~By: Tan Kin Lian~
In part I, Tan Kin Lian explored about the inadequancy of insurance to meet our healthcare needs and listed several reasons for it [here]. In part II, he will explore the alternatives to health insurance.
What is the alternative for a person who is not able to get insurance for health insurance or prefers to be self-insured?
Below are possible approaches:
- Set aside adequate savings to cover your medical expenses. If you do not pay the insurance premiums and invest them to earn interest at (say) 4% per annum, the savings can accumulate to a tidy sum that will be adequate to cover your expected cost of treatment during your lifetime.
- Look for cost effective treatment when you need it. You can get the advice of your personal doctor (i.e. the general practitioner that you see regularly). Your doctor knows your personal condition and can be trusted to give you the best advice that is most beneficial to you.
- You will find that the treatment in a subsidised ward of a public hospital to be the most cost effective. As the charges are closely monitored by the government, the incidence of over-treatment or over-billing is lesser. Furthermore, the actual bill that you pay will be lower, after allowing for the subsidy from the government.
- The doctor or specialist assigned to the subsidised ward will be able to treat most medical conditions. If your illness has reached a serious stage and cannot be treated in a subsidised ward, it is likely that a private specialist will not be able to treat it as well. They may be exceptions, but they are likely to be few.
- If you wish to be treated by a private specialist, you can use the benchmark price of the subsidised ward to make your decision. You can negotiate the bill and avoid the shock of getting an unexpectedly large bill.
- You have to accept the fact that some medical conditions cannot be treated. Do not waste money on these unnecessary and costly treatments (unless you are so wealthy that the money does not matter to you).
Insuring at a young age
Some insurance agents or journalists advice you to buy health insurance when you are still young and healthy, as you will not be able to get insurance when you are older. It is all right to take this advice, provided that the health insurance premium is low.
However, the premium will increase according to your age, and there will come a time when it does not make sense for you to be paying a premium that is several times more than the average cost of health care.
By that time, it may be more sensible for you to be self-insured. This will be appropriate, if you have accumulated sufficient savings that can take care of the medical bills. If the cost of treatment is very expensive for a serious medical condition, you still have the choice of entering a subsidised ward.
Some insurance agents may exaggerate the cost of medical bills, to frighten you into buying an expensive health insurance policy. They earn a commission that is based on the premium, so they have the incentive to get you to pay as much as possible.
A healthy lifestyle
Do not overlook the importance of adopting a healthy lifestyle – exercise, correct diet and avoid the bad habits of smoking, excessive drinking or stress.
This may be the most important strategy to reduce your health care cost. Spend time to learn about healthy lifestyle and put the tips into practice.
Accept the inevitable
There will come a time when you have to depart from this world. Be ready, when the time comes. Accept the inevitable. There are better ways to spend the last day than under intensive care in a hospital.
This advice also applies to your approach towards your parents. They may prefer not to be treated – accept their views.