20140714 CPF Board taking excessive risks to manage Medishield insurance

Town councils which had invested residents’ funds in toxic investments probably lost millions during the last financial crisis 6 years ago. Till today, my town council has refused to disclose the losses despite my repeated query.

It appears the CPF Board has not learnt any lesson from our estate managers turned part-time fund manager. The CPF Board also manages our Medishield fund.

Our healthcare insurance needs could easily be met by a number of private insurers. After all, for the coverage we get from Medishield and Medishield Life, the premiums are relatively high. Worse, there is also no transparency.

Medishield Fund managed by CPF Board (pg 57)

Should CPF Board also act as a fund manager?

When it comes to our retirement savings, the Board takes zero risk by ‘investing’ in SSGS which guarantees members the lowest pension fund returns in the world.

So why does it deem fit to take on all the risks in managing Medishield funds? What if the fund incurs losses? Will the government then give ‘funny’ excuses to increase our insurance through legislation?

Come 2019, total Medishield Life premiums will easily be about $2 billion annually with every resident on board the scheme. (average $500 per person, pre-existing conditions 30% loading, 3.8 million population including PRs)

Every road leads to the CPF

Medisave top up in 2013 $878 million (pg 24)

The PAP government has been channeling increasing amounts of money into the CPF. (see list above)

At the start of the year, it appears overly concerned and set the stage (wayang) to inject $9 billion into the Pioneer Generation Package, mostly into the Medisave (MA) or Medishield as subsidies for huge increase in premiums.

A few months later, the government announced “permanent subsidies” which will cost billion$ eventually to address the issue of high premiums. How are elderly retirees funding their thousand-dollar premiums? From their children’s MA? Or through government subsidies which is again channeling even more money into CPF?

The CPF Board is in no position to act as a fund manager and should transfer members’ risk to insurance companies such as NTUC, AIA, Prudential, etc.

With huge surpluses, our Medishield premiums could have been easily reduced. Instead, the CPF Board’s priority is to use the excess money for its training to become a fund manager?

Medishield funds increased by $106 million last year. With new premiums increasing by between 111% and 189%, expect Medishield Fund to increase by hundreds of millions annually. This is not in the interest of CPF members.

So we now know our national healthcare insurance is probably a much more profitable business than NTUC supermarkets and taxis. Looks like one can only watch how Medishield Life will shortchange citizens. It is a fact the government can suka suka increase premiums with zero transparency. Healthcare insurance is now its business.

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