I wish to respond to the statement by Michael Jeyakumar, “The MySalam scheme: Are Malaysians being short-changed?”
Before proceeding, I would like to declare two limitations of my views on the issue. Firstly, I am not in any way associated with the finance ministry or the insurer, in this case, Great Eastern Holdings. Hence I have no further information than that which is publicly available. Secondly, I am not an expert in actuarial science or insurance claims, hence my analysis will consist mostly of the simple logical deductions of a lay person, and I stand to be corrected by any expert in the field.
Jeyakumar is concerned about several “loopholes” in the terms of the scheme that may exclude many patients from being able to benefit from claims.
It was announced that members of the B40 group covered in the MySalam scheme will only be able to make claims if the critical illness diagnosis was made from Jan 1, 2019 onwards.
As MySalam is an insurance scheme, having a commencement date of coverage is entirely expected. A previously uninsured motorist, for instance, will not be able to enter into a motor insurance contract only after a car accident and expect a claim.
Jeyakumar asked whether a person who sustains a head injury in November 2019 would be able to claim the money in May 2020. It was asked: “Will the claim on his behalf in May 2020 be rejected because it occurred prior to Jan 1, 2020? (pre-existing condition?)”.
Based on my understanding, the patient will be able to claim as the incident/diagnosis occurred after Jan 1, 2019, as announced.
From the way the question was asked, it appears that there is confusion over the belief that the scheme operates on an annual renewal basis when it was never stated as such.
Many others may also ask: why does the scheme need to follow the commercial insurance practice of having a commencement date of coverage, and why not include all those diagnosed even before Jan 1, 2019?
The simple answer is this: if any patient diagnosed with any of the illnesses before Jan 1, 2019 can make claims, the RM2 billion trust fund may be depleted much too quickly. Some who suffer from critical illnesses, for example cancer or heart attacks, may recover and survive for years. For instance, the Singapore prime minister had lymphoma in the 1990s, but he is still alive and kicking.
If there is no commencement date, everyone who suffered a heart attack, cancer or stroke, even in the 1990s or earlier, would be able to claim. Some of these people may have recovered. Although having an extra RM8,000 will not hurt, this deprives those who are really in need.
The takaful trust was created with the injection of RM2 billion by Great Eastern Holdings. Each successful claimant gets RM8,000. This means that to use up the entire RM2 billion will require 250,000 claims (RM2 billion ÷ RM8,000).
The finance ministry said the scheme is expected to be initially sustainable for about five years. This means that to totally deplete the fund will require 50,000 claims per year, i.e. 50,000 new diagnoses of a critical illness in a year.
The coverage population is 3.7 million. Fifty thousand claims means 1.35% of the covered population will need to suffer from a newly diagnosed critical illness per year to completely use up the fund (50,000 ÷ 3.7 million).
Some worry that this is an overestimation, and that if the fund is not used up in five years, the leftovers will be “pocketed” by Great Eastern. After all, in typical commercial insurance, the premium paid by policyholders is kept in the “insurance fund” of the company.
In the MySalam website, though, it is clearly stated that “in the event that the takaful claims over the five-year period amount to less than the total contributions paid for the takaful, the excess will be reimbursed back to the MySalam Trust Fund”.
This mechanism effectively disincentivises the insurer from unnecessarily declining claims. Any insinuation that the design of the scheme is to deliberately limit claims to the benefit of Great Eastern is thus baseless.
The MySalam website lists critical illnesses without full definitions, which gives rise to doubt over what they are, exactly. However, the definitions of critical illnesses are standardised across the insurance industry in Malaysia. MySalam is highly likely to adopt the same definitions, thus they are no secret but are easily available.
The definitions give objective criteria of the level of severity allowed before claims are made. For example, “heart attack” is a layman term that some may mistakenly take to include unstable angina. This is less serious than actual myocardial infarction, but requires hospitalisation nonetheless.
The definitions detail the electrocardiographic or ECG and cardiac biomarkers requirements for the actual diagnosis of “heart attack”, which is perfectly consistent with what is widely recognised by the medical profession.
For bacterial meningitis (#3), encephalitis (#13), and major head trauma (#24), which are among the 36 critical illnesses listed, there is a requirement of “permanent” functional impairment resulting in the inability to perform the activities of daily living.
“Permanent” does not mean that the patient has to wait a lifetime for this to be established. According to the definitions, it means “expected to last throughout the lifetime”. It seems that the decision of permanency is left to the opinion of the medical consultant who assesses the patient. There is, however, a required “assessment period” of only 30 days before such certification can be made.
Bacterial meningitis, encephalitis and major head trauma are conditions from which patients can fully recover without any residual disability. Should these lucky ones be allowed to make claims as well? Shouldn’t claims be reserved for genuinely serious cases?
The general principle for the definition of critical illnesses is that the condition must be severe. A patient cannot rely only on the diagnosis label in making claims. After all, this is coverage for critical illnesses.
By concentrating on allowing claims for really serious cases, the insurance ensures that the neediest or their families benefit from the scheme.
If the definitions are too loose, more will get their claims, more will be happy, and the Pakatan Harapan government will score more populist political points in the short run. However, more claims will also mean that the trust fund depletes more quickly.
Say the scheme can only continue for three years instead of five as a result of allowing claims for less serious cases. There is bound to be criticism that it is poorly managed and was poorly planned from the outset. More importantly, really serious cases that could have been addressed in year four and five are deprived of the benefits of the scheme.
Having objective definitions is crucial to ensure fairness, in that only those who really meet all requirements can claim. If, instead, claims are based on vague definitions and decisions are in the hands of government officials instead of professional claim officers in the industry, there will be more chance of abuse.
The insurance industry in Malaysia has had many years of experience in the administration of insurance for critical illnesses. The MySalam scheme is wise to use an established framework to achieve its purposes. The private critical illness insurance would not have survived the ferocious competition in the market if it is as deficient as some try to depict.
There are also accusations that the MySalam scheme excludes patients with “pre-existing conditions” as it only allows claims for cases diagnosed from Jan 1 onwards. This is a confusion of the concept of “pre-existing conditions”.
When an applicant has a pre-existing condition, chances are that the insurer will reject the application. Even if the applicant is accepted, there will be no coverage of the same condition after commencement of the policy.
For example, if a cancer patient is accepted for medical insurance – which is unlikely – no claims will be allowed if he or she subsequently develops a relapse of the same cancer.
In fact, the insurance policy holder may not be able to make claims when he or she suffers from a disease related to “pre-existing conditions”. Say, for instance, that a policy holder has the “pre-existing condition” of diabetes mellitus. He subsequently goes blind due to complications. The insurance company can reject his claim.
Judging from the available information, MySalam does not exclude patients with “pre-existing conditions”, unlike commercial insurers who are often accused of cherry-picking clients. Even those with pre-existing heart disease (not severe enough for claims) can enter the scheme, although they have a much higher chance of developing a full-blown heart attack soon and making a claim.
Besides, there is no clause forbidding participants of the scheme who had a critical illness before from making claims if he or she subsequently develops the same illness for a second time after the commencement date of MySalam.
One also needs to understand that the MySalam scheme merely provides additional financial assistance for the B40 who suffer from critical illnesses. The recipients still enjoy free, or nearly free, public medical services.
To discuss the scheme as if it will completely replace the current public medical service will inevitably end with the conclusion that it is insufficient for the purpose. But that would be totally out of context.
Crucially, the scheme is not funded through public money or ministry allocations, either. Its funds are wholly injected by Great Eastern Holdings. So while it is limited and targeted only at members of the B40 with really serious critical illnesses, it is still a good scheme as it can help many.
Dr Yew Lim is a general practitioner in Kuala Lumpur.
The views expressed are those of the author and do not necessarily reflect those of FMT.