Daft Sinkies? Dishonest insc agents? Or Medisave sucks?

In CPF, Financial competency, Financial planning on 08/07/2014 at 4:29 am

I was shocked to read in BT on Saturday that the MediShield Life Review Committee highlighted something that should never have been allowed to happen by a truly nanny govt or a govt that cares for its people:

 [O]ne issue has stuck out like a sore thumb: the overbuying of Integrated Shield Plans (IPs).

In the clearest indication that something is amiss, the committee’s report released last Friday stated that about three in five Singaporeans covered under MediShield purchased IPs.

But seven in 10 armed with IPs that target Class A wards in public hospitals chose to stay in lower ward classes when hospitalised. Only one in 10 from the same group chose private hospitals.

Echoing a similar trend were those with IPs that target private hospitals – six in 10 chose lower ward classes in public hospitals. The committee noted twice in its report that many Singaporeans want medical treatment beyond that provided in Class B2/C wards but have “over-stretched themselves to buy the most expensive product for higher protection”. (Emphasis mine)

So S’poreans fork out premiums to stay in the best (OK most expensive) wards, but then don’t use them ’cause no money? Presumably the insurers are laughing when they see their bank statements.They pay out less than what they are prepared to pay for.

Shumething is clearly wrong.

BT as part of the constructive, nation-building media tries to avoid blaming S’poreans. insurers and their agents, or Medisave.

Having said that, it qualified that this typically happens during the working years, when premiums can be paid entirely or mostly through Medisave, the national medical savings scheme used to foot hospital bills, among other things.

A quick comparison of the IPs offered by the five insurers – AIA, Prudential, Aviva, NTUC Income and Great Eastern – showed that premiums for the first 40 years of an individual’s life were priced suitably low to gain market share.

For example, existing private IPs for Class B1 in public hospitals range between $78 and $207 annually, according to the comparison provided by the Ministry of Health’s website. The amount payable doubles to about $297 to $410 when the consumer is between the age of 41 and 50. It rises to between $425 and $921 for those aged 51 to 65, and for those who are 66 to 90, the yearly costs go up to between $888 and $4,245.

It calls for more education rather than pointing out that Medisave nudges S’poreans towards over-insuring despite describing the process of nudging (for the daft: the last three preceding paras).

While information is relatively accessible and most people understand that they have to pay more as they get older, only a small number of people truly realise the exponential spike in IP premiums from age 60 onwards, not to mention the accumulated lifetime costs.

All these point towards a poor comprehension of the workings of IPs – a point that the committee also made sure to reiterate throughout its report. This is why there is a pressing need for the government to educate the wider public of its entire healthcare financing system, as well as the things to look out for in choosing an IP if required, so that the individual can make an informed decision.

But it ignores the T Rex in the ward, Medisave: this typically happens during the working years, when premiums can be paid entirely or mostly through Medisave, the national medical savings scheme used to foot hospital bills,

The answer to the title of this rant?

All three with Medisave the catalyst. It worsens the stupidity (or financial incompetency) of many S’poreans and the dishonesty of agents, by nudging via skewed incentives money in Medisave cannot be touched except for illnesses and medical insc premiums, so might as well buy the more expensive coverage)). It’s our money in MediSave, but we can only spend it in the right ways, one of which leads to bigger profits for insurers..

Update: Follow-up


  1. Morning atan, do you think that with the launch of medisave life, there is a really possibility that we could do without IP plan if we are comfortable with b2 class? I am thinking of opting out of my B1 plan?

  2. […] – The Heart Truths: #ReturnOurCPF: 12 July 2014 | 4.00pm | Hong Lim Park. See You There! – Five Stars and a Moon: Your Letters: If not the GIC, then who? – SG Wealth Builder: The case of Madam Goh Kah Keow vindicated the merits of CPF Minimum Sum – The IFA on Duty: CPF Life Standard default plan is the worst of the 2 – Thoughts of a Cynical Investor: Daft Sinkies? Dishonest insc agents? Or Medisave sucks? […]

  3. Shocked? shocked?..

    How could they be shocked… when:


    Singapore, 12 February 2014

    The life insurance industry posted strong results for 2013, hitting $2.8 billion in weighted* new business premiums, a gain of 28 per cent over the previous year’s record.

    Sales of annual premium products were particularly strong, totaling $2.1 billion for 2013, up by a sizeable 31 per cent over the same period in 2012.

    Sales of single premium products also increased by 20 per cent to reach $0.7 billion of weighted single premiums. Of this amount, 16 per cent comprised CPF-funded sales.

    “Despite a slight dip in the fourth quarter, we maintained sales momentum to end the year with improved growth over the previous year,” said Dr. Khoo Kah Siang, President, Life Insurance Association. “Annual premium products were the biggest drivers of growth for the year, echoing a more stable market environment and improved consumer sentiment.”
    Other Highlights (January to December 2013)
    Total Sum Assured

    The total sum assured for new business increased by five per cent to reach $82.9 billion for 2013.
    Health Insurance

    New health insurance premiums went up by 145 per cent to $456 million compared to the previous year. The bulk of this – 94 per cent – went to Integrated Shield Plans and riders.

    In line with the upward revision to the benefits and premium rate of the basic MediShield plan in March 2013, participating Integrated Shield insurers also enhanced their plans.

    As of 31 December 2013, a total of 2.68 million lives were covered with paid up premiums amounting to $1.4 billion.
    Distribution Channels

  4. May I add my two cents’ worth based on my personal experiences and who as a HR personnel know something about hospitalisation insurance (I am now retired but had to do a comprehensive study of the different hospitalisation insurance just before my retirement as the company I worked in wanted to revamp its medical benefits).

    Opting to purchase an integrated shield plan (ISP) is really a personal choice and I don’t think the government has anything to do with it in terms of “hook winking” (my words) us or anything. I would be pretty upset if the govt. disallows me to buy an ISP. I am pampered in wanting a high-end health care standard and would be happy to pay out-of-pocket and higher premiums for it.

    I don’t think anyone should be quick to cancel his (ISP) because of the introduction of Medishield Life. The latter is merely for C or B2 class and this comes with a fair bit of restrictions. They are :

    – you cannot choose your doctor and you will invariably end up being assigned to just a medical officer (a doctor still undergoing specialist training). Precisely because they are trainee specialists, they are really quite inexperienced where their diagnosis of your medical condition can be a little “off”. I speak from two personal experiences where I was scared out of my wits and was only calmed down when I turned to senior specialists for second opinions (the first instance when the medical officer said I could have serious spinal problem and another case where the trainee doc thought I might have lung cancer).

    – you may have to wait weeks or months for an appointment in a restructured hospital as a C or B2 patient. It is a case of money is important even in a restructured hospital where if you opt for B1 or A class, the chance of your getting an earlier appointment with your selected specialist will be much easier to come by. Here I am talking about an elected surgery / hospitalisation and not one due to an emergency like a heart attack or a stroke.

    – related to above point, while not all there are some doctors who see the $ sign and will treat subsidised and private patients differently. Again, I have experienced this personally and after the first experience, I never went back to being a subsidised patient even when I have to pay much more. I also have relatives who as subsidised patients were mistreated by cocky doctors.

    – lets face it, as we get more affluent we also become more demanding of the quality and service of everything, including health care. In a C ward you share the space with tens of other patients (I admit i don’t have the count but it will likely be a dozen or more). You hear the groaning of fellow patients in pain, you smell the urine, you want to rest but too much noise all round, etc. B2 is slightly better and may be some are happy with it.

    – When in C or B2 class, you are first prescribed with only generic drugs. Certainly these drugs can have good efficacy but almost certainly the branded and latest drugs will likely be more superior.

    – Once you opt out of an ISP, you are likely not able to get back to it without exclusions when you are older and have pre-existing medical conditions. To upgrade is difficult but to downgrade is easy where underwriting is not required for the latter.

    – one choice would be to opt for B1 where you still have much of A class privileges (you still enjoy a small subsidy from the government at 20%) in restructured hospitals or for those willing to pay then the Private class.

    So please think carefully before you cancel your ISP.

  5. No, the PAP set up the (stupid) rules, and the people are merely responding to it. That’s how we got this outcome. Let me share from personal experiences :

    a) When you enrol for a Integrated Shield plan for say, “A”, you can downgrade, but cannot upgrade. If you try to upgrade years later, whatever illnesses you’re diagnosed with before, becomes considered “pre-existing condition”. So if I’m in my 20’s, not earning much, in the pink of health and am confident that my earning power will only grow through the years, the “right” thing for me to do is to go for a “P” plan, if I can afford it. So that I do not fall into the trap of “pre-existing condition”, in the unfortunate event that something is diagnosed later. If I were to purchase a plan based on my then existing income, say a “B” plan, I’d have short-changed myself prematurely.

    So does the latest changes in Medishield / MediLife address this? No. So, status quo will remain. In the USA, the equivalent (Obamacare) does address this, but here we did not.

    b) There is little confidence that the plan in which you’re supposedly assured for, will be the umbrella you expect it to be when it comes to the crunch later. The insurer will look for ways to reject paying for certain costs or items billed. Yes, you could have gone for a “P” plan but before you actually exercise it, its wiser to think carefully if you want to take that risk. The main reason for why insurance policies can have “holes” ?? A poor regulatory environment, skewed towards the big guys.

    So does the latest changes in Medishield / MediLife address this? No. So, status quo will remain. In the USA, the equivalent (Obamacare) does address this, but here we did not.

    And finally, the “over-insured” situation is in an even worse shape when you consider that the average person who is employed is also covered by his company’s medical insurance. In other words, our medical insurance industry relies on a majority of its members being double-insured. This should mean that its more than merely “viable” — they should be printing money!! Because they compute the insurance rates based on statistics on per person basis, but enjoy double premium paid by most members.

    Again, does the latest changes address this? Sadly no, again. And again, a central plank of Obamacare is that you DO NOT need to buy an own insurance, if your company already insures you medically. Here, we’re now requiring everyone to purchase their own insurance, while for the most part of their adult life, they’re actually covered by another scheme. And oh, the way it works is that your insurer REQUIRES you to first claim under company medical insurance, before you can claim from your Integrated plan.

    To me, the whole Lifeshield thing is a major disappointment. Not unlike the “COE review” we had recently. After all the hoopla and months of deliberation, just a bare squeek comes out. Minor tweaks, here and there. Nothing to address the underlying issues.

    • There are problems that need to be sorted out but bear in mind that: A survey on health-care efficiency by Bloomberg recently chose Hong Kong, Singapore and Japan as the best performers, based on their efficiency. Adding greater weight to patient choice, for example, might reshuffle the rankings. The Commonwealth Fund most values equity and access, and so rewards the systems where it finds these. But change the weighting given to each category and you can quickly change the outcome. When it comes to judging the world’s health systems, preferences and values guide conclusions, as well as raw data. – See more at:

      • So long as there is “co-payment” (and I support the principle) S’pore’s system will never ever live up to yr expectations.

  6. My comments were not to claim that Medishield Life or the ISP are separately / jointly good or bad. Rather, it was to suggest that before anyone decides to cancel their ISP after Medishield Life comes onboard, think carefully. This is because they may regret it later when they want better class healthcare so weigh the pros and cons according to personal preferences and expectations.

    I personally like the suggestion that the government also work with the private insurers to have a standardised B1 plan for those who wish for a higher class plan but not quite the A or Private Plan.

    Of course the proposed Medishield Life has its shortcomings, as are all health insurance plans but among the better benefits it has are some key features or aims like bringing in those (with pre-existing conditions and those above the insurable age) who want health insurance but were rejected both by Medishield and private insurers.

    I recognise the duplication of company health insurance and personal Medishield / Medishield Life. But it is beyond me to suggest what can and cannot be done. However, I do appreciate that it is not easy like ABC to resolve this. Corporations have their own considerations and corporate health policies often come with other strings that are not easily entangled (I looked at this too when I was doing the comparisons in my job).

    I have no knowledge of Obamacare and cannot make any comments on its merits or otherwise but I read that it has many minuses too but it is not my concern.

    Certainly Medishield or its subsequent Life plan can be better improved and both the government and citizens should relook at it some years down the road.

  7. Having worked as mgmt. in insurance cos before, can attest that insurance peeps are basically crooks from CEO down to the lowest CSO. That’s just how the industry works. Also can confirm that 90+% of sinkies are idiots when it comes to insurance (especially health & life ins). That’s why ins mgrs. laughing all the way to the banks (also fucked up but not as bad).

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