[SINGAPORE] Changes to MediShield Life, which kick in on Tuesday (Apr 1), may place some strain on insurance players who offer the associated Integrated Shield Plan (IP), but some industry players said they do not expect a significant impact on insurance businesses.
But at least one insurer has implemented moves to mitigate the effects of the changes on its portfolio.
Insurance players said they will continue to monitor the effects as the changes kick in gradually.
Private insurance players come into the picture with IPs, which are private insurance policies that provide additional coverage on top of MediShield Life. Further optional products, called riders, can be purchased to help with out-of-pocket costs.
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Insurance players who offer IPs and riders have started making provisions for the changes before they start rolling in from April.
Listed player Great Eastern said in an earnings briefing that it made provisions to its medical insurance business linked to the tweaks to MediShield Life.
This was one of the reasons its net profit for the fourth quarter ended Dec 31 fell 14 per cent to S$134.8 million.
In response to queries from The Business Times, Great Eastern said the cost gap between private and public healthcare players has “widened significantly”, and adjustments to plan parameters and cost structures were required to ensure the long-term sustainability of IP plans and maintain affordability and equity for policyholders.
It said: “As part of this, we adjusted the pro-ration factors for our Class A and B1 IP plans to better reflect the cost gap across the various private and public ward types.”
In IPs, a pro-ration factor is applied if policyholders consume healthcare at a higher class ward than their plan entitles them to. This prevents cross-subsidisation, which will eventually raise plan premiums.
This came into effect last October and applies to new and re-contracting policyholders.
“This adjustment creates a fairer system by preventing unintended cross-subsidisation, while ensuring that policyholders’ coverage remains unchanged,” added Great Eastern.
Another insurance company, Singlife, will review and monitor its portfolio and product offerings to “ensure continued relevance and long-term sustainability” for policyholders, following the phased implementation of the changes, said Helen Shen, its group head of products.
She said increased deductibles and greater pro-ration factors for private unsubsidised bills could “result in private insurers absorbing a larger portion of the bill for private patients”.
This could in turn increase the strain on insurance players’ portfolios.
Raffles Health Insurance’s general manager Ben Siah said the insurance arm of Raffles Medical Group anticipates some “price-sensitive customers” terminating their IP plans after MediShield Life premiums go up.
However, he does not expect the changes to significantly impact the insurance business.
“Raffles Health Insurance will continue to engage various stakeholders to reinforce the importance of sufficient and appropriate health insurance coverage,” he said.
Medical inflation, healthcare consumption
Insurance players noted the MediShield Life amendments are aimed at addressing rising medical costs, with medical inflation remaining a key concern.
Singlife’s Shen said healthcare consumption and costs have risen significantly since the Covid-19 pandemic.
Life Insurance Association (LIA) Singapore’s executive director Chan Wai Kit said the industry regularly reviews benefit levels and premiums to combat medical inflation. A survey by WTW placed this increase at 12 per cent for Singapore in 2025.
Said Chan: “IP insurers are supportive of, and will reference the Ministry of Health’s fee benchmarks to detect inflated claims and take an active approach towards claims adjudication.”
The implementation of IP panels and pre-authorisation processes have also helped to manage rising costs.
However, a “more mindful approach to healthcare consumption” will be key to managing long-term costs and ensuring financial stability, said Great Eastern.
“The insurance industry also remains committed to educating the public on the importance of pursuing only necessary and appropriate treatments,” Chan said.
