Mr Tan KL's concerns are prescient: Prefunding Risks Medishield-life Degenerating into a Bankrupt-Ponzi-Scheme of unending premium increases if it is designed after a one-incident-only-claim 'whole life' insurance policy/scheme.
Mr Tan KL wrote Pre-funding not feasible for MediShield Life:
Compared to whole life insurance (insurance on life or the occurrence of a terminal illness), insurance covering medical treatment is a whole lot more complex with the possibility of involving multiple claims depending on the onset, severity and permanence of the medical condition (e.g. kidney dialysis which last lifetime). Life insurance on the other hand is one of the simplest forms of insurance, contractually involving ONLY ONE POSSIBLE CLAIM: I.e. a lump sum benefit payable upon a terminal incident (death or terminal, incurable illness); henforth after the claim, all liability of the insurer to pay further is ceased (payee is either terminally ill but 'paid', or else dead(estate is paid): the sum assured is FIXED (or equals the total amount of accrued principle including bonus paidover years if the policy value exceeds the guaranteed death/ terminal illness payout sum.)
In medical insurance however, the total payout sum is IMPOSSIBLE TO PREDICT due to advances in medical technology, medical costs inflation, lifespan of the individual, quality of care expected, frequency of hospitalisation, availability of domestic help (some people cannot be discharged because care givers not free/ 'busy' etc):
Just like NHS in the UK/ USA national pension schemes, bankruptcy awaits due to an excessive claims history: with even government support doing little to improve finances when claims eventually far outpace all premiums paid.
Medishield-life sows the seeds of failed promises. There is no free lunch in this world, no solution to an unhealthy lifestyle (diabetes, smoking, obesity etc). Where preventive healthcare fails, no insurance scheme can restore the loss without the high risk of bankruptcy or a total loss.
Prefunding already exists in the claims restricted nature of the CPF medisave account. If gahmen focuses on healthy lifestyle/ preventive healrthcare amongst all, boosts up medifund to fund the medical cost of the needy only, then there is reduced need to prefund the moral hazard of what is basically a fools errand to predict (Medishield-life premiums), and thus reduce the risk of medishield/ worse: compulsory Medishield-life eventually succumbing to become another bankrupt ponzi scheme.
Senior generation Singaporeans should also not ill forget the words of Lee Kuan Yew as they marvel at his son's mathematical acrobatics as he "derails the idea of having individual accounts for CPF and Medisave.":
Mr Tan KL wrote Pre-funding not feasible for MediShield Life:
Already, the element of prefunding exists in the form of medisave, whereby individuals involuntarily contribute to a medical savings account with extremely limited usage options unless they have proven terminal illness conditions of extremely short life-expectancy: e.g. strict claim limits, limits based upon claim type: e.g. in-patient vs out-patient, ban on claims for cosmetic treatments, acute illnesses(cough n colds etc) etc.
Compared to whole life insurance (insurance on life or the occurrence of a terminal illness), insurance covering medical treatment is a whole lot more complex with the possibility of involving multiple claims depending on the onset, severity and permanence of the medical condition (e.g. kidney dialysis which last lifetime). Life insurance on the other hand is one of the simplest forms of insurance, contractually involving ONLY ONE POSSIBLE CLAIM: I.e. a lump sum benefit payable upon a terminal incident (death or terminal, incurable illness); henforth after the claim, all liability of the insurer to pay further is ceased (payee is either terminally ill but 'paid', or else dead(estate is paid): the sum assured is FIXED (or equals the total amount of accrued principle including bonus paidover years if the policy value exceeds the guaranteed death/ terminal illness payout sum.)
In medical insurance however, the total payout sum is IMPOSSIBLE TO PREDICT due to advances in medical technology, medical costs inflation, lifespan of the individual, quality of care expected, frequency of hospitalisation, availability of domestic help (some people cannot be discharged because care givers not free/ 'busy' etc):
Just like NHS in the UK/ USA national pension schemes, bankruptcy awaits due to an excessive claims history: with even government support doing little to improve finances when claims eventually far outpace all premiums paid.
Medishield-life sows the seeds of failed promises. There is no free lunch in this world, no solution to an unhealthy lifestyle (diabetes, smoking, obesity etc). Where preventive healthcare fails, no insurance scheme can restore the loss without the high risk of bankruptcy or a total loss.
Prefunding already exists in the claims restricted nature of the CPF medisave account. If gahmen focuses on healthy lifestyle/ preventive healrthcare amongst all, boosts up medifund to fund the medical cost of the needy only, then there is reduced need to prefund the moral hazard of what is basically a fools errand to predict (Medishield-life premiums), and thus reduce the risk of medishield/ worse: compulsory Medishield-life eventually succumbing to become another bankrupt ponzi scheme.
Senior generation Singaporeans should also not ill forget the words of Lee Kuan Yew as they marvel at his son's mathematical acrobatics as he "derails the idea of having individual accounts for CPF and Medisave.":
The seeds of destruction are being sown, young Singaporeans should prepare themselves for some rather lean years...
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