NTUC Income's reply underscores a flawed system of risk pooling and cross subsidies ("Rising cost of Integrated Shield Plans: Income replies"; last Saturday).

With car insurance, motorists are rewarded with no-claim bonuses for staying accident free.

However, health insurance premiums go up regardless of whether one leads a self-indulgent, unhealthy lifestyle or not.

This is because those who are fit and do not make any claims are subsidising those who are unfit and make claims.

The high loading in the high-risk group makes it costly for low-risk people to get insured.

Integrated Shield Plan (IP) insurers should consider data mining and monitoring the most at-risk policyholders.

For example, the insured who have manageable diseases such as diabetes could be offered free monthly check-ups.

If they are found to be not sticking to their doctor's advice, their premiums go up.

This will induce more people to look after themselves better, causing risk pools to become smaller.

However, individuals should not be made to assume all the pooling risks associated with their healthcare needs.

The Health Ministry and IP insurers should review risk pooling and how it can be practically implemented for low and middle-income earners when risk pools shrink.

Attention should also be paid to ways to lower administrative costs in general.

Francis Cheng