TKL: Medishield Life - Watch Out for FAP's Fine Print!

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An honorable member of the Coffee Shop Has Just Posted the Following:

FORMER NTUC INCOME CEO'S ANALYSIS ON MEDISHIELD LIFE

Post date:
7 Jun 2014 - 6:35pm








Question: In what ways are the new proposals better than the present system? Medishield Life allows every one to be insured, including those who are not healthy and are now excluded under the current scheme. Medishield Life also cover pre-existing illnesses.


These two important features that make Medishield Life much better than the current scheme.
Question: The devil is always in the details. What are the details that we need to study carefully?

The current Medishield scheme covers only the subsidized wards, i.e. B2 and C. Those who wish to be insured for higher class wards or treatment in private hospitals have to buy an "integrated plan" from an insurance company. As different companies offer different plans, the differences are quite confusing to the public and there is a risk that the coverage under the integrated plan may be rejected due to non-disclosure or other technical issues. This can be quite confusing to the public.

It is better for Medishield Life to offer options to cover the higher plans, or to specify standard conditions that the private plans should observe. The treatment of claims should be standardized among all the insurance companies offering the integrated plans.


The current level of deductible is too high. Medishield Life should provide an option for the insured person to opt for a lower deductible by paying a higher premium, rather than buy a separate cover from a private insurance company to cover the deductible.
Question: Premiums can turn out to be a sticking point. What kind of premiums would you prefer?

I prefer the premium to be set at a level that is based on the actual claim experience for each age band, rather than to make a surplus for the younger people to subsidize the premium for the older people. it is difficult to achieve such a cross-subsidy system, especially when this insurance is made compulsory.


As the premium for the older people are going to be quite expensive, it is better for the government to provide a direct subsidy for the premium of older people, rather than rely on the younger people to provide the subsidy.

Question: Will this announcement bring about the peace of mind that the government has promised?

The key for a successful national medical insurance scheme is the ability to manage the treatment expenses by providing suitable mechanism in place. If the medical fees are allowed to escalate without control, the insurance will become more and more costly, as is the case in America.
There is the danger that the medical fees and premiums will continue to increase over the years in Singapore, as it seemed to be modeled along the American model.


We should study the experience in Japan and Canada, where there is negotiation of medical fees at national level between the insurance scheme and the medical providers. This will help to control the escalation of health care cost, to some extent.

Right now, many people are worried that the premiums will continue to escalate in the future. They cannot have the peace of mind, until they are assured that the cost will be kept under control.




Tan Kin Lian * Kin Lian retired from NTUC Income on 28 February 2007, after heading the cooperative for 30 years. He was a candidate in the 2011 Presidential Election. He now runs a consultancy company. He blogs at www.tankinlian.com and www.facebook.com/kinlian to give his views on insurance, investment and financial planning for the benefit of consumers.


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