Some good may come out of uproar over health insurance pre-authorisation
Great Eastern has decided to suspend pre-authorisation of treatments for policyholders using Mount Elizabeth Hospital (MEH) and Mount Elizabeth Novena Hospital (MNH). The reactions seem to have been a bit over the top when, in fact, the move could pave the way for much-needed discussion on healthcare costs.
Some doctors and patients have claimed that GE's move restricts their choices, despite the high premiums they pay for treatment at private hospitals. Even the Ministry of Health (MOH) has chipped in to say that it is engaging GE to better understand the impact of its decision.
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Sign up now: Get ST's newsletters delivered to your inbox GE temporarily stopped issuing pre-authorisation certificates for admissions to Mount Elizabeth Hospital and Mount Elizabeth Novena Hospital from June 17. SINGAPORE - Some policyholders of Great Eastern (GE) found themselves in a pickle after the insurer temporarily stopped issuing pre-authorisation certificates for admissions to Mount Elizabeth hospitals from June 17. Policyholders will now have to re-evaluate whether they want to go to Mount Elizabeth Hospital or Mount Elizabeth Novena Hospital for treatment; switch to another private hospital; or change insurance provider altogether. The incident has also highlighted the need for a separate pool of funds for unexpected medical expenses, even though the verdict on such a fund is mixed. Integrated Shield Plan (IP) holders of GE policies have to make some choices now that pre-authorisation for planned medical procedures has been suspended at the two Mount Elizabeth hospitals. Pre-authorisation is not required for emergency situations, where immediate medical attention is needed. Mr Alex Lee, president of the Singapore Actuarial Society (SAS), said those who still decide to go to the two hospitals for treatment will have to foot the bill out of their own pockets first and claim it back later. Mr Lee added that GE may reimburse the claim if it is deemed as reasonable. This will be no different from the scenario in which the policyholder has received pre-authorisation for the medical procedure. However, the insurer could also reject the claim if the treatment is excluded under the policy conditions, he said. Mr Kyith Ng, senior solutions specialist at insurance advisory firm Havend, said these GE policyholders will have to face the uncertainty over whether their insurance will cover their hospital expenses and how much of the bill it will cover. SAS' Mr Lee said other policyholders, who want peace of mind before their medical treatment starts, could choose to move to another private hospital where GE continues to offer pre-authorisation for admissions. There are eight private hospitals in Singapore, including the two Mount Elizabeth ones: Gleneagles, Parkway East, Farrer Park, Raffles, Thomson Medical Centre and Crawfurd Hospital. There is also one private not-for-profit hospital, Mount Alvernia. The process of pre-authorisation allows an insurer to assess whether a medical procedure recommended by the doctor is necessary and at a reasonable cost, said Associate Professor Chen Renbao from the department of finance at the National University of Singapore (NUS) Business School. Upon approval, policyholders have a gauge of the estimated treatment costs and know how much their insurance policy will cover prior to hospitalisation. There are some GE policyholders who are contemplating whether to switch to another insurance provider. They can do so if they do not have pre-existing illnesses, which will exclude these medical conditions from any new insurance coverage. One policyholder who wishes to remain anonymous told The Straits Times that his entire family uses Mount Elizabeth hospitals. He is thinking of switching to another IP insurer but is concerned about any exclusions that will not be covered. He told ST that GE should not impose such restrictions on existing policyholders and that these restrictions should only apply to new ones. Of the seven private insurers that offer IPs, Income and Singlife do not offer pre-authorisation for medical procedures. The other four, AIA, Prudential, HSBC Life and Raffles Health, do but Havend's Mr Ng said there is no certainty they will continue to do so. 'What GE does may make the other insurers wonder if they can do the same,' he added. If policyholders switch insurers and that insurer later makes changes to its claims policy, they could be caught in a bind, Mr Ng noted. Health insurance provides a safety net against unexpected health issues and offers individuals and their families protection in case major medical treatment becomes necessary. Mr Ng said an individual could build up savings specific for medical needs as another safety net. The fund can be used to pay any pre-hospitalisation procedures such as scans, blood tests or post-hospitalisation expenses like physiotherapy or speech therapy. Policyholders have to pay pre- and post-hospitalisation expenses in cash and then submit the claims for approval, Mr Ng added. Furthermore, some claims might take longer than usual to process. Mr Ng has seen cases drag out for as long as six months. Claimants will face a cash-flow crunch if they do not set aside enough cash on hand, he added. There are situations where individuals will need to pay medical costs upfront, though this is not always so, Mr Ng noted, adding that they just need to ensure they have an adequate amount to supplement those needs. Otherwise, they may be compelled to use the money set aside for other purposes, like their children's education or their own retirement. 'The money has to come from somewhere.' So, by setting aside say $20,000, individuals know how much money they have for such exigencies and will not have to take the money from their other financial funds, Mr Ng said. However, Associate Professor Walter Theseira from the Singapore University of Social Sciences, said it is not efficient for most people to maintain 'substantial funds in cash for medical needs', given that these are infrequent and large. He said the point of having more comprehensive insurance is to reduce the need to maintain funds just for medical purposes. If insurance does not give individuals such assurance, 'it is not of much value as an insurance product'. The Ministry of Health (MOH) has said it is engaging with GE to better understand the impact of its decision to suspend pre-authorisation certificates for Mount Elizabeth hospitals. In its reply to queries from the media on June 19, MOH said IP insurers 'would have to ensure that policyholders continue to be able to access the full benefits of their policies in accordance with the terms and conditions for claims, as stated in their policy contracts'. SAS' Mr Lee said GE is not in breach of contractual obligations. This is because 'issuance of Certificate of Pre-authorisation is at Great Eastern's discretion', according to the policy contract that SAS has sighted. According to GE's website, the insurer states that it has 'observed that, over the past few years, certain private hospitals have been charging significantly more for similar treatment or the same clinical outcomes'. Mr Lee noted that by withdrawing pre-authorisation for the two hospitals, GE hopes that it will help address 'the issue of rising charges from the two hospitals'. Prof Chen from the NUS Business School said that GE is prioritising healthcare providers that offer high-quality care and better cost management, specifically those that are more cost-effective and transparent about pricing. Having looked through the financials of all the IP insurers which filed their latest 2024 results with the Monetary Authority of Singapore, Havend's Mr Ng said he can see that GE is 'trying to control the cost levers' within its control. The insurer posted an underwriting profit in 2024 of $4.8 million, after making an underwriting loss of $44.9 million in 2023. This makes GE one of the three IP insurers which turned in a profit in 2024. The other two are Prudential and AIA. Three other IP insurers, Singlife, Income and HSBC Life, widened their underwriting losses while the last one, Raffles Health, narrowed its underwriting losses. Mr Lee said that insurance, especially in cases requiring little or no out-of-pocket expense, strengthens policyholders' sense of affordability. Demand induced by this stronger sense of affordability can drive up medical costs, he noted, adding that this never-ending cycle of medical cost inflation can be broken if the sense of affordability gets meaningfully dampened. However, Mr Lee pointed out that there are other factors such as shortage of medical professionals, supply chain disruptions and medical innovations that will drive up medical inflation. He added that if medical costs continue to rise, insurers will have no choice but to raise premiums because there is hardly any pricing buffer left in the rates being charged. Mr Lee said: 'At its core, this pre-authorisation withdrawal aims to address rising medical costs that, if poorly controlled, lead to premium rates spiralling upwards in future.' Prof Theseira added: 'This certainly could be perceived as a shot across the bow for private hospitals and doctors who have higher than average charges. 'If the decision changes patient behaviour, it would pressure private healthcare providers to moderate charges or risk similar actions being levied against them by other insurers.'
