Holes in medical coverage
By JOSEPH LOH
Sunday Star, September 12, 2010
When buying medical insurance, make sure to study the terms and conditions properly to avoid being short-changed at the critical moment.
WHEN R. Samy* found his wife unconscious on the bedroom floor, he feared the worst for her. Fortunately – or so he thought – she had a medical insurance policy so they did not have to worry about paying the hospital bills.
He took her to a panel hospital under the insurance company and she was admitted. The following day, while still fretting over his wife’s well-being, Samy received a rude shock: her insurer had declined to issue a guarantee letter for her treatment. The reason – there were pre-existing conditions that she did not state when purchasing the policy.
According to Samy, these ranged from her having a sinus problem and a heart condition. He says she does not suffer from such conditions and has doctors’ reports to prove it.
Another reason stated was that she had a history of dysfunctional uterine bleeding. It was merely a consult done with the family doctor four years ago during her menopause, Samy maintains.
He was asked to settle the hospital bill upon her discharge and would be reimbursed by the insurers later. He was unable to pay the bill, however, and it remains unsettled till now. He has received a lawyer’s letter from the hospital demanding payment.
“When they sold the policy, they promised the moon and the sky and said everything would be taken care of. It was not cheap – about RM2,400 annually,” Samy says, adding that the terms and conditions were not clearly outlined to him before the policy was signed.
“The policy is 30 to 40 pages long. With all its legal terms, it may as well be written in a foreign language. How do you expect a layman to understand it?”
He feels aggrieved because the company has yet to clearly state the grounds for its denial to issue a guarantee letter. He also believes it is on a witch-hunt to find reasons to avoid paying the claim.
“I have even gone to Bank Negara but nothing has come of it. I now have no choice but to take legal action against the company.”
Samy’s tale is but one “horror story” involving medical insurance claims (see accompanying story for two more examples).
His expectations are legitimate as he paid good money to ensure he would be covered in a medical emergency. But for reasons that he could not comprehend, that was denied.
It is not far-fetched to say that all medical policy holders have a similar expectation.
But Federation of Malaysian Consumers Associations (Fomca) secretary-general Muhammad Sha’ani Abdullah is sceptical about medical insurance’s effectiveness as a comprehensive solution for the healthcare needs of the people.
“Insurance companies are commercial entities whose objective is to minimise exposure and maximise profits,” says Sha’ani, who is also the National Consumer Complaints Centre (NCCC) chief executive.
He believes that in order to reduce risk, medical insurance caters to healthy people and avoids the “risky” population.
He says he has heard many complaints from consumers who find out that cover is restricted, or will not be provided, when they are seeking treatment.
“Fomca does not recommend it as a fool-proof measure. People assume that medical insurance will take care of any eventuality so they keep on paying. Then, when they need protection, they find it is not adequate.”
Sha’ani believes policies are being sold without ensuring the customer fully understands the terms and conditions.
Citing policies that do not require a prior medical check-up, he says: “Some don’t say that you must disclose existing health problems – they just fill up the form and take payment. Only when the claim is submitted will they investigate for pre-existing medical conditions. And this is after regularly paying premiums for a year.”
The onus is on the company to ensure the customer does not buy a product without proper protection, he stresses.
Malaysian Medical Association (MMA) president Dr David K. L. Quek acknowledges that disputes do happen in medical insurance claims.
But, he says, it is important for the customer to know what he is buying and be aware that not everything will be covered.
He gives the example where someone goes to a hospital because he feels unwell. Unknown to him, the condition is not life-threatening but he insists on getting a full medical check-up.
“Health insurance is not a blank cheque for you to be checked from head to toe. All this costs extra money and it is not fair to you or the insurers,” he says.
“The whole idea of insurance is to share out the risk. So you get treatment when you need it, not when you demand it.”
He points out that generally you get what you pay for.
“You cannot buy insurance for a few hundred ringgit and expect to get the best care.”
When two commercial entities (private hospitals and insurance companies) come head to head, there are bound to be points of contention. Unfortunately, it is the patient who is caught in the middle. Problems can arise because insurance companies insist on discounts, which some private hospitals are not willing to give.
Medical insurance is essentially a contract between the insured and the insurer with all the terms and conditions stated in black and white in the policy document. By signing the document, the customer agrees to the terms and conditions and is bound to them to the letter.
“Customers must be wary when they buy medical insurance. They have to investigate and shop around. They should never assume it will cover everything and must check the coverage provided,” advises Sha’ani.
Heng Zee Wang, Prudential Assurance Malaysia Bhd chief product and marketing officer, says customers should be aware that what they are purchasing will suit their needs.
“What insurance to buy depends on your financial capability. Lower level plans come with lower coverage so look at what you want to cover and what you can afford,” he says.
And as with any contract, both parties should be well aware of the terms and conditions they are agreeing to.
Heng points out that insurance policies typically have a list of exclusions where the insured cannot make claims. Examples of these are injuries caused by natural disasters, riots, under the influence of illegal substances, and even radioactive contamination. Even some conditions, such as AIDS, and communicable diseases requiring quarantine, like SARS, are excluded.
Apart from the exclusions, each insurance company will also have its own terms and conditions, and it is crucial that the customer clearly understands what they are.
There are some typical ones that must be properly communicated to or understood by the customer. He may feel cheated if denied a claim because of these.
These include disclosure of pre-existing conditions (where it is the customer’s responsibility to inform the insurer of any previous medical condition); co-insurance (where the customer pays a portion of the hospital bill); investigative admission (going for a medical check-up, which is not covered); as well as annual and lifetime limits (amount that can be claimed within one year, and over the entire course of the policy).
Whose responsibility is it to ensure the nitty-gritty details of each policy are fully communicated to the customer?
Heng says both parties bear a part of it. “We train our agents to explain as much as possible but it is also important for the customer himself to ensure he is aware of and fully understands the terms and conditions. There are many important points, and customers should be proactive and ask as many questions as necessary before signing.”
Heng assures that his company goes through a rigid process of recruiting agents and have high training requirements.
“From the company’s point of view, we do everything to ensure agents advise and sell policies properly to customers. If we find out that certain agents do not, we will take action.”
Heng also advises policy holders to contact their insurers at the first possible instance before seeking treatment. This is to ensure that they are aware of the proper procedure and cover provided and avoid being saddled with costs that they have to bear themselves.
Healthcare for all
As it stands, Malaysians have two avenues to obtain potentially expensive medical treatment which they will not be able to afford on their own. The first is from public hospitals, and the second is with medical insurance.
Sha’ani says public hospitals typically have a long waiting list and treatment may not reach the sick in time. As he believes that medical insurance is inadequate, then it is the Government which should come up with a solution.
“Everybody has the right to proper healthcare. If insurance cannot give proper cover, then the state should provide it.
“In the first place, healthcare should not be commercialised – it is the state’s responsibility,” he stresses.
Referring to the proposed National Health Financing Scheme, which has been bandied about for some time but has not yet materialised, as a potential solution, he says: “We can follow the Socso model; everyone contributes and that scheme will protect everyone.”
Dr Quek says recent reforms such as that introduced in the United States would be welcome, as well as schemes such as Medicare and Medicaid, which provide for the older generation and low-income groups respectively.
“Right now, the Government spends about 2% of the nation’s GDP on healthcare, which is about RM13bil. If they can allocate more, to about RM30bil, then a lot more ground can be covered.”
He says a healthcare model based on Socso or EPF can work, but everybody has to pay for it, including public servants.
“The private sector should not have to bear all the costs. If public servants do not pay, then the Government should pay on their behalf,” says Dr Quek.
*Real names withheld to protect identity