Medical Insurance and Us

March 6, 2021 | Latest

As both a consumer of and payee from medical insurance policies, the current adjustments made by the insurance industry to help control costs are mostly welcome. The fee guidelines and 5 % co- payment requirements should help guard against the continual increase in medical costs. This is a good thing.

My objection is the use of panels of doctors by insurers which give these doctors special advantages when it comes to delivery of care to patients. The selection of these doctors is an opaque process based on the provider’s criteria. The insurers then introduce rules to cause inconvenience, additional cost and friction to discourage patients from going to NON panel doctors. This is not correct. Indeed, with the control of fees by the Ministry of Health’s fee guidelines and the introduction of pre-approval by medical insurers, the need for panel doctors and non panel doctors is removed.

As a consumer of medical insurance, I am also surprised at the unilateral changes insurance providers are allowed to make when it comes to the terms of what is essentially a contract between an insurance consumer and insurance provider. This includes changes in annual premiums, restriction of the medical providers that an insured person can seek and arbitrary loading of premiums in the year following a claim made on the policy. None of this is explained when you purchase the policy. Some insurers routinely ask for discounts on the hospital and doctor’s charges which is (obviously) not revealed to the patient. One hopes that these are, at least, passed on to the patients in the form of reduced premiums.

The argument put forward by the insurance providers is that they are a business and have to make a profit. Patients have a choice when they select a provider. They can, ostensibly, vote with their feet. There are 2 issues with this. One, the insurers have access to a pool of consumers who are using their compulsory Medisave contributions (retirement funds) to fund their compulsory medical insurance. Two, the consumer, once he has a medical condition, is often locked in to the original provider. To change provider one must be prepared to lose cover for that “pre-existing condition”. The consumer is a captive- locked in to a compulsory medical insurance from one provider with little chance of changing. So this is not a just a brand of TV or a restaurant that we can change- people’s lives, their choices and health are involved.

For a business to be profitable, it must charge fairly for a product that the consumer wants. A successful insurance provider provides a service with fair terms at a fair price and controls its cost of delivery of that service to remain profitable. Publicly available MAS statistics titled “ Underwriting Results for Integrated Plans in 2019 (% of Premiums)” shows that claims ratios are in the range 65% to 88 %- so the insurers pay out less than they collect in premiums. There is no problem here but it does show that there is a profit in providing medical insurance. The difference appears to be the cost of delivery of the service- the range of “management cost and “distribution cost” ranges from 16 % of premiums paid to 69 % of premiums paid. One wonders what the poorest performing provider is doing with 69% of the premiums paid. Paying its executives and agents large commissions? As a small businessman, it is my understanding that a high cost base means that it is difficult to make a profit delivering good service. Perhaps the claims against the policies are not the problem. Perhaps the insurer with the highest “management cost and “distribution cost” can learn from its competitor.

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About the Doctor
Dr Andrew Khoo
Plastic & Aesthetic Surgeon
FRCS (Edin), FRCS (Glasg),
M Med FAMS (Plastic Surgery)