Rahayu Mahzam rejects proposals to impose limits on rising insurance premiums, citing sustainability risks

During a parliamentary sitting on 6 May 2026, Minister of State for Health Rahayu Mahzam rejected proposals to impose limits on rising insurance premiums, warning that such measures would be unsustainable and potentially harmful to policyholders.

Rahayu stated that premium increases are driven by underlying healthcare cost pressures and cannot be artificially suppressed without consequences.

“Premium increase actually reflect the underlying healthcare cost increases,” she said, pointing to structural drivers across the healthcare system.

Rahayu was responding to PQs filed by Yio Chu Kang SMC MP Yip Hon Weng and West Coast-Jurong West GRC MP Dr Hamid Razak.

Yip asked how MOH will address rising Integrated Shield Plan premiums (ISP) that may offset rider savings, ensure fair claims handling, and improve transparency and accountability of insurers for unjustified price increases.

Dr Razak asked whether MOH was aware of insurers’ planned base premium hikes coinciding with rider changes from April 2026, and whether any analysis was done on how these combined changes would affect overall consumer premiums.

Drivers behind rising healthcare costs

Rahayu identified several factors contributing to rising premiums, including an ageing population, more expensive medical technologies, higher pharmaceutical costs, and increasing manpower expenses.

She added that overconsumption and overservicing in the healthcare system have further intensified cost pressures.

“There is also over consumption and overservicing… this causes an increase in the cost of healthcare which then results in increased claims,” she said.

These rising claims, she explained, inevitably lead insurers to adjust premiums to remain financially viable.

“If we artificially limit it, it will not be sustainable,” she said, warning that insurers may be unable to meet payout obligations if pricing does not reflect actual costs.

Risks of limiting premiums

Rahayu cautioned that artificially restricting premiums could lead insurers to reduce coverage benefits or withdraw from the market altogether.

“In the end this will actually harm the policy holders because you may see reduction in the benefits or even market exits,” she said.

Such outcomes, she added, would undermine consumer protection rather than strengthen it.

MOH maintains a general policy of not intervening in commercial decisions made by insurers, including premium-setting.

Role of government and private insurance

Rahayu reiterated that the government’s primary responsibility is to ensure affordable, accessible, and quality subsidised healthcare for all Singaporeans.

She emphasised that MediShield Life forms the foundation of the healthcare financing system by covering large hospital bills.

Integrated Shield Plans and riders, in contrast, are private commercial products designed to supplement coverage for unsubsidised care.

“IPS and riders are private commercial products that supplement MediShield Life,” she said.

While the ministry regulates key parameters such as co-payments and deductibles to ensure sustainability, pricing decisions remain within insurers’ commercial domain.

Premium trends and recent changes

Data presented in Parliament showed that private hospital ISP premiums increased at an average annual rate of 8.6 per cent between December 2021 and December 2024.

Rider premiums rose more sharply, at an average of 17.2 per cent per year over the same period.

Despite these increases, Rahayu noted that recently introduced rider reforms have provided some relief.

“With the launch of the new riders, policyholders can save on average 35 to 40 per cent premiums by switching,” she said.

These changes were part of broader efforts to address cost sustainability within the insurance market.

Parliamentary concerns on affordability

Yip in his supplementary questions further raised concerns that even with cheaper riders, overall costs for households may continue to rise due to increasing base premiums.

He asked whether the ministry would consider implementing clearer limits or review triggers on premium increases.

He also highlighted the challenges faced by older Singaporeans, who experience the steepest premium hikes and have limited flexibility to switch plans.

Rahayu acknowledged these concerns but maintained that pricing controls would not address the root causes of rising costs.

Instead, she pointed to practical options available to consumers, including adjusting coverage levels or switching to more affordable riders.

“Seniors can… review or right size their coverage in accordance to their needs,” she said.

Measures targeting root causes

Rather than capping premiums, the ministry is focusing on addressing underlying cost drivers through a range of policy measures.

These include establishing fee benchmarks, issuing clinical guidelines, and taking enforcement action against errant providers.

Rahayu said these efforts aim to ensure appropriate care and reduce unnecessary treatments that contribute to rising costs.

Additional initiatives include rider reforms and the development of not-for-profit private hospitals.

“All these measures in totality will help to moderate the increases,” she said.

However, she acknowledged that some level of premium growth remains inevitable given broader healthcare trends.

Oversight of claims and insurer conduct

On concerns about claims management, Rahayu noted that both the MOH and the Monetary Authority of Singapore require insurers to process claims fairly and honour contractual obligations.

Insurers must notify policyholders of any changes to policy terms at least 30 days before implementation.

Disputes can be referred to the Financial Industry Disputes Resolution Centre, an independent body that handles insurance-related complaints.

Regulators may also take action against insurers that fail to comply with fair claims practices.

Private healthcare cost components under review

Dr Razak asked whether the ministry had analysed specific components of medical bills, such as facility and consumable costs, beyond professional fees.

He also questioned whether panel arrangements imposed by insurers might limit equitable access to care.

Rahayu confirmed that the ministry is studying different cost components within private healthcare.

“We are reviewing to see if there is a need… to also put in benchmarks in the other components,” she said.

She explained that panel arrangements are a market response by insurers seeking to manage rising claims and maintain sustainability.

Administrative costs and insurer incentives

Non-Constituency Member of Parliament Andre Low suggested that insurers could reduce administrative and processing costs to help moderate premiums.

He asked whether policy levers could incentivise insurers to pass such savings on to consumers.

Rahayu said the ministry engages insurers regularly but remains cautious about intervening in commercial matters.

“We are very mindful about where we intervene… because it is a commercial product and we have to have them remain competitive,” she said.

She added that the ministry adopts a measured approach, focusing on regulatory conditions rather than direct pricing controls.

Assurance on healthcare access

Despite concerns over rising costs, Rahayu stressed that no Singaporean would be denied access to essential healthcare services.

“What is anchoring our healthcare system… is the fact that there will always be access to subsidised services,” she said.

She pointed to existing support mechanisms including MediShield Life, Medisave, and Medifund as safeguards ensuring affordability.

“We ensure that nobody will be left out or not be able to have access to healthcare because of cost pressures,” she added.

The ministry will continue monitoring premium trends and healthcare costs while refining policies to maintain affordability and system sustainability.