20140615 Medishield Life – huge premium increase will be an issue

I refer to “Granting of MediShield Life premium subsidies will be “hassle-free”: Amy Khor”.

There is only one conclusion from the article – the PAP intends to price another necessity out of reach for the masses. With huge premium increase, not unlike unaffordable public housing, the government is then able to play the good guy role ie provide kueh lapis assistance to citizens.

It would have been easier if the PAP simply allocate part of the budget to lower the unit price of the MediShield Life (ML) premiums. By making it affordable for lower income/ordinary Singaporeans, there would be little need for subsidies.

It is generally understood that whenever the PAP says it will help citizens, it is as effective as citizens helping ourselves. Citizens are actually made to cross subsidise the lower income group, a responsibility which the government has abdicated.

Two thirds of Singaporean households from the low and middle income groups will receive premium subsidies” tells us a lot about the upside-down nature of PAP’s planning. What is the motive of pricing it so high that most would require a subsidy?
According to CPF Annual Report 2011 (Annex J), there were almost half a million CPF members earning $1500 and below. Bear in mind we are not talking about two thousand households or twenty thousand but two thirds of Singaporean households from low and middle income groups.

Annex J, CPF Annual Report 2011

SMOS for Health Amy Khor contradicts herself by saying that “we are committed to making sure that the premiums are affordable”. Question – how could premiums be affordable when hundreds of thousands of citizens require subsidies?

SMOS for Health Amy Khor Lean Suan

Photo credit: Channel News Asia

Amy also says that “those who still cannot afford to pay for premiums even with the subsidies will also get more financial help”. She doesn’t seem to realise that citizens do have dignity. The government should not increase the price of a necessity to the extent that ‘too many’ citizens have to go down on their knees for assistance. I find this practice disgusting.

A day earlier, Health Minister Gan Kim Yong assured Singaporeans that the 1% increase in the employer Medisave contribution next year and government subsidies, will be sufficient to cover the rise in premiums. (notice the government claimed the restoration of CPF would impact businesses but when the it wants to increase healthcare premiums across the board, increased business cost becomes a non issue)

What Gan has not said is a cause for concern for Singaporeans. When the Medishield Life figures are confirmed, Singaporeans will be in for a rude shock.

1 If Medishield Life is truly affordable, why the need for more than a million citizens to be given subsidies? This is similar to public housing which is so unaffordable that housing grants are needed by even the middle income.

2 Gan says that for “the middle- to lower-income Singaporean families, there will be a permanent subsidy structure to ensure that they …afford the premium for the family. This again proves the government is ‘helping’ only because after it has overcharged on the premium.

3 Gan uses the example of Mr Muthu, a project manager who earns $5,000 a month to highlight how good the ML deal will be. According to 2011* CPF statistics on wages (Annex J, table above), there were 1.363 MILLION CPF members who earned below $5000. Taking salary increments of the last 2 years into account, not all the 65,000 in the $4,500 to $4,999 income bracket will be earning above $5,000 today.

The reason for Gan to use the above example is to show the increment of 1% in employer Medisave ($50) next year will be able to offset the increase in the initial years of ML. It is disingenuous of Gan to use the Mr Muthu example because at least 1.3 million CPF members do not earn $5,000.

4 When the minister acts like an insurance salesman, promising heaven when details have yet to be worked out, one should be sceptical.

5 The Medishield Life committee members are all high income earners. What is unaffordable to ordinary Singaporeans is pocket change to them. They simply do not understand the appropriate pricing of a necessity. There is also a conflict of interest with committee members such as Dr Tan, CEO of Parkway Pantai Ltd and Dr Lee Chien Earn, CEO CGH.

In short, Minister Gan should not jump the gun and assure Singaporeans that ML premiums will be affordable**. It would have been more appropriate for Gan to use the example of a lower wage earner. Gan’s example confirms the government intends to price ML premiums on the high side.

Conclusion

While it is the responsibility of able bodied citizens to provide for our healthcare needs, the government is solely responsible for every needy and vulnerable citizen who require the state’s help. Able bodied citizens should not be made to cross subsidise. (recall the recent public transport fare hike)

By not using the example of an average income worker, the government will likely price the increased premiums out of reach for the masses. The huge increase in premiums will be another PAP-created issue.

* CPF has ceased publishing similar statistics in subsequent years.
** Perhaps the government has noticed this pot of gold, $66 billion in CPF members’ Medisave, to pay for increased premiums.

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3 Responses to 20140615 Medishield Life – huge premium increase will be an issue

  1. option? says:

    Well said. It is very common sense.

  2. Johnson says:

    just redirect 30% from our defence budget to meet the medical needs of the people. Reduce NS to 1 year. The savings from these two cuts will go a long way to help needy Sporeans.

  3. Pingback: Anonymous

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