By Leong Sze Hian

I refer to the article “Premiums for MediShield Life to be kept affordable” (Straits Times, Aug 20).

“The impact of higher MediShield premiums will be studied carefully to ensure that every Singaporean can afford them,” said Health Minister Gan Kim Yong.


Dr Ang Yong Guan’s poster on Reserves and Medishield

After I read the above, I read Dr Ang Yong Guan’s Facebook poster which he posted on my timeline, it asks:

“How much reserves do we really have? Knowing allows us to see how much can be set aside for Medishield.”

It got me thinking – instead of debating how to tweak and change Medishield, why not try to think out of the box and look at how we finance Medishield from the perspective of a comparative analysis with other countries’ national insurance schemes?

(Note: I am a layman with little knowledge, education, training or experience in healthcare.)

According to the Department of Statistics’ Monthly Digest of Statistics July 2013, the amount of CPF contributions in 2012 was $26.1 billion and the total amount due to members was $230.2 billion.

Since as much as 9 per cent of CPF contributions go to the Medisave account, how much of the $26.1 billion in 2012 and the total due amount of $230.2 billion were to Medisave? Based on my estimate, the Medisave contributions a year should be more than $7 billion.

Why is this statistic so important in the analysis of Medishield financing?

Because in most countries, their citizens would pay an annual national insurance premium for their healthcare.

Therefore if we include the cash out-of-pocket expenses that Singaporeans pay for healthcare in a year, in a sense, the total that we all pay for healthcare (like the national insurance premiums in other countries) may be more than $12 billion ($7 billion Medisave contributions and $5 billion cash out-of-pocket – I don’t know what the exact numbers are and I’m just throwing out some numbers for illustrative purposes).

In this regard, the ratio of public to private share of total healthcare financing is about one-third to two-thirds. Singapore’s healthcare public spending as a percentage of  GDP at about 1.6 per cent in the last reported fiscal year makes it one of the lowest spending in the world.

So, on a per capita and percentage basis, are Singaporeans paying the highest “national insurance premiums” in the world?

When they say our total healthcare spending is only 4 per cent of GDP, it may arguably not be a very accurate or appropriate portrayal of our healthcare financing model, particularly from the perspective and context of the citizens’ cash flows, because Medisave contributions are not included.

And what is the accumulated surplus of Medishield premiums collected less claims? Is it still about $850 million as last reported in Parliament? Does this amount include the interest on the surplus all these years? If not, where has the interest gone to?

If the annual interest is included, would Medishield still be in operating deficit annually. In this regard, since the Medishield operating deficit statistics were for periods before the increase in Medishield premiums and deductibles from 1 March this year, is the current annual operating deficit still expected to be in deficit in the future?

Many complications arise from the above question, such as when Medishield-Plus was transferred to a private insurer many years ago, was the then Medishield-Plus surplus transferred to the private insurer? If not, what happened to it? Was it transferred to the basic Medishield fund?

Since about $86 million of Medifund surpluses have been transferred to the protected Reserves, why were these surpluses not transferred to Medishield? If these were transferred to Medishield, how much would it add to the accumulated Medishield surplus now, including the annual interest over the years?

After reading the above, and if we get all the answers and statistics that proves there is no deficit for running the Medishield scheme – will you still think that Medishield premiums need to be raised?

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