Beating PRIVATE medical cost

Source: Sunday Times 10th April 2017 

There's been lots chatter about Prudential's new pricing approach of our rider for Shield plan that covers from the first dollar. Here's some of key take-aways and my take.

1) Private healthcare cost is now almost 3x of public hospitals.

2) Internal Shield claims has been rising 27%p.a. for past 3years (DOUBLED within 3years).

3) Bulk of customers (>80%), who haven't been making any claims, are also experiencing Premium increase for the past few years regularly as the premium collected is unable to keep pace with Private medical inflation (not just with Prudential alone).

4) The claims at public hospital is still pretty much well-managed - no premium increase for the past few years from Prudential's side. Price increase is pretty much targetted at Private hospital coverage.

5) There's a need to develop a pricing approach that's fair for everyone. 

a) Customers who are healthy and don't make any claim from PRIVATE hospital (claims from public hospital not affected) will provide lesser "subsidy" to customers who opt for Private hospital coverage by making customers who made claims at Private hospital pay higher premium into the 'pool'. 

E.g. if you kana a huge claim at Private hospital of >$20,000 for a non-serious condition in a particular year, your rider annual premium will cost $1,000 instead of the original $500. Recap, you claim $20,000 (~$15,000 from main plan, ~$5,000 from rider), rider cost go up by $500. Fair right?

b) Consumer mentality - if you know you will be made to pay (higher premium in future), you are less likely to make claim unnecessarily. 

E.g. Real Life Case - MRI cost $1,000 and you don't want to pay for it. In order to claim, you get yourself warded at private hospital (cos public hospital doesn't ward/scan you for non-urgent cases). The one night stay adds up to $2,500 (~$1,000 to scan, ~$1,000 to the specialist attending to you, ~$500 to A&E and misc cost). You will think thrice about getting yourself warded knowing premium will increase instead of just pay $1,000 for the MRI yourself. Just like the case for motor insurance, for smaller and non jialat accident, you are likely to pay for damage than to claim.

c) Profit driven nature of Private healthcare - ever heard of Surgeons charging a different amount when you are and when you are not covered by insurance? It speaks for itself.

With lesser incidence of claims and let customers making claims at Private sector pay a little more, this is how Prudential is doing our part to help control Private sector demand/medical inflation. So that when you really need the Private healthcare 10-20years down the road, it is still affordable (hopefully).