As a follow up to my recent post, I received a good question from a friend of mine, she asked me what a layman can do in the face of increasing private medical insurance premiums. Here is my answer:
- Be a Bargain Hunter (not advisable)
It won’t surprise me one bit to find bargain hunters comparing the premiums across insurers and picking the cheapest plan to buy or switch into.
With two hikes in premium within the last 5 years, and companies taking turns to be the “cheapest”, it’s as clear as day that if cost is your sole intention, you’ll never find the one that pleases you forever because premiums are never static.
Don’t get me wrong, it’s a good attribute to be thrifty, and you shouldn’t let anyone stop you from switching plans if it makes you happy.
However, just be aware that things like health conditions may develop over time which may render you uninsurable for that particular condition under your new insurance plan, so you got to be absolutely sure before pulling the trigger.
- Avoid over-reliance on private medical insurance
I read that the Singapore government commissioned a high level ministerial committee years ago to study the topic of controlling the growth in healthcare expenditure.
So back in 1993, a White Paper on Healthcare Financing was presented and one of the core points brought forward was that the individual must be personally responsible for at least part of his healthcare expenses.
This led to the creation of Medishield scheme, with emphasis on deductibles and co-insurance/co-payment.
Perhaps due to market pressures, in 2007 “as-charged” plans were born, and with additional cash riders that cover both deductibles and co-insurance, the original recommendation in the White Paper on Healthcare Financing has been disregarded.
You can try to reverse this by not submitting to the “As-charged” plan entirely by forgoing the additional cash rider, or by opting for the standardized Class B1-ward package instead.
- Adopt the “if you can’t beat them, join them” approach.
My opinion of our private as-charged plans is as follow: It is fantastic on paper because of the peace of mind each individual would enjoy knowing that his hard earned savings would be kept intact due to the first dollar coverage/reimbursement.
However, it is based on the assumption that people would make of the insurance plan responsibly, which sadly is not always the case in reality.
So the “if you can’t beat them, join them” approach calls for you to sign up for an as-charged plan just like everyone else, because not signing up for one doesn’t solve your problem of risk management.
There is an entire study on long term care planning which I do not want to bring in now, but just be aware that medical cost grows at a higher rate than most goods so you have to set aside a part of your money to plan for this ever increasing medical cost and medical insurance.