The government dropped a bomb shell that both young and older policyholders of Integrated Shield Plans are likely to pay part of its premium in cash. This was according to the newspaper report on 13 March 2015 (“More Clarity on private health plan premiums” Straits Times) which I copy and paste and underline the relevant part:
The premium for the MediShield Life portion of their IP can be paid in full with Medisave. But the additional premium for their private plan will face a new Medisave cap that will vary with age – with younger people allowed to use less and older people more. The precise amounts will be announced later, but these are unlikely to cover the entire premium of the pricier IPs for treatments in A-class or private hospitals. In future, even young people with expensive IPs will likely have to pay for part of their premiums in cash.
I foresee a lot of people is going to lapse their policies especially the younger ones. Most just take for granted that their entire Integrated Shield Plans premiums can be paid using Medisave. Such lapsing would mean they would automatically be downgraded to Medishield Life.
However, can the restructured hospitals cope with the surge in human traffic? I wrote to the Straits Times questioning the restructured hospitals’ ability to cope with large patient volume (Care needed in raising Integrated Shield premiums , 2 February 2015) and after more than one month, MOH did not even bother to reply and provide any form of assurance.
With the need to pay part of the premium in cash and less of the premium from Medisave, it just gives people the impression that once again the goal post has shifted. This time, less of the Medisave can be used for insurance.
More transparency or more paper work?
I also read with disappointment that the Minister Mr. Gan Kim Yong felt that there is insufficient product disclosure for Integrated Shield plans (paragraph 35 of the Speech by Minister for Health Mr Gan Kim Yong at the MOH Committee of Supply Debate, 12 Mar 2015). As such, MOH is now working with MAS “to ensure that insurers present their products more transparently and accurately.”.
What? The current documentation is not accurate and not transparent?
When I read this, I almost fainted.
The amount of product disclosure has killed countless trees. The financial industry is perhaps the least productive sector in this country. We do not need more product disclosures. We need more financial advisers who are fiduciaries.
Perhaps Mr. Gan should become a financial adviser for just one day and I am very sure he will throw in the towel after meeting just one client as he will fail the Balance Scorecard immediately due to overlooking disclosing to the client the countless required disclosures.
Other comments on endless paper work
The sharp rise in lapse rate of Integrated Shield Plans means more work for financial advisers because either:
- The advisers must pre-emptively tell their clients they need to pay cash or enrol them in GIRO; OR
- Reinstate lapsed policy. That means must do underwriting all over again.
Since there is going to be an even thicker set of documents for the Integrated Shield Plans, I really wonder when this is going to end.
That is why I am extremely selective of the clients I deal with. Very often I have to give some excuse that I am too busy to handle certain cases that are just one-off transactions. This is especially so when the transaction is too time consuming with extremely low payoff. Of course I can charge for a fee but knowing that there is no long-term relationship really makes me think why bother even to take in the case in the first place.
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This is the price to pay for having compulsory nation-wide medical insurance — govt’s concern is that as much of the people’s own money (in Medisave) be able to keep Medishield Life solvent, less of using reserves and taxpayer monies. So govt now wants stricter caps on using Medisave to pay for private plans.
Most of your readers being upper-middle class will eventually downgrade to B1-Class plans. This is govt intention also, that’s why they’re giving excuses to come up with a “standardised” private B1 plan.
As for productivity, financial industry remains one of the few industries in S’pore still showing strong productivity growth. This is becoz of the extremely high profit margins in financial industry, basically involved in moving & pushing money around. E.g. the profits from 1 person closing a case to sell wholelife insurance is equal to 20 cleaners keeping 2 HDB estates clean — this is high productivity in the eyes of accountants & economists.