Guidelines and Competition in Healthcare Insurance Industry

Ms Tin Pei Ling asked the Minister for Health (a) whether insurers are regulated and/or receive guidelines on the extent to which they may exclude healthcare coverage because of applicants' pre-existing medical conditions; (b) whether additional regulation is needed to ensure that insurance exclusions are not disproportionate; and (c) whether the Ministry sees areas for improved efficiency and competition in the market for healthcare insurance.

Page: 628

Mr Gan Kim Yong: My Ministry takes a two-tiered approach towards health insurance. For basic coverage, we encourage as many Singaporeans as possible to be covered under MediShield, which is run by CPF Board and aimed at covering the cost of Class B2/C bills. 90% of Singaporeans are currently covered under MediShield. For those who wish to have additional coverage beyond MediShield, for example, for non-subsidised services, such as Class A or B1 charges, we have allowed the private sector to play a role in meeting this demand, via a range of Integrated Shield Plan and other private insurance products. There is a competitive Integrated Shield Plan market for those who seek higher coverage, with five insurers offering 26 plans targeted for different needs.

MOH does not regulate the underwriting decisions of private insurers and the criteria for accepting or rejecting applicants for Integrated Shield Plans or for imposing exclusions on pre-existing conditions. These are commercial decisions taken by the industry, depending on each insurer's risk appetite and claims experience as well as the profile of the applicants. About 5.5% of Integrated Shield Plan policyholders have exclusions for pre-existing conditions imposed on their coverage. To safeguard the interest of Singaporeans, MOH requires private insurers to be transparent with their clients by keeping their terms and conditions simple and clear. We also require them to guarantee renewals so that policyholders are not dropped even if they fall sick and incur high claims subsequently, and publish the time taken for them to process claims.

We must be mindful not to over-regulate these optional add-on plans. Insurance operates on the concept of risk pooling. If we impose overly stringent conditions on the insurers and compel them to take on higher risk applicants, they may have to raise premiums to meet these conditions. This may not be in the overall interest of the insured.

We share Ms Tin's concern about insurance coverage for Singaporeans with pre-existing conditions. Thus far, our approach has been to bring as many Singaporeans onto health insurance as early as possible before health conditions develop. For this reason, we introduced auto-cover for MediShield at birth in Dec 2007. As a result, we expect the extent of Medishield coverage to increase over time. Besides insurance, heavy Government subsidies in the public hospitals and Medisave savings will help to defray healthcare expenses. Medifund also provides a safety net for needy Singaporeans. We will continue to review our health insurance regulation to ensure it meets our needs.