Dr Akshar Saxena on health insurance changes in Singapore

Key Concepts

• Integrated Shield Plan (IP) Deductibles: The initial amount of medical expenses a patient must pay out-of-pocket before their insurance coverage begins.
• Private Insurance Plan Riders: Additional insurance policies that supplement a primary insurance plan, offering extra benefits.
• Co-payment: A fixed amount or percentage of the cost of a medical service that a patient is responsible for paying.
• Cost-consciousness: An awareness of the cost of healthcare services and a willingness to make choices based on price.
• Panel Doctors vs. Non-panel Doctors: Doctors who are part of an insurance network (panel) versus those who are not.
• Premium Growth: The rate at which insurance premiums increase over time.
• Capacity Planning: The process of determining the resources (e.g., hospital beds, staff) needed to meet future demand for healthcare services.
• Overconsumption of Healthcare: The use of medical services beyond what is medically necessary or beneficial.
• Friction (in healthcare consumption): Introducing elements that make the healthcare consumption process less seamless, encouraging more deliberate decision-making.

Changes to Private Insurance Plan Riders and Their Impact

1. Main Topics and Key Points:

• Policy Change: Starting from April, new private insurance plan riders will no longer cover the minimum Integrated Shield Plan (IP) deductibles.
• Objective: The primary goal of this policy change is to make patients more cost-conscious and to slow down the acceleration of insurance premium growth.
• Short-Term Effects:
  • Patients: Expected to become more cost-conscious, question doctors about services and prices, and compare prices between panel and non-panel doctors.
  • Doctors: Expected to become aware that patients are asking more questions, leading them to offer more cost-effective treatments, reduce unnecessary tests, and cut down on unnecessary care.
• Long-Term Effects:
  • Slowing Premium Growth: The policy aims to slow down the rate at which premiums increase, rather than causing them to fall.
  • Reduced Overconsumption: The introduction of "friction" is intended to curb the overconsumption of healthcare services.
  • Shift in Insurer Competition: Insurers will need to compete on services rather than just the generosity of their plans.

2. Important Examples and Real-World Applications:

• US Study on Co-payments: A classical study in the US showed that increased co-payments led to patients cutting back on essential medications like statins, resulting in an increase in mortality. This highlights the risk of cost-cutting leading to cost avoidance.
• Ministry of Health (MOH) Efforts: The MOH has previously made efforts to shift patients to the private sector to balance capacities. This new policy might reverse that trend as people return to the public sector due to cost concerns.

3. Step-by-Step Processes/Methodologies:

• Patient Decision-Making Process (Post-Change):
  1. Receive medical service.
  2. Become aware of deductible/co-payment responsibility.
  3. Question doctor about necessity and cost of services.
  4. Compare prices across different doctors/providers.
  5. Consider panel vs. non-panel doctor options.
  6. Potentially reduce consumption of non-essential services or tests.
• Doctor's Response to Patient Inquiries:
  1. Acknowledge patient's cost-consciousness.
  2. Justify the necessity of tests and treatments.
  3. Offer more cost-effective alternatives.
  4. Avoid recommending unnecessary care.

4. Key Arguments and Perspectives:

• Argument for the Policy: The policy is necessary to curb the unsustainable growth of healthcare costs and premiums, which are driven by overconsumption and a lack of cost-consciousness.
  • Supporting Evidence: The "blank check" system previously allowed for a "free for all" in healthcare consumption.
• Argument against the Policy (Fairness): The policy creates a two-tier system, where those with older riders enjoy full coverage while new policyholders do not.
  • Counter-Argument: While a "pain point," a full immediate change was not feasible. The policy is fair from a national perspective as it aims to slow premium growth for everyone, benefiting younger cohorts who might otherwise face escalating premiums.
• Risk of Cost Avoidance: There is a risk that increased co-payments could lead patients to delay or avoid necessary medical care.
  • Mitigating Factor: The MOH's approach allows co-payments and deductibles to be covered by MediShield Life, somewhat lowering this risk. However, vigilance is still required.
• Impact on Public Healthcare: A potential shift of patients back to the public healthcare system necessitates a rethink of capacity planning and manpower.

5. Notable Quotes or Significant Statements:

• "Patients will become more costconscious. That's the entire objective of the policy." - Dr. Aksha Sakina
• "They should be becoming conscious about whether they go for panel doctors versus non-panel doctors." - Dr. Aksha Sakina
• "The good part about the way the MO has done this part is that the co-ayments and deducted bills could still be covered by the medicave." - Dr. Aksha Sakina
• "We have to rethink capacity planning because with this change I anticipate people will switch back to the private to the public sector." - Dr. Aksha Sakina
• "I would not see them falling. I would not anticipate that. So at the best what I would see is that in the short run there will be some confusion. People will look at what's going on. They will compare prices. What I anticipate is in about 3 to 5 years the the growth rate of the premiums the way at this they were accelerating that should slow down." - Dr. Aksha Sakina
• "Previously, they were competing on the generosity of the insurance. They were giving out more generous insurance. That led to an increase in premiums for the subsequent cycles. But now, they have to compete on services." - Dr. Aksha Sakina
• "Previously people had a blank check and they could consume as much healthcare as possible with the riders that was a free for all system this kind of introduces friction and friction is uncomfortable people are uncomfortable with that kind of change But friction will actually slow down the over consumption of healthcare." - Dr. Aksha Sakina

6. Technical Terms, Concepts, or Specialized Vocabulary:

• Integrated Shield Plan (IP): A private insurance plan that supplements MediShield Life, providing coverage for hospital stays and treatments in private hospitals.
• Riders: Additional insurance policies that offer enhanced benefits beyond the base plan.
• Deductibles: The initial amount of medical expenses an insured person must pay before their insurance coverage kicks in.
• Co-payment: A cost-sharing arrangement where the insured person pays a portion of the medical bill.
• Panel Doctors: Healthcare providers who have a contractual agreement with an insurance company to provide services to its members at a negotiated rate.
• Premium Growth Acceleration: The increasing rate at which insurance premiums rise over time.
• Capacity Planning: The process of forecasting and ensuring that healthcare facilities and personnel are adequate to meet anticipated demand.
• MediShield Life: Singapore's national basic health insurance scheme that covers all Singaporeans and Permanent Residents for large hospital bills and selected outpatient treatments.

7. Logical Connections Between Different Sections and Ideas:

The discussion flows logically from the announcement of the policy change to its immediate and long-term implications. The impact on patients and doctors is discussed first, followed by the fairness of the policy and the potential risks. The conversation then shifts to the broader systemic effects on the public healthcare system and the insurance industry. Finally, the long-term vision of the policy's impact on healthcare consumption is presented. The core connection is how the removal of rider coverage for IP deductibles is intended to create "friction" that leads to more conscious decision-making, ultimately impacting costs, premiums, and service utilization.

8. Data, Research Findings, or Statistics:

• US Study: Mentioned as evidence for the potential negative impact of increased co-payments on medication adherence and mortality. Specific figures from this study were not provided in the transcript.
• Premium Growth: The transcript repeatedly refers to "accelerating" premium growth, implying a significant and increasing rate of rise, though specific figures were not cited.
• Timeframe for Stabilization: Dr. Sakina anticipates that premium growth rate deceleration will be noticeable in "about 3 to 5 years."

9. Clear Section Headings:

• Key Concepts
• Changes to Private Insurance Plan Riders and Their Impact
  • Main Topics and Key Points
  • Important Examples and Real-World Applications
  • Step-by-Step Processes/Methodologies
  • Key Arguments and Perspectives
  • Notable Quotes or Significant Statements
  • Technical Terms, Concepts, or Specialized Vocabulary
  • Logical Connections Between Different Sections and Ideas
  • Data, Research Findings, or Statistics
• Synthesis/Conclusion

10. Synthesis/Conclusion:

The new policy, which disallows private insurance riders from covering minimum IP deductibles from April, is a strategic move by the Ministry of Health (MOH) to address escalating healthcare costs and premium growth. The primary objective is to foster greater cost-consciousness among patients, encouraging them to scrutinize medical services and prices, and to prompt doctors to offer more cost-effective treatments and reduce unnecessary care. While this change may initially cause psychological discomfort and concerns about fairness due to the creation of a two-tier system, it is argued to be beneficial for the nation in the long run by slowing premium inflation. A key risk identified is that increased out-of-pocket expenses might lead to patients delaying or avoiding necessary care, though the coverage of deductibles by MediShield Life mitigates this to some extent. The policy is also expected to shift competition among insurers from plan generosity to service quality. Ultimately, the introduction of "friction" in healthcare consumption is seen as a necessary step to curb overconsumption and promote a more sustainable healthcare system, with observable effects on premium growth expected within 3 to 5 years. The potential shift of patients back to the public sector also necessitates a proactive approach to capacity planning.