Mr Chua Kheng Wee Louis (Sengkang): Thank you, Mr Speaker. Just one supplementary question for the Minister. I understand that the CDL is a positive development for our healthcare system. But at the same time, a lot of the insurers are responding very quickly to this legislation and introducing various riders. I understand from the Minister’s response the Ministry is looking into this. So, my question is whether the Ministry will look into whether insurance companies are profiteering from this. And eventually, the concern is whether or not, this could all end up as higher premiums for the various policy-holders as a result.
Mr Ong Ye Kung: Thank you. Before I directly answer the question, let me explain what is happening now.
In the past, as we know, MediShield Life provides the basic level of protection. Above that, there is IP; and above whatever IP does not provide, riders would provide. So, you look at the cake as three layers.
In the past, what happens is, an IP has limitless claims. We call this “as-charged”. But it requires some co-payment and riders sit on top of IPs to cover part of the co-payment. But with the recent changes, that relationship has been flipped. Because an IP now has quite a strict coverage of four, five times of MediShield Life. So, IP has lower coverage. It also does not cover so many drugs because non-CDL drugs are no longer covered; IP coverage has shrank. But now, the ballon is squeezed out into the rider space. Insurance companies now come in with riders with 18 times coverage – so, not “as-charged” but 18 times or a very high absolute number.
I think there is an impact now where it is no longer “as-charged” but the entire IP plus rider is now capped, albeit a very high cap. I think we need to monitor this. The way consumers respond will be quite key. If consumers heed our advice, that if you just look at our CDL which is quite comprehensive and that IP coverage is actually quite adequate; and if they stick to just buying IP, then I think the problem can be addressed.
When it comes to the riders, they should look at the price. Riders have to price in higher coverage plus more drug coverage, so they will be priced higher; and you cannot use MediSave – you can only use cash.
So, if rider demand goes down and most people think IP is enough for them, I think we have addressed the problem.
But if consumer behaviour does not change and consumers continue to buy riders, notwithstanding high premiums, then, I think I agree with the Member, we may have a problem. In which case, as I had mentioned just now, together with MAS, we will be prepared to regulate IPs and riders.
The Member mentioned the word “profiteering”. I am not sure I would describe the insurance sector that way. I think they are competing. I am not sure they are profiteering from it. But because they compete, they try to fight for market share, they offer a wide coverage – sometimes, it is, in the long term, not very sustainable for their business.
In healthcare, it is a very complex system. Regular market economics do not quite work and if need be, if we have to regulate, we will do so.
Ministry of Health
21 April 2023
https://sprs.parl.gov.sg/search/#/sprs3topic?reportid=oral-answer-3187
Office of the Leader of the Opposition 