Why penalising care won’t solve Singapore’s insurance crisis — and may deepen it

When Health Minister Ong Ye Kung defended upcoming Integrated Shield Plan (ISP) rider changes during a media doorstop on 14 December 2025, he presented a clear rationale:

• Riders are becoming too expensive, so people are dropping them.
• By removing deductible coverage and doubling the co-payment cap, premiums can fall by around 30%.
• With lower premiums, more people will retain their riders, stay in private care, and avoid straining the public sector.

This logic may sound straightforward — but it defies well-established behavioural and economic principles. In fact, it risks deepening the very crisis it seeks to resolve.

A solution that contradicts the real problem

Ong cited data that 100,000 policyholders downgrade or cancel ISP riders each year, as costs become harder to bear. These dropouts increase pressure on the public system, especially as procedures migrate from private hospitals to subsidised care.

But the solution proposed — reduced benefits in exchange for lower premiums — misses the critical question:

Are people dropping their insurance because it costs too much, or because it no longer feels worth the cost?

This is more than a financial issue — it’s a confidence issue. And the data supports that.

The behavioural reality: Singaporeans are avoiding care

According to the Economist Impact–Prudential study Patient Voices Singapore (April–May 2025):

• 83% of respondents delayed care in the past year.
• 23% cited cost as a reason, despite subsidies and insurance schemes.
• Over 60% worry about affording care, and half reported bill shock after treatment.
• 60% said they often don’t know where to seek help, and 61% lacked the information needed to make informed decisions.

This isn’t a population abusing insurance — it’s one already hesitant to use the healthcare system. Introducing more out-of-pocket costs risks further discouraging early, appropriate care.

When “not knowing” becomes a coping mechanism

Singapore Democratic Party Chairman Prof Paul Tambyah addressed this issue in a video on 9 December, later removed to avoid confusion about whether it referred to current or future policy.

Prof Tambyah warned that by raising the co-payment cap to S$6,000, the policy may dissuade people from pursuing care they otherwise would have sought.

He described a hypothetical patient who might avoid a biopsy for a breast lump because the cost would fall entirely within her co-payment — choosing instead to wait and hope the issue resolves.

He added that for many, they hope that they are not truly sick as they do not want to deal with costs they fear that they cannot afford even when covered by insurance

This aligns with global findings: when co-payments go up, patients don’t just cut back on unnecessary treatments — they cut back across the board, including urgent and preventive care.

Why shrinking coverage may worsen the spiral

If people are already dropping insurance because they feel it is no longer worth the cost, offering them even less coverage at a marginally lower price is unlikely to restore confidence. In fact, it may accelerate disengagement.

The Minister’s proposed solution — to reduce benefits in exchange for lower premiums — appears to assume that consumers will see this as a fair trade-off and return to the insurance pool. But this overlooks the real reason many are leaving: a growing perception that insurance no longer protects them meaningfully.

When public confidence erodes, the following sequence typically unfolds:

• Healthier or lower-risk individuals exit the pool, believing they can manage without the added cost.
• The remaining risk pool becomes older, sicker, and more claim-heavy.
• Average claims per policyholder rise, prompting insurers to increase premiums.
• Actuarial models justify those hikes based on worsening risk profiles and reduced economies of scale.
• As premiums rise again, more people drop out or downgrade, repeating the cycle.

This pattern is a textbook case of adverse selection, and left unchecked, it can lead to what insurers term a “death spiral” — where premiums become prohibitively high, benefits are sharply reduced, and the product ceases to be viable.

In other words, if trust in the value of health insurance continues to deteriorate, even cheaper premiums will not be enough to stabilise the system.

Indeed, the current drop in policyholders cited by Ong Ye Kung may not be happening in a vacuum. It is likely a direct response to previous rounds of policy tightening that have diminished perceived value over time.

In March 2018, the Ministry of Health announced a significant change: all new Integrated Shield Plan (IP) riders would require a minimum 5% co-payment, aimed at discouraging “buffet syndrome” — the overconsumption of healthcare services when there is no out-of-pocket payment.

From April 2021, all policyholders on new riders would have to bear a portion of their bills. Insurers were allowed to continue selling full riders in the interim, but were required to inform new customers that they would eventually be transitioned to the co-payment model.

Then in 2021, another major change was introduced: From April 2023, IP policyholders would no longer be able to claim for outpatient cancer drugs unless they were listed on a government-approved list of cost-effective treatments.

This followed MOH’s announcement that MediShield Life and IP coverage would be aligned to a single list of drugs deemed clinically proven and financially sustainable.

Each of these changes — while introduced to ensure system sustainability — has progressively reduced what insurance actually covers, even as premiums have continued to rise.

The cumulative effect may explain why thousands of Singaporeans now feel that their premiums buy them less coverage than before, and why many have chosen to exit or downgrade their policies altogether.

Cost-sharing is not the same as sustainability

The Minister’s remarks frame the co-payment reforms as a way to ensure long-term viability and reduce abuse. But what Singapore’s data shows is that underuse — not overuse — is the pressing issue.

Even the best-designed cost-sharing model fails if it discourages essential care, leads to late diagnoses, and results in higher costs later in the public system.

Ong acknowledged that colonoscopies and other procedures may shift to the public sector. But the true burden may be greater — delayed treatment, deteriorating health, and rising emergency visits.

The real answer lies in early engagement, not deferred action

Singapore’s Healthier SG initiative rightly prioritises family physicians and preventive care. But insurance design must support — not undermine — this direction.

As Prudential Singapore’s Chief Health Officer Dr Sidharth Kachroo noted:

“Delaying care can escalate minor conditions into major health and financial burdens… The healthcare system should empower people with the confidence to act early, not hesitate.”

Yet if ISP riders no longer shield policyholders from reasonable out-of-pocket costs, the fear of financial exposure will remain a powerful deterrent — one that may outweigh the benefits of slightly cheaper premiums.

A turning point in trust

Singapore’s insurance model depends not only on affordability but on perceived value and confidence.

Right now, both are eroding. Restoring them will take more than cost control — it will require a system that supports timely, affordable, and understandable care, not one that penalises the act of seeking it.

Without that shift, these reforms may end up solving the wrong problem, while deepening the one that matters most: Singaporeans delaying care until it’s too late.

Notice: We now publish our news at The Online Citizen and Heidoh.

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