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Extend insurance cover to pre-existing illnesses

  Friday, 10 l 12 l 2010 Source:  The Straits Times   
By: Lorna Tan

MediShield, as a govt scheme, should cover congenital conditions 

SINGAPOREANS are constantly reminded to buy individual health cover while they are still healthy and insurable. Being insurable typically means that they are either free of medical conditions, or they have to be aged 75 or below. This is because insurers cease to accept new policyholders after they turn 75.

pre-existing-coverageInsurance firms also exclude cover for pre-existing conditions except under special circumstances or conditions. In the worst-case scenario, your application may be declined altogether if you have many chronic pre-existing conditions. To recap, a pre-existing medical condition is a condition, disability or illness that you have before you apply for a health cover. It may seem justifiable for insurers to refuse cover to a smoker who has developed lung disease before he applied for cover. After all, smoking is an unhealthy social habit and one can argue that he should have taken better care of himself.  But what about babies who are born with congenital abnormalities? Or people who develop diabetes in their teens, before they are old enough to buy their own cover?

In both these examples, it is not a person’s fault that he was saddled with these medical conditions. It can happen to your friend, colleague, relative or even your own child. Even MediShield excludes cover for newborn babies’ congenital abnormalities. This is despite MediShield being a government insurance initiative to help Central Provident Fund (CPF) members meet medical expenses from major illnesses.

When contacted, the Ministry of Health (MOH) said the reason for excluding congenital conditions is to keep premiums low for policyholders. The concern is that the majority of Singaporeans without such conditions will end up cross-subsidising these policyholders through higher premiums across the board. But without insurance protection, to whom can people with pre-existing medical conditions turn? Shunned by insurers, they can only rely on Medifund and their Medisave funds which – if not bolstered by insurance – will not be enough to pay for large hospital bills. The burden will then fall on the Government or the community, to try and do something to help these people.  

While surfing the Internet, I came across the United States Pre-Existing Condition Insurance Plan (PCIP). This is a new programme created by the US comprehensive health-care reform law enacted in March this year. The PCIP makes health coverage available to those who have been denied health insurance by private insurers because of a pre-existing condition.

In fact, the health-care reform guarantees that by 2014, all Americans – regardless of their health status – will have access to affordable coverage either through their employer or through a new competitive marketplace where they can make price and benefit comparisons. Insurers will be prohibited from denying coverage to anyone based on the state of their health. 

I think it’s wonderful that the Americans have taken the tough decision to stop discriminating against anyone based on a pre-existing condition. Apparently, these policyholders won’t even be charged a higher premium because of their medical condition – what is known as “premium loading” in insurance circles. The PCIP will also be available in every state in the US. Perhaps Singapore can take a leaf from this new programme and see how it can be applied here.  

This is even though MediShield rejections due to pre-existing illnesses are apparently uncommon. MOH said that less than 1 per cent of MediShield applications from CPF members have been rejected due to pre-existing conditions. MediShield is doing a relatively good job covering the nation. As at the end of last year, the opt-out scheme covered nearly 90 per cent of the resident population, or 3.3 million people. This includes those without CPF accounts such as housewives and children. According to MOH, this is not very much lower than the coverage in countries with mandatory insurance coverage. 

The ministry has also done much work to spread the MediShield net. In December 2007, it introduced automatic coverage for all newborn babies and opt-out auto-cover schemes for those in school. As a result, only about 17 per cent of young people below 21 were not covered by MediShield as of last year, much less than the 45 per cent figure in 2007.

But this does not mean that the small minority that fall outside the coverage net are any less important. The main stumbling block for many of these enhancements to MediShield seems to be cost, but should they be so quickly ruled out? Another example of an improvement to the scheme would be to move MediShield to an as-charged plan – a feature that the private insurers are already providing in their integrated Shield plans.

Even with the prospect of higher premiums, an as-charged approach will provide certainty to MediShield members. In a nutshell, a plan that is as-charged does away with any sub-limits on medical benefits such as room and board. This means that hospitalisation expenses will be paid according to what has been billed, subject to the plan’s deductible (minimum amount before insurance payouts kick in) and co-insurance (patient’s share of the bill). Insurers are also covering members for life instead of ceasing cover at age 85. Should MediShield also consider this? If you poll policyholders, you may find that many will not mind paying slightly higher premiums to provide more complete coverage, both for the individual and across the nation.

To its credit, MOH says it will at least study the impact on premiums of covering congenital conditions and other enhancements. That, I believe, is the way to go. After all, isn’t the purpose of a national medical insurance scheme – in fact any insurance scheme – to cover the misfortunes of a few by spreading the burden to a much wider group or population?

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