You’ve probably heard about that change in the insurance landscape in Singapore, brought about by the mandatory 5 per cent co-payment of hospital bills added to all new policies and their riders.

What this means for Singaporeans is that new insurance plans can no longer cover hospital bills completely, and new policyholders should be prepared to fork out a little bit of money when next going to the hospital.

You will hear terms such as “policy” and “riders” being bandied about. Simply put, a policy is what outlines the basic plan that you are paying for, things such as hospital coverage and post hospital treatment.

The rider, on the other hand, refers to add-on coverage for additional cost. For example, full coverage riders cover all in-patient medical expenses, and this appears to be a popular choice amongst Singaporeans, with The Straits Times reporting that 29 per cent of the population own this type of rider.

However, it is this type of rider that has been at the centre of the controversy, sparking debates on patient over-consumption and medical over-servicing.

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So what does this mean for the average Singaporean?

Previously, you could purchase a policy with a full-coverage rider that meant you didn’t have to pay for hospital stays, procedures, and tests. It was a one-size-fits-all solution, if you could afford it.

Now, however, you can no longer purchase a policy with such a rider.

The implementation of the 5 per cent co-payment is a measure to arrest errant medical claims, with The Straits Times reporting an instance of a patient amassing $25,000 worth of fees in less than 24 hours.

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Why were the medical charges so high?

Although the astronomical fees may suggest over-servicing, in which doctors recommend expensive and perhaps unnecessary tests or procedures, Channel News Asia noted that such instances were symptoms of “buffet syndrome” brought about by private insurers over-selling full coverage riders. Since patients with such riders don’t have to pay a single cent, they over-consume these expensive treatments, or request overnight stays at hospitals even if they are only doing a day procedure, as hospitalisation is a common requirement for making claims. As a result, the overall costs of both medical services and insurance premiums become inflated.

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“The insurance side will say it’s the medical, the medical side will say it’s insurance,” said a senior financial consultant at a major insurance firm, who wanted to be known only as Re.

While it remains unclear as to whether the rise in costs is the fault of the medical professionals or the insurance companies, it is very certain that the legislation significantly impacts potential policy buyers.

The 5 per cent co-payment would help keep medical and insurance costs down as it encourages responsibility on the part of policyholders, who no longer have a free buffet of services, as well as medical professionals, who cannot over-service indiscriminately because the patient will have to bear some of the costs.

New riders, which include the co-payment, would probably have lower premiums also, resulting in savings for policyholders, said Senior Minister of State for Health Chee Hong Tat when announcing the move.

Re explained that there are three groups of people who will be affected by the change differently: Old policyholders, recent buyers, and future buyers.

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Old policy-holders: These are people who currently hold full coverage riders bought before the announcement of the legislation on March 8, 2018. If you’re in this category, you will not be affected by it and can continue to enjoy the perks of your full cover, unless your insurer decides to change the terms of the rider, in which you will be notified a month prior to it taking effect.

Recent buyers: These are policy-holders who bought full coverage riders after the announcement date. With most insurance companies, if you bought a full coverage rider on or after March 8, and before April 1, 2019, you will still be able to make full claims through to March 31, 2021, after which your rider will be subject to the 5 per cent co-payment.

Future Buyers: These are for those who purchase a policy after April 1 next year, and all riders offered will be subject to the 5 per cent co-payment.

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There is a $3,000 cap to the co-payment, but this applies only to government hospitals. There is no co-payment cap on private hospitals.

In light of the changes, how should one choose an insurance policy?

“Think about your lifestyle, and budget,” advised Re. “For those with monetary limitations, it is advised that you opt for a simple accident plan and a hospital coverage plan that utilises your CPF for premium payments.”

It would be important also to consider the medical benefits of the company you work for, or when looking for a job.

“A common misconception is that insurance policies cover everything,” explained Re. “But to put it simply, insurance policies cover in-hospital stays and fees. They do not cover flu, cough, or cold. However company insurance policies can cover GP visits for those illnesses, so it’s good to always check your benefits.

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It is about understanding what you’re getting yourself into, when seeking medical treatment, said Re. So when it comes to medical matters that require a specialist or need hospitalisation, Re advises speaking to your insurer for their list of recommended private doctors and for the coverage provided.

According to him, it is better to be “kiasu” – afraid of losing out, than “kiasi” – afraid to die. “It’s better to be kiasu and ask your doctor or agent for more and more information, than to be kiasi and pay more and more money,” he explained.

You could think the co-payment move “kiasi” or “kiasu”, but it will keep insurance premiums affordable. Channel NewsAsia reported that rider premiums have gone up by as much as 225 per cent over the last two years, and the rise in premiums has also affected those without full riders. Integrated Shield Plan policyholders saw a rise in premiums by up to 80 per cent, with the highest increases felt by older policyholders and those on private hospital plans.

“If this trend continues, I’m worried Integrated Shield Plan and rider policyholders will find their insurance premiums increasingly unaffordable as they age,” said Mr Chee.

We could appeal to patients with insurance riders to consider being more responsible in front of the buffet of medical services available to them. We could also discourage medical professionals to refrain from over-servicing their patients. But will that work?

No doubt there will be those who gripe at the 5 per cent co-payment. But it will help keep costs down and keep everyone honest as it will curb over-consuming and over-servicing.

Because what we don’t want to see is patients, especially older ones, having to pay a lot more, or end up being unable to afford insurance premiums.

Top Image: The Pride