3 Changes To The Hospital Insurance Industry

A year into the introduction of the Cancer Drug List and Non-Cancer Drug List Classification Framework, another wave of changes occurred in the hospital insurance industry that was effective on 1st April 2024.

Read more: Non-CDL Classification Framework

This article is written specifically for my clients only to bring you guys up to date as to what has changed. If you are not my client, please bear in mind that what is stated in this article is NOT financial advice. Do speak to your insurance agent to understand how you are affected by the changes in recent years. If you wish to seek more personalized financial advice, please reach out to me directly.

Also, for compliance reasons, I will avoid naming companies and instead focus on the changes in the industry. For clients who want a TLDR, you can skip to the last section to see a summary of the changes and how you may be affected depending on the plans you are on.

2023: Introduction of Cancer Drug Cover Riders

On 02 September 2022, MOH implemented the concept of the Cancer Drug List (CDL) to push down the cost of cancer drugs and treatment provision in Singapore. From there on out, only treatments on the CDL may be claimed under MediShield Life, Medisave and Integrated Shield Plans. As of 01 Sep 2022, more than 90% of about 200 cancer drug treatments approved by the Health Sciences Authority are listed on the CDL.

To provide coverage for the non-CDL drugs and treatments, insurance companies are providing additional coverage for that area which are found in the riders. In fact, some companies are starting to “package” their non-CDL coverage in a separate rider which adds to the overall cost if you are trying to get an all-rounded coverage.

This adds an additional layer of differentiation in benefits between companies as there are currently up to three parts to a hospital insurance that provide “comprehensive” coverage which includes:

Integrated Shield Plan (Base)
Rider that covers co-insurance and deductible
Rider that enhances CDL coverages

It is important to note that some companies have combined the non-CDL coverage and co-insurance deductibles into a single rider while others have provided the option to keep them separated. If you are doing your comparison, do bear in mind your “settings” to ensure that you are comparing the plans on an “apple-to-apple” comparison.

These changes were effective on 1st April 2023.

2024: Changes in CDL and Non-CDL Coverage

A year into the introduction of the CDL and Non-CDL Classification Framework, some insurance companies have decided to yet again make changes to their coverages which had changed the way they compete in this space.

From the changes implemented, it is evident that some insurance companies are trying to dissuade people from applying for their private hospital insurance by intentionally lowering their benefits and increasing the cost of their private hospital insurance offering. This was done to make their public A-ward hospital insurance offering more appealing.

Some of the benefits changed include decreasing the number of days of post-hospitalization treatment coverage, decreasing the CDL and Non-CDL coverage limits and increasing the out-of-pocket expenses required by increasing either the deductible payable, co-payment limit payable or both.

These changes were effective and live on 1st April 2024.

Thankfully, the insurance companies that I’ve recommended to you guys did not implement any negative changes in benefits. As such, none of you need to be concerned that your coverage is compromised by this round of changes.

That being said, unfortunately, we are not spared by the increase in insurance premiums which brings me to the next point.

Post-Pandemic: Higher Premiums Every Year

Since the start of the pandemic, I’m sure all of you have felt the impact of a higher insurance premium cost on your hospital insurance and while there is nothing we can do about it, I can at least explain to you the cause of the increase in premiums over the years.

Unlike life insurance where the cost of insurance is fixed at the age of entry, the cost of insurance for hospital insurance is based on the prevailing age band and the medical inflation situation. That said, much of the premium increase that we’ve experienced in the last 3 years can be and is attributed to Singapore’s medical inflation situation:

While the long-term medical inflation rate is about 2.3%, the recent impacts of COVID-19 and the global inflation situation have made matters worse both in terms of the cost of the provision of medical services and also stressed our healthcare system’s capacity.

While much of the cost increase is heavily subsidized by our government and insurance companies, all the major stakeholders in the system acknowledge that at the current rate that we are going, the system may not be sustainable.

As a result, we’re seeing actions being taken in the public sector (CDL classification) and the private sector (higher insurance cost) to ensure that our healthcare financing system remains sustainable.

Unfortunately, when it comes to hospital insurance changes, we as consumers are and will always be the price takers and as such, for whatever changes that come our way, the only option for us is to accept it or consider changing to a different provider.

This brings me to the closing message.

Closing Message (TLDR)

In my opinion, despite all that has happened in recent years, the market leaders have not changed. What has changed is just the degree of items – more specifically the area of non-CDL drugs and treatments - that you are paying for when comparing a “normal” and “budget” plan.

For people who are on the “budget” plan, you are not impacted by the benefit changes this year as both the benefits and the cost remained relatively unchanged. That being said, the potential “gap” that may have surfaced due to the introduction of CDL classification would be the lower claimable limit for non-approved cancer drugs and treatments as compared to the "normal" plan.

For people on the “normal” plan, we are the ones who have felt the full impact of the changes – both good and bad – as on the one hand we are adequately covered for the non-approved cancer drug list and treatments. On the other hand, the premiums had increased accordingly to reflect the added coverage.

I hope this article has brought yall up to date on the developments within the hospital insurance industry and reassured you that the plans and insurers you had previously chosen are still the market leaders in their respective domains of competition (Cost leadership / Benefits Differentiation).

If you have any questions please PM me directly and I’ll be happy to meet you and talk about it.

Daniel is a Licensed Independent Financial Consultant with MAS and a Certified Financial Planner (CFP®).

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