Cutting Healthcare Costs Without Cutting Corners (Part 2)-Take Out A Health Insurance

At today's healthcare inflationary rates of 12-13%, a smile can turn into a frown if you are not insured

In these recessionary and inflationary times, there are strategies that can be taken to minimise expenditure   related to health without compromising on accessibility and efficacy.

Its a fact…none of us want to get sick or injured. Its also a fact that getting hospitalised can happen to anyone in unexpected ways and the doctrine that it “can only happen to the other person” isn’t often the case. And if you’re uninsured, its a double-whammy once the hospital bill is presented.

If you haven’t yet taken out an adequate health insurance, this is the time. In the US alone, 15% of the population (45 million people!) aren’t covered by insurance or third-party payors(1) This means they have to pay out-of-pocket if they require medical care. In many countries, unless there is some form of social insurance, a significant number of people will be left uninsured. In Malaysia, it is estimated that one-third of those who use private healthcare facilities have to pay out-of-pocket.

Recession or no, the inflationary rate for healthcare will relentlessly increase by 8-12% every year and, in the US, is matched by a corresponding increase  as far as health-plan rates are concerned. The time to take out a policy  is NOW!.

There are some points to note when considering a health insurance plan:

  1. Just because you are covered by a group insurance plan taken out by your employers does not mean you will be covered once you retire or leave the company. What then?
  2. Is the current plan adequate to meet your needs? Make sure you have the right plan. Just in case you didn’t know, a life insurance plan does not include hospitalisation expenses.
  3. Does the plan include office visits (aka outpatient visits) as well? Many plans specify only reimbursement for hospitalisation only.
  4. Study in detail copayments( the percentage of the total hospital bill that you have to pay in excess of your benefits) , coinsurance (the fixed percentage of the  hospital bill you have to pay) and excess clauses (the amount you have to pay before the insurance kicks in).
  5. Know about cooling-off periods. No claims will be entertained if you develop an illness within a specified period of taking the policy.

Its not that the payor or insurance company is always taking you for a ride but, hey , they’re in the business to make money and that’s why they will reject those clients who are at high risk, usually those with a bad medical history. Such private insurance companies adopt the risk-rated model.

In order to provide universal health coverage, countries, including the USA, are striving for a community-rated model where there is 100% coverage for the people. Read here.

If you need to know more about taking a health-plan,  go here if you are in Malaysia; otherwise go here.


8 responses

  1. The dilemma in the USA is, as you highlighted, the 45 million people who are not insured. The suggestion is to have a single-payer public-funded community-rated insurance which provides universal healthcare access.
    This is easier said than done as many countries have tried this but became bogged by various causes.
    Massachusetts state have come up with an experimental medical savings plan(similar to Singapore) but this is still in its infancy.
    Nevertheless, universal healthcare access will certainly be one of the hot topics by both presidential candidates in the US the next few months.

    Doctor2008 says: Yes, it will be interesting to see what Obama and McCain will put on the table, especially after Hilary Clinton’s health reforms fell by the wayside when her husband was President. Other countries will be watching closely too.

  2. After suffering a heart attack, many insurance companies have declined to take me on. What should I do?

    Doctor2008 says: Private for-profit insurance companies are what they are..existing for profit. So most will not take you on as you are considered a high risk( of getting another cardiac event).
    However, if you shop around, there are a few who may take you a cost, because you will have to pay a higher premium.

  3. You are right!!! I’m in the insurance business. Many Malaysians are not fully covered, and the awareness is not that high. I did claims for my client and the bills has increased from the day I started the business. Your article is very impressive and i would like to share with as many people as I could ,especially for those who love to spend their salary at shopping malls rather than buying health insurance.

    Doctor2008 says: I share your sentiment. It will take one untoward health event to set a family back financially, not to mention the emotional component.

  4. I would like to know if even though there are plenty of government programs out there,yet there are still millions of people without health insurance is it society’s responsibility to provide healthcare service to all?

    Doctor2008 says: I guess you’re referring to the USA. Its sad that the US government never started off with a purpose-built comprehensive health plan ever since independence.
    What we have today is a hotch-potch of government-initiated programs (Medicare,Mediaid) mixed with privately-run for-profit insurance plans. That’s why there are 46 million Americans who are still uninsured.
    If you believe in human rights and that health is one of them (as the US government claims it does), then healthcare is society’s responsibility. But there are problems…see my post on “Health – a basic human right?” at

  5. […] course, the best method is prevention. The next? Getting a good healthcare insurance cover (click here to know […]

  6. health insurance should only be taken from reputable companies, you really don’t want to get it from fly-by-night companies -,,

  7. Hi Doc. I know the importance of health insurance and have been trying to get some more. Prudential led me on a song and dance routine which only resulted in rejection and a permanent tag as one who’d been rejected before. This usually means that other insurance companies will prick up and erect barriers right at the first interview. At my age, 64 Prudential will cover me but only if I pay a premium which is 150% more than the regular premium for the policy. Needless to say this is an amount which is unaffordable. So what is the recourse for people like me?

    Doctor2008 says: There are quite a few in the same boat as yours. Its a problem with risk-rated insurance, that’s why some governments prefer community-rated insurance, which means everybody is insured with the govt. subsidising people like you in terms of the extra premium. So far, its all talk because I fear, not many govts can afford this..
    Btw, I like that part in your comment above…”prick up and erect”…intentional? 🙂

  8. Doc, hope you don’t mind if I comment on this post as I am a Johnny come lately as far as your blog is concerned!
    Obama, has recently passed a bill that overcame most of the obstructiveness of the insurance companies.
    Like not insuring those with existing diseases, age limitations and such.
    Resulting in almost 95% of Americans now having health insurance.
    He is one President who means what he says and says what he means!!
    Quite a rarity nowadays.
    I still think that health insurance should be in the realm of the government.
    Financing can be partially borne by the whole working population contributing to a central government fund and the rest by a government budget.
    It’s some kind of cross subsidisation with the fund available to the unemployed, retirees and such.
    I think that our country is well equipped to undertake such a scheme.
    Perhaps the National Health Insurance Scheme (still in the works!) is part of it?
    Thank you.
    Doctor2008: I agree with you. However, the path is fraught with obstacles and potholes. Even Obama has to admit some defeat as he now has to backtrack on his reform proposals.

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