I refer to the article “Singapore Budget 2014: Gan spells out how Medishield Life premiums to stay affordable” (Straits Times, Mar 12).
Same or lower premiums after taking into account permanent subsidies and Medisave contributions and top-ups?
It states that “The premiums that lower- and middle-income households will have to pay for the new Medishield Life insurance that kicks in next year, will be the same or lower than what they now pay.
That is after taking into account the Government’s permanent subsidies and Medisave contributions and top-ups.
Health Minister Gan Kim Yong gave this assurance on Wednesday, as he shed light on the approach the Government intends to take to keep premium increases affordable.
Transitional subsidy is temporary only?
He said the Government intends to bear most of the initial cost of universal coverage, with permanent subsidies to be introduced for lower to middle income groups and an additional transitional subsidy for all, regardless of income, to tide over the shift to MediShield Life.”
No direct funding into MediShield Life?
So, what does the above mean?
- That the initial additional costs of MediShield Life including universal coverage will not be direct funding into the MediShield life scheme, but in a sense, indirectly through permanent and additional transitional subsidies, Medisave contributions and top-ups?
Permanent subsidies?
What are permanent subsidies?
- Like the 80 per cent subsidy on Class C hospitalisation?
Transitional subsidies?
What are additional transitional subsidies?
- Additional subsidies on top of the permanent subsidies, but only for a transitional period?
Increase in Medisave contribution rate?
What are Medisave contributions?
- Like the 1 per cent increase in Medisave contributions?
Medisave top-ups?
What are Medisave top-ups?
- The occasional top-ups to the Medisave accounts of older Singaporeans?
Increasing costs and Medisave contributions may offset the increase in subsidies and top-ups?
In summary, does it mean that there will be no direct funding into MediShield Life, but continuing permanent subsidies and additional transitional subsidies which may be offset by ever increasing healthcare costs, the increase in Medisave contributions which is our own money, and Medisave top-ups which may be consumed by just a single hospitalisation.
Singaporeans have to foot the bill?
In other words, the increase in MediShield Life premiums may still have to be paid by Singaporeans, at the end of the day.
Medisave contributions will be enough to pay?
The following remarks may confirm the above – “He also said a typical Singaporean household, comprising a working-age couple with two school-going children, will take up no more than half of their annual Medisave inflow to pay for their MediShield Life premiums.
Cannot afford to pay increased premiums – apply to Medifund?
Additional financial help, such as through Medifund, will be given to the very needy who cannot pay premiums even after subsidies and Medisave top-ups, said Mr Gan.
No increase in premiums after accounting for subsidies and top-ups?
There will be no net increase in premiums for older Singaporeans aged 55 to 64 who are currently on MediShield and earning up to median income, after government subsidies and Medisave top-ups are included.
The pioneer generation – those aged 65 and above this year and who became citizens before 1987 – will get extra help with their MediShield Life premiums. The Government will give a special subsidy starting from 40 per cent at 65 and rising to 60 per cent at 90, while pioneers aged 80 and above this year will have their premiums fully covered.
“Our intent is that no Singaporean will drop out of MediShield Life because of their inability to pay for premiums,” he said. But those who have the means should still pay their own share so government support will go to those who most need help, he added.
Direct funding into MediShiled Life for pioneer generation only?
Even so, the Government will give additional transitional premium subsidies for all Singaporeans, regardless of income, said Mr Gan.”
- It appears that the only direct funding into the MediShield Life scheme would be for the pioneer generation. What if the special subsidy starting from 40 per cent is gradually offset by rising premiums and healthcare costs in the future?
How much will this direct funding for the pioneer generation cost the Government in a year, relative to the increase in premiums, healthcare costs and Medisave contributions in the future? ?
Singaporeans have to shoulder the burden?
The following remarks may also confirm that it is Singaporeans who may have to shoulder practically the entire burden of paying for MediShield Life:-
“While the MediShield Life review is still ongoing, Mr Gan said he was glad that many Singaporeans support the shift to provide lifelong coverage and better benefits under the new scheme. “MediShield Life is as much about giving all Singaporeans greater peace of mind, as it is about us forging a new social compact – with everyone chipping in to better protect one another from having to face life’s uncertainties alone.”
In the final analysis, does it mean that from a cashflow perspective – the Government may continue to not spend a single on MediShield Life or healthcare?
Leong Sze Hian
*Leong is the Past President of the Society of Financial Service Professionals, an alumnus of Harvard University, has authored 4 books, quoted over 1500 times in the media , has been host of a money radio show, a daily newspaper column, Wharton Fellow, SEACeM Fellow, columnist for Malaysiakini, executive producer of the movie Ilo Ilo (24 international awards). He has served as Honorary Consul of Jamaica and founding advisor to the Financial Planning Associations of Brunei and Indonesia. He has 3 Masters, 2 Bachelors and 13 professional qualifications.