We thank The Straits Times for highlighting that overly generous health insurance policies, particularly Integrated Shield Plan (IP) riders, could undermine the national effort to contain escalating cancer treatment costs (Excessive IP rider cover can hurt effort to curb cancer care cost, March 31).
International experience has shown that medical insurance is a notorious example where perverse incentives and market failure can lead to escalating healthcare costs. This is especially for cancer, where patients’ anxiety can be easily exploited.
The Ministry of Health (MOH) has been addressing the key factors driving up cancer treatment costs.
First, as a small market, Singapore lacks negotiating power and pays higher procurement prices. With the Cancer Drug List (CDL), drug companies lower prices to include drugs in the CDL to get financing coverage. Since the changes, we have negotiated an average cost reduction of 30 per cent, and over 60 per cent for some drugs. The CDL now covers 90 per cent of cancer treatments in Singapore, and has wider coverage than reimbursement lists in many other developed countries.
Second, high-cost cancer treatments are often prescribed even where costs are not commensurate with clinical benefits. This is exacerbated by “as-charged” insurance policies, where patients have limited co-payment, which encourage many to try treatments even if the benefits are unclear. Overseas studies have found that about half of new cancer treatments were introduced without evidence of benefit to survival or quality of life.
The CDL sends a strong signal to patients and doctors to use clinically proven and cost-effective treatments. While riders may cover non-cost-effective treatments, these costs will be reflected in rider premiums, rather than MediShield Life and IP premiums. Individuals should consider their needs and long-term affordability of the plans when deciding whether to buy IPs and riders.
Third, the mark-up of cancer drugs by some healthcare providers may be significant, encouraged by “as-charged” coverage. MOH has taken steps to curb this by mandating a minimum co-payment for bills covered by new riders in 2018. With the changes from April 1, 2023, we have taken another major step with the CDL and the requirement for IPs to set claim limits for cancer drug treatments, instead of having no limits at all.
MOH is monitoring the situation, and will take further steps to regulate the industry and act against developments and practices that appear to protect policyholders, but raise costs and premiums without improving health outcomes, and set us on an unsustainable path.
Director (Finance Partnerships and Commissioning)
Healthcare Finance Division
Ministry of Health