hospitals offer few four-bed wards, and these are not subsidised.

Calling on the Government to take over the administration of IPs for B1 services, he said: "A single insurance provider will enjoy economies of scale and better risk-pooling."

In wrapping up yesterday's debate on MediShield Life, Health Minister Gan Kim Yong said his ministry will study how to "strengthen the current regulatory and accountability framework for IP insurers, while being mindful not to over-regulate" them.

"Imposing requirements which are too onerous could limit choices or result in higher premiums for policyholders," he said.

He also said he will take members' suggestions into consideration when designing the B1 plan.

This article was first published on July 10, 2014. Get a copy of The Straits Times or go to for more stories.