Government took action on IP riders after spotting potential ‘serious market failure’: Ong Ye Kung

The government stepped in to tighten Integrated Shield Plan (IP) riders only after seeing what it described as an “emerging market failure” in private healthcare, Health Minister Ong Ye Kung said in Parliament on Monday (Jan 12).

He said that the Ministry of Health (MOH) will not micromanage or prescribe market practices in the area of private medical insurance. Instead, it will set key parameters such as co-payments and deductible requirements, to ensure that schemes are sustainable.

“We only step in when we see a serious market failure emerging, which is why we have intervened in this case, to tighten the design of IP riders,” Ong noted.

These questions follow MOH’s move to curb IP riders that fully cover a patient’s minimum deductible from Apr 1, 2026.

Overgenerous coverage leads to overconsumption of healthcare services, which leads to higher private healthcare costs. This results in higher private hospital IP rider premiums which grew at an average of 17 per cent annually for the past three years, double that of IP premiums, he added.

About 100,000 policyholders cancel or downgrade their IP rider policies each year, and it is possible many switched from private to public healthcare. It would help the public healthcare system if those who can afford it stick with private healthcare, Ong noted.

“It makes a lot more sense when someone has the ability to buy private healthcare insurance, including a rider, wants to use private insurance, but half of them today switch to public subsidised care,” he said.

The patient load ratio between private and public hospitals has steadily shifted to public hospitals from 15:85 in 2010 to 12:88 in 2020, and now 10:90. The short-term impact from the IP rider changes could see some policyholders seeking treatment at public hospitals to reduce their co-payment.

There are ongoing efforts to increase public health capacity in hospital beds and outpatient capacity to cope with the ageing population.

“If need be, we may need to implement surge capacity for selected treatments,” said Ong.

The recently announced changes to the IP riders are part of tackling the issue of putting private healthcare and insurance on a sustainable path,

“IP rider premiums are going up because costs are going up, so I think we need to tackle the issue at the root,” said Ong.

Premiums for policies with the new riders are expected to fall by about 30 per cent – compared with existing policies with maximum coverage – under the new rules, amounting to average annual savings of S$600 for private hospital IP rider policyholders and S$200 for public hospital IP riders.

The 5 per cent co-payment cap has also been doubled to S$6,000 a year.

Source: The Business Times © SPH Media Limited. Permission required for reproduction.

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