Home Front

Health insurance task force: Heartening proposals for change, now for action

Recommendations of the Health Insurance Task Force deserve serious consideration by all stakeholders

The Life Insurance Association's initiative to try to stem the spiralling cost of healthcare insurance is most heartening.

The question now is: How valid are the recommendations from the task force? Do they go far enough? And will the six insurance companies that provide two in three people here with integrated plans that cover them for non-subsidised treatments act on them?

The ones who pay when private healthcare costs go out of control are the policyholders, not the insurers that are essentially intermediaries which just pass the cost on. So the incentive might not be there for insurers to act, beyond a token compliance.

Like most of healthcare, there is an asymmetry, both of information (patients depend on doctors to tell them what is wrong with them and what they need to do about it) and the ability to make changes - which is something only a big player can do. Individual patients are at the mercy of the system.

In this case, the big players are the Government, as represented by the Ministry of Health (MOH), and the Singapore Medical Council, the insurance companies and possibly professional associations representing doctors, like the College of Medicine and the Singapore Medical Association (SMA).

The SMA had tried to provide patients with a guide on how much they can be expected to pay for various treatments. But this had to be scrapped about 10 years back, when it was deemed to be anti-competition.

The MOH is also trying to level the playing field by putting online the fees charged by the public sector, as well as private specialists and facilities. While these are helpful, they probably do not go far enough, given the huge difference in fees charged by different specialists for the same treatment.


Take a simple, single eye cataract surgery, including the implant of a lens. One in four ophthalmologists in private practice charges $2,140 or less. The same number charge $4,000 or more. Which means that for a simple, straightforward procedure, some doctors charge more than double what others do. And they are all specialists practising in the private sector.

How is such a wide range of fees going to help patients? This is especially since there is nothing to indicate if the doctors who charge premium fees are any better than those whose fees are moderate.


A guideline on fees with a narrower range, on the other hand, would provide a better yardstick.

Putting up such a guideline was one of the recommendations from the Health Insurance Task Force (HITF).

While doing away with riders has patients upset, suggesting that patients and doctors get pre-authorisation from the insurer for treatments has doctors worried.

But this has been disallowed by the Competition Commission of Singapore (CCS). Ms Grace Suen, its assistant director (communications), international and strategic planning division, explained: "In general, CCS views price recommendations by private sector suppliers, trade or professional associations as likely to harm the competition by distorting independent pricing decisions.

"A likely outcome is that prices charged will tend to cluster around the recommended levels, regardless of business costs, product/service differentiation and quality of product/service.

"In this connection, competition authorities worldwide have found price recommendations and fee guidelines issued by private sector suppliers, trade or professional associations to be anti-competitive."

Ms Mimi Ho, who headed the HITF, however, told The Straits Times: "The HITF believes that the adoption of published fee benchmarks of guidelines to provide a range of professional fees is paramount to improving the transparency of medical costs in Singapore."

She adds that such benchmark guidelines are used in countries like the United States, Canada and Japan and "provide an important baseline for assessing reasonable charges, enabling the market to operate with greater efficiency and more transparency".

So the CCS says fee benchmarks set up by the private sector and professional associations are internationally frowned upon, while the HITF says this is practised in some of the world's biggest economies.

Two things come to mind. First, what the CCS says is probably true generally, but does it apply to everything?

Public Transport Council chairman Richard Magnus recently posted this on his blog: "It is clear that commuters prefer a simple fare structure. All public transport fares should be calculated simply, using distance travelled, regardless of the chosen mode and route, air-con or fan ventilation."

Should certain things, like public transport and medical care, be exempted from the general rule on the CCS? The main purpose of the CCS is to ensure that people do not suffer from the results of cartels.

But in medicine, it is having no benchmarks that is causing grief - to patients who do not know what they should be paying, to doctors who are accused of overcharging (even though there is no benchmark to measure their charges against) and to insurers who are asked to pay some doctors more than double what other doctors charge.

And second, could a middle ground be found with the MOH overseeing such a benchmark, thus taking it out of the realms of private enterprise?

The CCS supports the MOH's action in publishing actual fees charged. But as mentioned earlier, there is often a huge difference, not just between the most expensive and the cheapest, but also when comparing the middle ground, the fees between the 25th and 75th percentile.

This might be a good time for the CCS to revisit the basic principles of what constitutes anti-competition.

It says guidelines could result in prices "clustering around the recommended levels". But that is not necessarily a bad thing, especially if, in the case of medicine, the MOH has a hand in keeping those guidelines realistic.

In fact, that is what patients would very much like to have, knowing that whatever they are asked to pay is within a reasonable range, rather than not knowing if they had been paying through the nose.


Some of the HITF's other recommendations also bear looking at.

One is for insurers to have a panel of preferred health providers that charge reasonable fees. This is already practised by doctors and companies involved in third-party agreements.

Doctors involved not only have to give the referring company a percentage of fees charged, they are also constrained to charge fees that are usually lower than free market rates.

Doctors are not forced to accept such agreements. Most do so when they are new to the private sector and do not have a large clientele of their own, or take these on as extras.

The effect is a cap on fees. If the fees are too low, doctors would simply leave the scheme, making it not viable, so such fees, while low, are regarded as acceptable.

It would be helpful if insurance companies did the same, as this could help to rein in costs. While policyholders should not be constrained to go to only doctors on this panel, they could get an idea of what doctors on the panel charge.


Which brings us to the next recommendation from the task force: to ensure that patients pay part of the bill, so they will be more aware of the costs.

It argues that patients with "riders" have bills that are 20 per cent to 25 per cent higher than for patients who do not have riders. Basic health insurance usually comes with a deductible, which is the amount patients have to pay before insurance kicks in, and a co-payment, which stands at 10 per cent of the rest of the bill. Patients may add "riders" or additional insurance to cover their share of the bill.

This suggestion has been met with considerable unhappiness among members of the public, one in three of whom has riders, and they are loath to give them up.

Does having a rider push up medical bills? Based on figures from the industry, undoubtedly so. But the more important question is whether the higher bills are uncalled for.

We need a breakdown of such bills to know. For example, if someone has a rider and went for a knee replacement, he would pick the best available implant that might last longer, while someone who has to pay a share might baulk at the far higher cost and choose a lower-cost option.

But it is precisely because people want to be able to choose what they perceive as the best that they buy riders in the first place. Is this so wrong?

While doing away with riders has patients upset, suggesting that patients and doctors get pre-authorisation from the insurer for treatments has doctors worried.

Their concern is the volume of treatments and the time such pre-authorisation would take.

The concern is that this would add a layer of bureaucracy - insurers would need a panel of specialists to be able to say that a treatment suggested by another specialist is not appropriate - hence adding to the cost and perhaps delaying treatment for patients.

This suggestion has possibilities, but it needs much thinking through. For example, normal treatments at acceptable fees should not require pre-authorisation, which could be kept for the unusual or the very expensive.

Even then, should the insurer veto a treatment and the patient's health deteriorates as a result, who would bear the blame? While it is important to keep healthcare costs from soaring out of control, it should not be at the expense of patients' health.

So while the recommendations from the HITF might not be fully adopted at face value, they do raise concerns that need to be addressed.

However, this is not a journey on which insurance companies should be expected to embark on their own, but rather one in which all stakeholders - patients, doctors and the Government - should work together.

A version of this article appeared in the print edition of The Straits Times on October 20, 2016, with the headline 'Heartening proposals for change, now for action'. Print Edition | Subscribe