Healthcare inflation leads to new rules for insurance

Apr 22, 2019

The way health insurance plans work in Singapore saw a big change on April 1. That was the Ministry of Health (MOH) deadline for insurers to come up with new Integrated Shield Plan (IP) riders where policyholders co-pay 5% of their total medical bill. This is a departure from the traditional “full rider” plan where patients pay nothing regardless of the bill size, and is intended to restrain healthcare inflation.

MOH co-payment changes
Healthcare inflation is a significant challenge for Singapore, and affects all Singaporeans. As reported in the Singapore Business Review, healthcare inflation is expected to hit 10% this year, compared to 1% for other goods and services. Part of this inflation comes from an increase in healthcare needs due to the ageing population, as well as the expansion of treatment options due to technological advances.

However, a significant part has also come from an increase in healthcare utilisation among patients who have “full riders”, in which they pay nothing regardless of bill size. Such “full riders” lead to a “buffet syndrome” where there is over-consumption of healthcare services as well as over servicing by some doctors. This has, in turn, led to upward pressure on premiums and increased costs for consumers.

The institution of mandatory co-payment by MOH is intended to combat this buffet syndrome, and restrain healthcare inflation. This is a necessary step to help patients become more involved in their own healthcare as well as the costs associated with treatment.

How AIA Singapore is implementing the changes
As an insurer, AIA Singapore has a social responsibility to maximise value for money on health expenditure, given that it is ultimately the customer who bears the cost of healthcare through premiums. We also need to ensure that our IP portfolio is financially sustainable so that we can keep our brand promise to help our customers live healthier, longer, better lives.

In line with MOH’s direction, we have introduced AIA Max VitalHealth – a new rider for AIA HealthShield Gold Max – effective on 1 April 2019. This policy features a 5% co-payment component with a cap of S$3,000 per policy year if you are treated at any AIA Quality Healthcare Partners (AQHP) specialists or public hospital.

The introduction of AIA Max VitalHealth complements our other measures to provide customers with quality affordable healthcare. In particular, AIA was the first insurer in Singapore to establish direct partnerships with the medical community with its AQHP programme. Our experience with the panel has been very positive, and we have been progressively working on ways to strengthen collaboration with our panel doctors. We have also recently expanded our services for pre-approval of claims, which provides customers with assurance that their claim will be paid before they undergo a procedure or hospitalisation. While pre-approval is still very nascent in Singapore, take-up for this service is increasing at an encouraging rate.

Overcharging by outlier providers is also a significant contributor to healthcare inflation. Such outliers have a direct impact on healthcare costs, and also serve as a signal to other providers to raise fees. To mitigate this, the MOH has established
national fee benchmarks for procedure fees. The benchmarks serve to guide private sector healthcare providers in charging appropriately, and enable patients and payers to make better informed decisions.

AIA Singapore takes a data driven approach to tackle the issue of overcharging. To assess if a charge is reasonable and customary, we will take reference from the MOH fee benchmarks where available. We will also compare the claim against our historical claims data to identify outliers, and consult with in-house medical experts. If we find that there appears to be overcharging, we will negotiate with the provider to bring down charges. This directly benefits customers who have to co-pay, as they will end up paying a smaller out-of-pocket amount.

Prevention better than cure
While all IP insurers have made changes to their IP riders to comply with the MOH co-pay requirements, AIA Singapore has gone further to be the first insurer to offer complimentary Colonoscopy screening for Colorectal Cancer, and Mammograms for Breast Cancer, under AIA Max VitalHealth A - the new IP rider and the existing AIA Max Essential A Saver rider.

In 2013, AIA Singapore launched AIA Vitality, the first in market comprehensive health and wellness programme designed to encourage policyholders to live healthier with incentives and rewards for making healthy choices in their everyday lives.

Helping our customers stay healthy is a core part of our strategy, because this is the right thing to do, and early detection will help our customers to have a better prognosis and enable them to seek treatment earlier.


At AIA Singapore, we have been serving the community since 1931.

As The Real Life Company, we help families lead longer, healthier, and better lives. We aim to make insurance easier for everyone – with quality financial advice and innovative products and services. We listen to customers to make sure we give them the financial security they really want.

AIA Group’s Vision is to be the pre-eminent life insurer in Asia-Pacific and we are committed to be Singapore’s pre-eminent life insurer, admired for our excellent service and best practices. 

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