Making Integrated Shield Plans fully portable not the right solution for policyholders’ concerns: Rahayu

SINGAPORE: Mandating full portability of Integrated Shield Plans (IPs) is not the right solution for the issues faced by policyholders, Minister of State for Health Rahayu Mahzam said in parliament on Tuesday (Nov 12).
Neither is this international best practice, Mdm Rahayu added in response to a parliamentary question by Member of Parliament Tan Wu Meng (PAP-Jurong) who wanted an update on the ministry’s feasibility study.
IPs are offered by private insurers as optional health coverage on top of MediShield Life, Singapore’s national health insurance scheme. This typically covers stays in A- or B1-type wards in public hospitals or in private hospitals.
Various calls have been made for IPs to be made portable, or the ability for policyholders to freely switch health insurers.
The feasibility study, first announced by the Ministry of Health (MOH) in 2021, aimed to address the concerns of policyholders such as those who wish to switch insurers for more competitive premiums or for better benefits, but are unable to do so because of pre-existing conditions.
Noting that MOH has studied the issue including arrangements in other countries before arriving at its conclusions, Mdm Rahayu said IP portability is “generally uncommon across the world”.
She noted that it is “usual practice” for insurers to underwrite new policies in order to price the risks of accepting more policyholders with pre-existing conditions into their risk pool.
Underwriting can, however, result in insurers imposing additional conditions on the policyholder’s coverage, such as exclusions to the coverage. Policyholders may also have to pay higher premiums in view of the higher risks.
For countries that allow full portability – policyholders can switch insurers without underwriting – it is “usually a feature limited to their mandatory, national health insurance”, said Mdm Rahayu.
For example in Netherlands or Switzerland, universal coverage is mandated but administered by private insurers. Private insurers are “therefore required to accept any applicant, regardless of whether they are switching from another insurer or uninsured previously”, she added.
“This gives the impression that commercial insurance is portable, but actually it is not, as only the basic coverage under the universal national health insurance scheme is fully portable,” said Mdm Rahayu, adding that these two countries also have supplemental, private insurance that involves underwriting and is not portable.
Australia and Ireland are two other countries that have allowed non-national, supplemental private health insurance plans to be fully portable. Both countries have done for different reasons, Mdm Rahayu said.
In Australia, for example, private hospital care accounts for close to half of admissions. “So good uptake of private health insurance, including through features like full portability, is integral to support access,” she explained.
As for Ireland, private insurance was initially introduced for a segment of the population who was not eligible to receive free treatment under its public healthcare system. Private insurance with full portability was hence established, to ensure that this group is protected against large bills, she added.
These countries with full portability between private insurers also had to establish “additional compensation mechanisms”.
“In other words, for insurance company A to take over from insurance company B a policyholder with a pre-existing condition and of higher risk, A will receive compensation from B,” said Mdm Rahayu.
To facilitate this compensation system, countries had to set up a “risk equalisation fund”. This is usually funded with public money and insurer contributions, and payments between insurers are facilitated by a neutral body.
With that, “significant additional national resources” will be needed to set up and to administer the fund, said Mdm Rahayu.
“For these reasons, MOH does not believe that mandating full portability for IPs is the right solution for the issues faced by policyholders,” she told the House.
“Most of all, it is not an international best practice for supplementary and commercial personal health insurance to be fully portable.”
Mdm Rahayu noted that calls for IPs to be made portable mainly from three groups of policyholders.
These policyholders include those who are unhappy with changes made by their insurers to policy coverage terms, those who face difficulties in making claims and those who find it difficult to afford their policy premiums as they become older.
“Hence, they want to switch to another plan offered by another insurer, but realised they have to undergo another round of underwriting, and may not be able to preserve the coverage they already have, or they have to pay more premiums,” she said.
“The conclusion is that IP portability – allowing all IP policyholders to switch insurers freely – will enhance competition and improve bargaining power of IP policyholders.”
But for those with pre-existing conditions, the issue “may not be a lack of competition between insurers, but that insurers are not actively competing for this group of customers”, said Mdm Rahayu.
“This is because their probability of claims is higher, which means that insurers may have to pay out to them more than what they collect in premiums,”
Mdm Rahayu noted that the government has stepped in to ensure that this group of policyholders will receive coverage for their pre-existing conditions under MediShield Life. 
The authorities have also announced a set of enhancements to the national health insurance scheme, which will be progressively implemented from April 2025. 
“The best way to provide assurance to everyone is to keep healthcare costs manageable,” said Mdm Rahayu.
“At the national level, MOH will continue to look at measures to manage healthcare costs and ensure that all Singaporeans have access to good and affordable basic healthcare.”