Debunk Tan Kin Lian's views on medical insurance

Despite his pathetic 30 years in the line, Tan Kin Lian does not even know how insurance works. The premiums paid are not just lying around collecting dust until a claim is made. It is invested in all kinds of instruments. That is why level premiums are workable in reality.

Let's say a person starting at 25 pays insurance and only makes a claim at say 65. That gives 40 years for his premiums to be invested. The job of the insurer is to ensure that the returns on investment keep pace with medical inflation.

It is far better to lock in a level premium at a possibly higher rate, rather than start off low but keep having your rate revised at the whim of the insurer. The insurer will have every incentive to eat you alive.

Whole life insurance does not have fixed sum assured as well. It grows at 1 to 2% per annum depending on how good the insurer is.

And cross funding is just a cute term to make the younger generation subsidize the needs of the older generation. As a member of the older generation, he and I would welcome it, but it is bad for the kids. That guy is pathetic.

Kin Lian is a certified actuary. I respect his views on this

neddy said:

Kin Lian is a certified actuary. I respect his views on this

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Qualifications mean zilch if his views can be debunked by lay people.

Thick Face Black Heart said:

Qualifications mean zilch if his views can be debunked by lay people.

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i know of PhDs fumbling over the easiest tasks like changing a fluorescent light tube. true story, bro.

tan kin lian is the older version of hiaoest baey yam keng. you can all tkl a lao hiao!

leetahbar said:

tan kin lian is the older version of hiaoest baey yam keng. you can all tkl a lao hiao!

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Your sidekick Goh Meng Seng, long time TKL ally and one of the causes of his deposit forfeiture, is the most lao hiao.

Thick Face Black Heart said:

CURRENTLY, MediShield requires an annual premium that varies according to age. Younger people pay a lower premium, while older people pay a higher sum.
The Government is now planning to introduce MediShield Life, which covers people for life.
There has been some discussion about pre-funding for MediShield Life ("Problems with pre-funding" by Mr David Boey, last Tuesday; "Merits of pre-funding" by Ms Maria Loh Mun Foong; last Thursday; and "Caring for the old should be the norm" by Mr Geoffrey Kung; Forum Online, last Thursday).
The aim is for the insured person to pay a level premium to cover him for life. This is akin to a life insurance policy.
In both cases, the claim rate is lower for younger people and higher for older people. Pre-funding allows a person to pay a level premium that is deemed by an actuary to be sufficient for his lifetime.
There is, however, one key difference that makes pre-funding not feasible for MediShield Life.
In a whole-life policy, the sum assured is fixed for the duration of the contract.
For medical insurance, the cost of treatment is expected to rise over the years due to inflation. Also, the cost depends on the choice of hospital and specialists, and can vary significantly from one claim to another.
Some countries have adopted measures to make medical treatment more affordable for older people through cross-subsidies and supported by general taxation. They do not try to achieve this goal by using pre-funding under individual contracts.
Tan Kin Lian
http://www.straitstimes.com/premium...funding-not-feasible-medishield-life-20131125
​

Despite his pathetic 30 years in the line, Tan Kin Lian does not even know how insurance works. The premiums paid are not just lying around collecting dust until a claim is made. It is invested in all kinds of instruments. That is why level premiums are workable in reality.
Let's say a person starting at 25 pays insurance and only makes a claim at say 65. That gives 40 years for his premiums to be invested. The job of the insurer is to ensure that the returns on investment keep pace with medical inflation.
It is far better to lock in a level premium at a possibly higher rate, rather than start off low but keep having your rate revised at the whim of the insurer. The insurer will have every incentive to eat you alive.
Whole life insurance does not have fixed sum assured as well. It grows at 1 to 2% per annum depending on how good the insurer is.
And cross funding is just a cute term to make the younger generation subsidize the needs of the older generation. As a member of the older generation, he and I would welcome it, but it is bad for the kids. That guy is pathetic.

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Hi Thick face...
Why u say that TKL refusing to support something bad for kids is pathetic?

I think that here Mr TKL is thinking like a professional, not some wesel who is only trying to underpay premiums and exploit loopholes in the insurance system... Mr Tan has thus rightly pointed out the limitation of medishield life... That since with prefunding premiums are likely to be fixed from the start, the claim limits are likely also to be fixed from the start, thus defeating the purpose of covering whatever quantum future medical costs might be, also he pointed that just as (my own paraphrasing) people use different transport means, they also seek out different healthcare options resulting in medishield life probably becoming too restrictive since it would be a one size fits all with premiums fixed at the start.

I agree that in the absence of definite benefits for all members, Singaporean's should perhaps remain with the existing 3M framework with inflation related medishield premium incerase and government improve medifund coverage to help the poor.

bic_cherry said:

Hi Thick face...
Why u say that TKL refusing to support something bad for kids is pathetic?

I think that here Mr TKL is thinking like a professional, not some wesel who is only trying to underpay premiums and exploit loopholes in the insurance system... Mr Tan has thus rightly pointed out the limitation of medishield life... That since with prefunding premiums are likely to be fixed from the start, the claim limits are likely also to be fixed from the start, thus defeating the purpose of covering whatever quantum future medical costs might be, also he pointed that just as (my own paraphrasing) people use different transport means, they also seek out different healthcare options resulting in medishield life probably becoming too restrictive since it would be a one size fits all with premiums fixed at the start.

I agree that in the absence of definite benefits for all members, Singaporean's should perhaps remain with the existing 3M framework with inflation related medishield premium incerase and government improve medifund coverage to help the poor.

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Maybe I misread him, if I got the impression that he was FOR cross funding, rather than AGAINST cross funding.

In any case, it is possible for premiums to be fixed from the start, but for claim limits to keep pace with inflation. That is what whole life insurance does, and I don't see why the same concept cannot be transferred to medical insurance.

Unless you're saying medical inflation is much faster than the overall rate of inflation - in which my contention would be for the govt to co-fund the scheme. Medical inflation is something that the govt much play an active hand in managing. If it fails, the govt must co-fund the necessary amount.

There ARE reasons why a floating premium that increases with age and subject to changes in life expectancy is appropriate, but not for the reasons TKL mentioned. If there is to be universal insurance coverage, the govt must ensure such a floating premium scheme has adequate checks and balances. Thus far what I'm seeing is that the govt wants everyone covered but still pushing the biggest share of the pie to us without actually detailing how premiums and costs will be contained over the long term.

They have 40 years to eke out the forecasted returns, but they cant guarantee the premiums which insurance companies can increase anytime.

Why prefunding structure for Medishield-life is like fitting square peg into round ho

Why prefunding structure for Medishield-life is like fitting square peg into round hole.

Thick Face Black Heart (03Dec2013) said:

Thread source: Debunk Tan Kin Lian's views on medical insurance
Maybe I misread him, if I got the impression that he was FOR cross funding, rather than AGAINST cross funding.
In any case, it is possible for premiums to be fixed from the start, but for claim limits to keep pace with inflation. That is what whole life insurance does, and I don't see why the same concept cannot be transferred to medical insurance.
Unless you're saying medical inflation is much faster than the overall rate of inflation - in which my contention would be for the govt to co-fund the scheme. Medical inflation is something that the govt much play an active hand in managing. If it fails, the govt must co-fund the necessary amount.
There ARE reasons why a floating premium that increases with age and subject to changes in life expectancy is appropriate, but not for the reasons TKL mentioned. If there is to be universal insurance coverage, the govt must ensure such a floating premium scheme has adequate checks and balances. Thus far what I'm seeing is that the govt wants everyone covered but still pushing the biggest share of the pie to us without actually detailing how premiums and costs will be contained over the long term.

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Hi Thick Face, Mr Tan did not explicitly state that he is against cross funding, however, his insistence that govt fund elderlies healthcare costs from general taxation rather than from collecting higher premiums from younger Singaporeans suggest his aversion (to cross funding) as strongly so.

The problem with prefunding however, according to Mr Tan, is that such fixed annual premiums mechanisms are indeed only better suited for unitary claim and terminal condition based insurance policies such as whole life policies: http://en.m.wikipedia.org/wiki/Life_insurance in which insurance payout are prefixed, largely inflexible (can claim once only and that is it) and only happen in castrophic/terminal instances- e.g. death/ permanent disability/ terminal illness- I.e. where medical treatment is at best palliative and NOT curative/ life extending ... BUT medishield is insurance for mostly curative/ life prolonging medical treatment (cancer cure/ kidney dialysis/ transplant)- so because the life insurance structure is deemed too rigid and inflexible to be applied to a health insurance scheme, Mr Tan suggests that the only sustainable way forward is by term insurance, not prefunding since it is likely that a prefunded model is too rigid and narrow and thus will not satisfy the needs of Singaporean's where immediate healthcare costs is concerned.

Term insurance, appreciated for its widespread of earlier claim options, unfortunately however, is linked to floating premium rates- in which case, we are back to square one and better off improving the health of Singaporeans and tweaking the current medishield system rather than throwing the baby out with the bath water and instead defining medishield along the lines of a (terminal illness- terminal claim) based structure (whole life, prefund annual premiums)- which regretably, would be akin to fitting a square peg into a round hole (or worse still, the emperor's new clothes phenomenon).

Thick Face Black Heart said:

Despite his pathetic 30 years in the line, Tan Kin Lian does not even know how insurance works. The premiums paid are not just lying around collecting dust until a claim is made. It is invested in all kinds of instruments. That is why level premiums are workable in reality.

Let's say a person starting at 25 pays insurance and only makes a claim at say 65. That gives 40 years for his premiums to be invested. The job of the insurer is to ensure that the returns on investment keep pace with medical inflation.

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You are right... the people pays $, while the insurer invest and profit from the pooled $ - don't expect premium to come down because all the profits from the pooled $ goes to the insurer's shareholders.

And guess what, when the expected claims exceeds the insurers expectation (recall motor car insurance), what do these insurers do? Simple, increase the premium further.

Thick Face Black Heart said:

There is, however, one key difference that makes pre-funding not feasible for MediShield Life. In a whole-life policy, the sum assured is fixed for the duration of the contract. For medical insurance, the cost of treatment is expected to rise over the years due to inflation. Also, the cost depends on the choice of hospital and specialists, and can vary significantly from one claim to another.
Despite his pathetic 30 years in the line, Tan Kin Lian does not even know how insurance works. The premiums paid are not just lying around collecting dust until a claim is made. It is invested in all kinds of instruments. That is why level premiums are workable in reality.

Click to expand...

Not sure what he is trying to say. Cost of treatment is expected to rise, but so are all aspects of living costs.

In a whole-life policy, the sum assured is fixed but it is also in all cases not able to meet the risen costs of living, such as more expensive housing, more expensive food, more expensive school fees. There is no "key difference".

I know a case where a widow who bought insurance for $60 premium per month got $80,000 when her husband died, but what is $80,000 these days. And today, no agent will say $60 per month is enough coverage.

Insurance shouldn't be considered a get rich quick scheme.

Insurance shouldn't be considered a get rich quick scheme.

tanwahp said:

Not sure what he is trying to say. Cost of treatment is expected to rise, but so are all aspects of living costs.
In a whole-life policy, the sum assured is fixed but it is also in all cases not able to meet the risen costs of living, such as more expensive housing, more expensive food, more expensive school fees. There is no "key difference".
I know a case where a widow who bought insurance for $60 premium per month got $80,000 when her husband died, but what is $80,000 these days. And today, no agent will say $60 per month is enough coverage.

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Hi TanWP, what Mr TanKL is trying to say is that the whole life format (prefunded dividends) is only suitable for a one-time-claim only tragic event insurance... For healthcare bills, this insurance format is inappropriate as it is inflexible, and as mentioned, only suitable for an uncommon and tragic terminal event- but we all know that in the unhealthy, medical bills are a certainty, and also not a just ONE claim event (whole life insurance claims are only allowed (once only) for terminal event such as death or terminal illness or permanent disability.)

So for the widow getting S$80K, she would have been 'fortunate' to have bought such insurance had her hubby died early, e.g. after one year cos the 80k received could actually have helped bring up some kids, all for just $720 in premiums paid, a returns of over 100X premiums paid...
But in loving family life, we all know that the widow would have been happier that her hubby not die but then again, such insurance is against the extreme unpredictable and not against what is common occurrence.

In any case, having paid only $720 p.a. and assuming a marriage of 50 years, her total premiums paid would have amounted to only $36,000 but she received $80K, so there is some gain although it is arguable if returns would have been better in the stock market but one could also say that their marriage was better enjoyed given the certainty that the family would not be bankrupt even of misfortune came the husband's way(maybe husband could take on better paying dangerous jobs knowing himself 'covered')... guess nothing is free and insurance shouldn't be considered a get rich quick scheme.

Thick Face Black Heart said:

Your sidekick Goh Meng Seng, long time TKL ally and one of the causes of his deposit forfeiture, is the most lao hiao.

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gms is affiliated with tkl simply becos of the benefits he thinks he shall derive from the hiao foxy lao hiao. but those who know tkl, he won't give u a cent even if he can spare a $. go check with his ex-ka kias and u shall get a better idea.

Thick Face Black Heart said:

Maybe I misread him, if I got the impression that he was FOR cross funding, rather than AGAINST cross funding.

In any case, it is possible for premiums to be fixed from the start, but for claim limits to keep pace with inflation. That is what whole life insurance does, and I don't see why the same concept cannot be transferred to medical insurance.

Unless you're saying medical inflation is much faster than the overall rate of inflation - in which my contention would be for the govt to co-fund the scheme. Medical inflation is something that the govt much play an active hand in managing. If it fails, the govt must co-fund the necessary amount.

There ARE reasons why a floating premium that increases with age and subject to changes in life expectancy is appropriate, but not for the reasons TKL mentioned. If there is to be universal insurance coverage, the govt must ensure such a floating premium scheme has adequate checks and balances. Thus far what I'm seeing is that the govt wants everyone covered but still pushing the biggest share of the pie to us without actually detailing how premiums and costs will be contained over the long term.

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Tee tee ah lian wants to cheat young people to fund his and his cronie's medical fund? sounds legit. babyboomer in USA!!!! are already doing that. follow west is always good rite?

might as well invest money yourself. lowest returns guaranteed in singapore. banks insurance bonds you name it

leetahbar said:

gms is affiliated with tkl simply becos of the benefits he thinks he shall derive from the hiao foxy lao hiao. but those who know tkl, he won't give u a cent even if he can spare a $. go check with his ex-ka kias and u shall get a better idea.

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Not true that TKL is miserly to everyone. He is miserly only to those whom he feels are of little value to him.

Thick Face Black Heart said:

CURRENTLY, MediShield requires an annual premium that varies according to age. Younger people pay a lower premium, while older people pay a higher sum.
The Government is now planning to introduce MediShield Life, which covers people for life.
There has been some discussion about pre-funding for MediShield Life ("Problems with pre-funding" by Mr David Boey, last Tuesday; "Merits of pre-funding" by Ms Maria Loh Mun Foong; last Thursday; and "Caring for the old should be the norm" by Mr Geoffrey Kung; Forum Online, last Thursday).
The aim is for the insured person to pay a level premium to cover him for life. This is akin to a life insurance policy.
In both cases, the claim rate is lower for younger people and higher for older people. Pre-funding allows a person to pay a level premium that is deemed by an actuary to be sufficient for his lifetime.
There is, however, one key difference that makes pre-funding not feasible for MediShield Life.
In a whole-life policy, the sum assured is fixed for the duration of the contract.
For medical insurance, the cost of treatment is expected to rise over the years due to inflation. Also, the cost depends on the choice of hospital and specialists, and can vary significantly from one claim to another.
Some countries have adopted measures to make medical treatment more affordable for older people through cross-subsidies and supported by general taxation. They do not try to achieve this goal by using pre-funding under individual contracts.
Tan Kin Lian
http://www.straitstimes.com/premium...funding-not-feasible-medishield-life-20131125

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Old guard: consistent with LKY's conservative thoughts in:

Lee Kuan Yew:
My major objective in the early days was to make sure that nobody derails the idea of having individual accounts for CPF and Medisave. Whatever you earn, it’s yours. Because once you have that individual account, any suggestion that you put it into a common pool and everybody takes out from it (as with other welfare systems) is bound to lose you votes.
So if Low Thia Khiang says now, let’s set up a common pool, I think he’ll lose votes in the next election. Are you prepared to put your money into a common pool, having slogged and built up your CPF nest egg? It’s yours and if you don’t use it, you can leave it to your children or your relatives or whoever you like. Why should you put it into a common pool and everybody draws out at your expense, which is what’s happening in some Western countries? The system has collapsed.
From Lee Kuan Yew : Hard truths to keep Singapore going. (Eds Han FK, Z Ibrahim, Chua MH, L Lim, I Low, R Lin, R Chan) Straits Times Press 2011
Source: Are Singaporeans being set up for disappointment? | Insights Health Associates

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zhihau said:

i know of PhDs fumbling over the easiest tasks like changing a fluorescent light tube. true story, bro.

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i know of a phd fast-tracker from cal berkeley to mit (in 5 years) who could not decide between living with his parents and living with his bride for 5 years. everything cums in 5 years for this guy to make up his mind. it took him 5 years to decide junking his old car for a new one. seriously, jokers like this exist in the world. :*:

hahaha...when scroobal says tkl is a dud, his side kick tfbh must sing the same song lah....
of course his faithful doggie (me) must also toe the line...
so tkl is a dud.....and tomorrow's (7 June) event at HLP is also a dud because tkl is one of the speakers....