I previously shared some thoughts on a CNA podcast. The podcast was titled: Are generous health insurance policies inflating medical costs? The government’s recent reforms to IP rider regulations have given a clear answer to this question: Yes!

What has changed in the new policy?

The new IP Rider policy stipulates:

🎯 Riders will no longer cover the minimum deductible.

🎯 The co-payment cap covered by riders has been raised from $3,000 to $6,000.

Let’s talk about these two concepts:

👉🏻 Deductible: This refers to the total amount of medical expenses the policyholder must pay out-of-pocket each year before the insurance company starts to pay. Only when annual medical expenses exceed this amount does the insurer step in. This amount ranges from $1,500 to $3,500, depending on the ward class.

👉🏻 Co-payment: After the deductible is met, the policyholder must share a certain percentage of the remaining medical costs with the insurer. For example, if the co-payment is set at 5%, the policyholder pays 5% of the remaining costs, and the insurer pays 95%.

Currently, IP riders can cover the deductible and set a cap on the co-payment, with the lowest cap at $3,000. This means that no matter how high the actual medical bill is, consumers only need to pay up to $3,000 per year.

However, not all IP riders have this configuration. Riders that cover private hospital deductibles are actually quite expensive, especially as the policyholder ages.

When I bought hospital insurance for my newborn baby in the middle of the year, I carefully compared the terms and prices of hospital insurance provided by various companies. After a comprehensive comparison, I ultimately chose a rider that does not cover the deductible and has a co-payment cap of $6,000 for private hospitals, which happens to match the current government policy. Why did I choose this particular plan, and why do I support the new policy? Let’s discuss in detail.

Are generous health insurance policies the culprit behind medical inflation?

I believe they are certainly an important factor.

I’ve shared a personal experience with medical concierge service in Singapore before. When a family member was diagnosed with a major illness, because we had private hospital insurance, my former insurance agent proactively introduced us to a patient medical concierge service. Through this, I saw the various players—private clinics, insurance agents, medical concierge escort services—all trying to get a piece of the pie in Singapore’s private healthcare system.

The medical concierge staff only introduced us to clinics they had commercial partnerships with, which paid the medical concierge service provider for marketing and advertisement, whispering with clinic receptionists and exchanging documents in front of us. When I eventually contacted public hospitals and non-partner doctors myself and chose a clinic I trusted, the medical concierge staff disappeared. The costs of the medical concierge service, while seemingly borne by hospitals and clinics, are ultimately passed on to consumers through higher insurance premiums.

Why do insurance companies offer such generous health insurance? Simply to grab market share. Consumers, as long as they can afford it, are happy to pay for a “worry-free” plan. Medical institutions, when treating patients with “comprehensive insurance coverage,” also have no reason to hold back. While there are no immediate problems for any party, the ticking time bomb is the ever-rising medical costs and insurance premiums.

Why do I support the new policy?

In my family finance sharing, I listed our insurance setup. Our monthly spending on term insurance is nearly $2,000, so I’m definitely not stingy with insurance. But I have a few principles:

⚠️ Only insure against low-probability but high-impact events—critical illness, disability, death.

⚠️ This money is “sunk cost”—I hope never to use the insurance, so it can’t be too expensive.

⚠️ But when it’s really needed (touch wood), the coverage must be sufficient.

It’s easy to apply these standards to critical illness and life insurance. For medical insurance, you can put it this way: pay out-of-pocket for minor illnesses, use insurance for major ones.

👉🏻 On tightening the deductible and co-payment cap rules

Out-of-pocket for minor illnesses: For non-urgent, non-serious illnesses, I can always choose the public healthcare system. Public hospital fees are lower, and in most cases, basic MediShield Life is sufficient. MediSave savings can also ensure almost no cash outlay (the IP deductible is generally within the CPF MediSave payment limit).

Insurance for major illnesses: In emergencies or major illnesses, I definitely want more options for medical resources. If I can afford private hospital premiums, I choose to keep private hospital IP and rider, just to cover these rare but high-impact events. As the medical bill gets higher, the difference between $3K and $6K becomes negligible. When facing a major illness that could cost $200K or more, the extra $3K is insignificant compared to the overall financial pressure.

👉🏻 On the importance of riders

Besides capping out-of-pocket costs for huge bills and greatly easing financial pressure in extreme cases, another key point is coverage for cancer treatment.

I still think riders are important, mainly because of the introduction of the Cancer Drug List (CDL). As a family member of a cancer patient, I know how complex cancer treatment is. With chemotherapy, targeted therapy, and immunotherapy drugs, many late-stage cancer patients can maintain a good quality of life for years. Currently, only riders can reimburse non-CDL drugs. My family member has been receiving non-CDL treatment for some time, and through discussions with the doctor, I’ve learned more about cancer medications. One key issue is the government’s definition of the CDL: some new drugs are not included due to high prices or limited use, but for some tumors, these drugs are a perfect match. For late-stage cancer patients, these drugs are life-extending.

Negative impacts of the policy adjustment

👉🏻 Strain on public healthcare resources

Experts in a Zaobao article pointed out that the policy change may strain public healthcare resources. One reason is that, since the deductible must be paid by consumers, for small medical bills, people are more likely to choose lower-class public hospital wards to reduce cash (or CPF) outlay. But for large bills, since the marginal effect of the deductible is reduced and the rider caps the out-of-pocket amount, the cost advantage of public hospitals is less significant.

However, with rider prices rising rapidly, over 30% of people gave up their IP riders last year, meaning they gave up the deductible cap benefit. If these people face huge medical bills, they’re more likely to turn to more affordable public healthcare. If the new policy helps control rider prices and keeps the number of people with riders stable, it could actually ease pressure on public healthcare.

A possible trend is that consumers will choose public healthcare for minor, non-urgent illnesses, and have more options for complex, serious illnesses. This is actually a positive trend. The government needs to expand public healthcare capacity to meet growing demand and strengthen supervision and regulation of private healthcare pricing—both of which are already being actively pursued.

👉🏻 Hesitation over medical diagnosis

With reduced insurance coverage, a hospital stay now costs at least $1,500 to $3,500 out-of-pocket, so consumers may hesitate to undergo certain tests or checks.

Consumers should maintain the right mindset: don’t do a test just because “insurance will pay for it,” but because your body signals a need and your doctor recommends it. Don’t tie medical care too closely to insurance. The government needs to educate the public to raise awareness in both personal health and insurance planning.

How does the Minister of Health buy hospital insurance?

Many of these points were discussed in the October CNA podcast: More isn’t necessarily better for private health insurance: Health Minister Ong Ye Kung.

Under the new policy, personal out-of-pocket costs have increased, but rider prices have dropped and become more manageable. The real effect is that consumers pay more for small medical expenses, unnecessary tests and overtreatment are curbed, and rider premiums become more affordable, allowing more people to buy riders to cover rare but major illnesses. Insurance is used more rationally, which actually benefits consumers.

Minister for Health, Ong Ye Kung, also shared his own health insurance. He said he bought a rider when he was young, and now, in his early 50s, his rider premium has exceeded $2,000. He hopes to keep his rider but downgrade to one that doesn’t cover the deductible, but unfortunately, his insurer doesn’t offer this option (it’s hard to switch insurers for hospital insurance at an older age). Just a month after the podcast, the policy was announced, and all insurers must now offer such rider products—so the Minister’s problem is solved.