SINGAPORE — There is a “significant contrast” between the treatment inflation at private hospitals and public hospitals, with the former outpacing the latter, a trend exacerbated by a greater proportion of Integrated Shield Plan (IP) policyholders seeking treatment at private hospitals.

Overall bill sizes increased at a rate of 8.7 per cent per year for private hospitals versus 0.6 per cent per year for public hospitals, across inpatient treatment, day surgery and outpatient treatment, between 2012 and 2014, according to a study by the Life Insurance Association (LIA).

Average bill sizes incurred at private hospitals have also risen at a more rapid rate — at approximately two times more than at public hospitals for inpatient treatments, found the study, which was cited by a taskforce looking at healthcare insurance costs as it warned against escalating IP premiums yesterday.

This has helped to drive up the average IP claims incidence rate, at a pace of about 9 per cent per annum — a burden that the taskforce warned would be borne by IP policyholders.

IPs provide additional coverage to MediShield Life, by covering stays in Class A/B1 wards in public and private hospitals.

Currently, two in three Singapore residents are covered by an IP, and one in three has both an IP and an IP rider, which covers the deductible and co-insurance portion of the IPs.

The taskforce — called the Health Insurance Task Force (HITF) — said that there are “natural” factors for the increase in charges and in people seeking medical treatment, such as an ageing population.

But there are also “undesirable behaviours” that should be discouraged or eliminated, such as overcharging, and the design of insurance products that encourages a “buffet syndrome”.

“Currently, IP plans with IP riders are more expensive and provide nearly 100 per cent coverage for treatment under the plan where policyholders have little or no out-of-pocket payments,” the taskforce said.

“As these policyholders are insulated from the cost of their medical charges, they may lack the incentive to manage their health and medical costs, translating to higher insurance claims.”

It pointed to the LIA study, which found that, on average, policyholders with IPs and IP riders incurred 20 to 25 per cent higher medical bills compared with policyholders with IPs only.

This is mainly due to outpatient treatments, which the LIA said suggests that IP policyholders with riders are less hesitant to be hospitalised for minor non-surgical illnesses or injuries, compared with those covered only by an IP.

This group of policyholders also had a higher propensity to use private hospitals — 46 per cent did so in 2014, compared with 21 per cent of those covered by just an IP, the study showed.

The HITF said that policies should be designed in a way that encourages both customers and medical professionals to choose treatment paths that are “medically necessary and appropriate” for the patient’s circumstances.