Over two million Singapoerans are covered under Medishield and similar policies, called private Shields, issued by the insurance companies.
All the private Shields are required to reinsure the basic component of their coverage with Medishield under the "integrated Medishield:" arrangement. In essence, Medishield is almost a universal insurance scheme covering most Singaporeans.
Medisheld now has two restrictions, namely
a) It excludes pre-existing illness and congenital conditions at the time of coverage
b) It rejects applicants who are not in good health, e.g. suffering from chronic illness
It is appropriate for Medishield to be amended to cover congential conditions and people with pre-existing conditions, and adopt other risk management methods to handle the pre-existing conditions.
The other methods are:
a) require applicants with pre-existing conditions to pay a higher premium, also called a loading
b) exclude coverage of pre-existing conditions for a waiting period of one or two years, and provide full coverage thereafter
These other methods of risk management are appropriate for an insurance scheme that has standard coverage, such as Medishield, and also has a large base of people who are covered.
If Medishield provides this coverage, all the other private Shields will automatically provide the same coverage, due to the reinsurance arrangement under the "integrated scheme".
The purpose of insurance is to provide the benefit of risk pooling to large numbers of people in an economic way. This includes the need to insure people with congential conditions and pre-existing conditions. While the insurance scheme should be run on a viable basis, and appropriate risk management methods should be applied, the purpose should NOT be to maximise profits for the insurance company. It should have its social purpose of providing cover to those who need it at an economic cost.
We all now that as a person gets older, there will be some chronic illness that have to be managed and insured. This can represent a large part of the population. They should not be excluded by the restrictive underwriting standards.
I suggest that the Minister for Health seek the advice of suitable experienced people who do not have any conflict of interest, i.e. running an insurance company now, to provide advice to him on the insurance aspect of this review of Medishield. There are many retired insurance practitioners who are able to play this role.
Introduction:
Tan Kin Lian was the former chief executive of NTUC Income. He is now the director of a consultancy and software development company called Tan Kin Lian & Associates Pte ltd. He is also the Founder and President of the Financial Services Consumer Association (FISCA), an organisation with the aim of educating consumers on financial planning, insurance and investments, and to promote the interest of consumers. (
www.fisca.sg). He writes a blog at
www.tankinlian.blogspot.com
