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Medical insurance is not the solution to the high medical charges
28 Jul 2017 (87 views)

Many people are troubled to read about the high cost of medical treatment. A common procedure, such as a PET scan to detect tumors could cost between $2,000 to $4,000 a year in a public hospital. It could cost several tens or hundred of thousand dollars to go for cancer treatment.

When most people hear about the high cost of treatment, they look at medical insurance as providing the solution. The reasoning is - if they are insured, the insurance company will pay the high cost. They will be protected from the heavy burden.

MEDICAL INSURANCE
Medical insurance is NOT the solution. It is often the cause of the high charges.

If you find medical bills to be unaffordable, you will find the insurance premiums to be unaffordable as well. All the medical bills have to be paid by the insured people through an insurance pool. If the charges goes through the roof, the premiums will also go through the roof. 

In fact, the policyholders collectively will be paying premiums to cover the high medical expenses and also to pay fro the administrative and marketing expenses and the profit margin of the insurance company. The premium could be 150% to 200% of the total claims.

CHARGES ARE HIGHER WHEN THE PATIENT IS INSURED
Medical insurance can provide value if it is able to help patients to find cost effective treatment for their illnesses. In other words, if the insurance pays a lower price for the treatment compared to the price that the patient has to pay on his own.

Empirical evidence has shown that the opposite is the case. Doctors charge patients a higher price when he is insured, compared to paying on his own.  Insurance jacks up the charges.

PAYING FOR OTHER PEOPLE
When you are insured, you are paying a high premium to cover the high charges that other people have to pay for their treatment. If it is your turn to be treated, the other people will help to pay your bill.

However, the total premiums paid by everybody is much higher than the actual charges that they have to pay on their own, if they were not insured.

MY ADVICE
For the majority of people who are not affluent, my advice is to stay with Medishield Life provided by the government through the Central Provident Fund.

You have to be treated in a subsidized B2 or C ward. The charges are high, but they are much lower than the charges from private hospitals. You will receive treatment of a satisfactory standard.  You cannot choose your own doctor, but it usually does not matter. The doctor who treats you will be qualified. If he is not qualified, a senior doctor will be supervising him.

If you are affluent and well off, you can disregard my advice and go for an integrated Shield plan. Your total life time cost could be much higher (maybe three or four times), but it does not matter, because you  can afford the high premiums. You are also able to choose your own doctor to treat you. 


Medical insurance is not the solution to the high medical charges
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Many people are troubled to read about the high cost of medical treatment. A common procedure, such as a PET scan to detect tumors could cost between $2,000 to $4,000 a year in a public hospital. It could cost several tens or hundred of thousand dollars to go for cancer treatment.

When most people hear about the high cost of treatment, they look at medical insurance as providing the solution. The reasoning is - if they are insured, the insurance company will pay the high cost. They will be protected from the heavy burden.

MEDICAL INSURANCE
Medical insurance is NOT the solution. It is often the cause of the high charges.

If you find medical bills to be unaffordable, you will find the insurance premiums to be unaffordable as well. All the medical bills have to be paid by the insured people through an insurance pool. If the charges goes through the roof, the premiums will also go through the roof. 

In fact, the policyholders collectively will be paying premiums to cover the high medical expenses and also to pay fro the administrative and marketing expenses and the profit margin of the insurance company. The premium could be 150% to 200% of the total claims.

CHARGES ARE HIGHER WHEN THE PATIENT IS INSURED
Medical insurance can provide value if it is able to help patients to find cost effective treatment for their illnesses. In other words, if the insurance pays a lower price for the treatment compared to the price that the patient has to pay on his own.

Empirical evidence has shown that the opposite is the case. Doctors charge patients a higher price when he is insured, compared to paying on his own.  Insurance jacks up the charges.

PAYING FOR OTHER PEOPLE
When you are insured, you are paying a high premium to cover the high charges that other people have to pay for their treatment. If it is your turn to be treated, the other people will help to pay your bill.

However, the total premiums paid by everybody is much higher than the actual charges that they have to pay on their own, if they were not insured.

MY ADVICE
For the majority of people who are not affluent, my advice is to stay with Medishield Life provided by the government through the Central Provident Fund.

You have to be treated in a subsidized B2 or C ward. The charges are high, but they are much lower than the charges from private hospitals. You will receive treatment of a satisfactory standard.  You cannot choose your own doctor, but it usually does not matter. The doctor who treats you will be qualified. If he is not qualified, a senior doctor will be supervising him.

If you are affluent and well off, you can disregard my advice and go for an integrated Shield plan. Your total life time cost could be much higher (maybe three or four times), but it does not matter, because you  can afford the high premiums. You are also able to choose your own doctor to treat you.