Currently, basic MediShield plan covers 92 per cent of residents in Singapore. 60% residents have upgraded to Medisave Approved Integrated Shield Plans, which provide higher coverage such as private hospitals.


Fierce competitions have forced these plans “enhancing” nearly every year. However, these seemingly good initiatives make me worry about the sustainability of these integrated shield plans, which our national health care systems were built upon.

You can’t change your health insurance as often as you wish

In a recent Straits Times article titled “Curb rising cost of health insurance, allow switch”. The author suggested “MOH should allow policyholders to switch between plans with no penalty.”

“At a quick glance, with more than 20 integrated plans to choose from, the Integrated Shield market appears to be highly competitive. But health insurance is very different from, say, car insurance, where drivers can switch companies to get the lowest premium rates.”

It becomes almost impossible for someone older to switch plans without incurring hefty penalties. That’s because by the age of 40, 12 per cent of people here have diabetes, 17 per cent have high blood pressure and 18 per cent have high cholesterol levels.

Any private insurer will reject those already deemed unhealthy, or cover them but exclude those conditions.

So the trouble is that the plan you picked in your 20s may have premiums that you find too high in your 50s, but you’re stuck with it.

Nothing you can do with increasing premiums

If you refer to the table below, the premium increases for B1 integrated shield plans for people are as high as 50% to 100%!


However, it is also unfair to just criticize private insurers. Since 2005, all medisave-approved private shield plans have been integrated with basic MediShield to form a single integrated plan. That means the part of the premium you paid to your private insurer goes to basic Medishield plan.

With several rounds of revamps of the basic Medishield plan in March 2013 and in 2008, the premium of basic Medishield skyrocketed, forcing private insurers to raise their premium too. At the same time, private integrated shield plans collected less premium and the profit margins have been squeezed.

I seriously doubt the sustainability of the current system. The so called “enhancement” in recent years may have in fact increased the real risk of the current health care system in Singapore.

I think what the article has proposed, to allow policyholder to switch between insurers without penalty, is a good idea. But if at the end of the day, there is no profit for the private insurers, they may just call it a day or become insolvent and leave the insured without any insurance at all.

Without collecting enough premiums, these “enhancements” are just empty promises. Without a peace of mind in health insurance, Singaporeans will face even greater risks towards retirement.

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About the Author

Ivan Guan is the author of the popular book "FIRE Your Retirement". He is an independent financial adviser with more than a decade of knowledge and experience in providing financial advisory services to both individuals and businesses. He specializes in investment planning and portfolio management for early retirement. His blog provides practical financial tips, strategies and resources to help people achieve financial freedom. Follow his Telegram Channel to join the FIRE community.
The views and opinions expressed in this article are those of the author. This does not reflect the official position of any agency, organization, employer or company. Refer to full disclaimers here.

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