Shield's Up!

A loud gasp could be heard across Singapore when The Straits Times published a report on the cost of Integrated Shield Plans (IPs). $323,845 shone bright like a diamond and everyone's eyes couldn't take their eyes off that number that stood out like a sore thumb. Was it a little pre-emptive of The Straits Times to publish that article before the 2 year moratorium was over?

Image: The Straits Times (1 July 2024)

According to an article published by The Straits Times on 05 September 2022, IPs basic plan premiums would remain unchanged until 31 August 2024. And guess what happened on 1 September 2024?

Image: The Business Times (3 September 2024)

So why are premiums going up north and at such a rapid pace?

1. Rise In Medical Conditions
By 2030, 1 in 4 Singapore residents will be above the age of 65. Getting old is inevitable, but living well when we are old, that's another issue altogether. A study published by Duke-NUS Medical School's Centre for Ageing Research and Education showed that between 2009 - 2017, the number of elderly folks with 3 or more chronic diseases nearly doubled.

The 2022 National Population Health Survey by Ministry of Health showed a significant increase in chronic illnesses such as hypertension, cholesterol and chonic kidney disease.

There were 84,002 cases of cancer reported between 2017 - 2021. That's 1 cancer case reported every 30 minutes within those 4 years. There's no doubt that there's been a rise in the number of cancer cases over the years. Otherwise the National Cancer Center Singapore wouldn't have a need for a new 24 storey building that houses the latest medical technologies to meet Singapore's future cancer needs. And still the wait time for treatment can be over 3 weeks.

Cancer treatment can easily cost at least $100,000 a year. Proton beam therapy treatment starts from $70,000. Then there's a slew of treatment and services that one needs to copy with the cancer treatment. All these costs adds up, and if they are mostly paid by the IPs, then it is no wonder the IPs have to increase their premiums.

2. The Insurance Companies Raise Premiums To Make Profits, Right? 

Image: The Business Times (31 July 2023)

Image: The Straits Times (18 Jiuly 2024)

Calculating it out, only 2 out of the 7 insurers are in the black for their IPs. Numbers shown here are by the millions.

AIA Singapore: -$44.75m
Great Eastern Life: -$87.3m
HSBC Life Singapore: -$46.1m
Income Insurance: $11.57m
Prudential: $251.89m
Raffles Health Insurance: -$15.09m
Singlife: -$56.72m

Based on reports compiled by The Business Times and The Straits Times in 2023 and 2024 respectively, it shows that all by two insurers making profits. Rise in medical conditions results in rise in medical claims, and that eats into the profitability of the insurance companies.

There's the cost of medical advancement. New procedures, treatment, medicine, etc. Not so long ago, a hip fracture surgery would require the patient to be warded for a week or two. Now, they can be discharged within 3 days and have the ability to move and recover faster. And this is just one of the few procedures that have changed over the course of time. These can cost a lot more (at least for now) until other new procedures, treatment and medicine take their place.

And because of these medical advancement, people are living longer. Longevity also plays a part in the cost of medical inflation that is rising on an average of 10% each year.

As such insurance companies have to raise their premiums of their standard plan together with the riders to afford the claims.

So what can you do about this?

1. Decide if IP is suitable for you
As integrated shield plans are not compulsory, and all Singaporeans are covered with the MediShield Life plan by CPF, you can decide if getting an IP is a necessity.

As long as you feel the restructured hospital B2/C wards are good enough for you and you are comfortable with any doctor that has been assigned to you. You are also comfortable with the maximum claim limits per year and the claim limits for the outpatient treatment.

Image: Ministry of Health Singapore MediShield Life Benefits

Image: Ministry of Health Singapore MediShield Life Benefits

2. Decide which integrated shield plan and rider to be on
With 7 different insurers to choose from, you can select which insurer will suit your needs. The base plan is very similar across all 7 insurers, but where they differ would be with the rider benefits.

Things you will want to consider are:
• Length of pre/post hospitalization coverage
• Claim based or non-claim based coverage
• Inclusiveness for panel of doctors
• Additional cost of non-panel of doctors
• Ease of pre-authorization
These amongst others to look out for.

A good article to read on this would be by the Singapore Medical Association who had doctors rank the best to worst IPs to their knowledge.

3. Prepare for the cost of your IP
Benjamin Franklin once said, "the only certain things in life are death and taxes."

And now we can add the rising cost of premium for IP.

Ministry of Health and all insurers now publish the total cost of IP for one's lifetime either found on the website or via the product summary. Remember that your premiums will increase as you age, and insurers will increase premiums of their plans and riders accordingly according to market situations.

You need to forecast the amount required for your IP should you want to hold on to it for the years to come. One way is to use the information available via the MOH website or insurer product summary to calculate the amount you need to pay your insurer till the age of 85 (or 100 if you are confident of living that long). From there, work backwards to see how you'll be able to put aside the amount to prepare for the cost of premiums. This will be a good starting point that you can rework later on when the insurers increase the premiums again.

Drop me a message if you need help calculating your total premium for 2024.

4. Keep yourself fit and healthy
If everyone in Singapore can focus on keeping themselves fit and healthy, that means there will be lower claims which in turn results in slower increase of premiums.

Make sure you
• Have at least 7 hours of sleep every day
• Exercise at least 150 minutes a week with the inclusion of strength training, cardio and mobility work
• Eat whole foods as much as you can
• Manage your stress

A healthier, longer, better life starts with what you do on a daily basis.

And a healthier you keeps medical bills away for a long time.