Govt should take on more risk on behalf of citizens

The PAP MP’s argument that it is okay for the Government to “save more” (by collecting more premiums than necessary) but disastrous for it to pay out more, proved the central point in my speech: That the Government is reluctant to take on more risks on behalf of Singaporeans.

During the debate in Parliament on 27 May 2014 on the President’s address, I made a speech in which I criticised the Government for not taking on sufficient risks on behalf of the people, but had instead passed many risks to them. I cited the increasing of the CPF Minimum Sum, the raising of the CPF drawdown age, and the high capital adequacy ratio of the MediShield insurance scheme as examples.

PAP MP Janil Puthucheary took issue with my remark that MediShield was “collecting a lot more in premiums than it is paying out in claims”. He suggested — without mentioning me by name — that this was an example of “intellectual dishonesty” and “sound-bite politics”, paraphrasing what I said as, “Medical insurance premiums are higher than the pay-outs”.

He left out my phrase “a lot more”, which gave the impression that I thought MediShield should be making a loss by collecting less in premiums than it pays out in claims. I immediately clarified that “I never said or suggested that health insurance pay-outs should be more than the premiums collected. But for a social health insurance scheme which is what MediShield Life should be, the premiums collected do not need to be so much more.”

In any case, these are not simply sound-bites, but facts. Between 2001 and 2013, based on CPF Board Annual Reports, MediShield collected $3.704 billion in premiums but paid out $2.190 billion in claims — a difference of $1.514 billion. I leave it to Singaporeans to assess whether or not they consider $1.5 billion to be “a lot more” in premiums than pay-outs.

Dr Puthucheary also questioned the validity of my comparison between MediShield and Obamacare, the US Affordable Care Act, which requires all Americans to buy health insurance and mandates commercial insurers to take on more risks on behalf of their policyholders. He said that “we are talking about a public social insurance and he is comparing it with a private, for-profit environment in the United States”.

In fact, Obamacare served to illustrate my point that even profit-oriented health insurers in the US are required to take on more risks on behalf of their policyholders than our MediShield, which is a social health insurance scheme. I pointed out that Obamacare mandates a loss ratio of at least 80-85%, and that insurers who do not meet this minimum must now issue rebates to policyholders. (Loss ratio = [claims paid-out] / [premiums collected] x 100%. The higher the loss ratio, the more risk on the insurer.)

MediShield’s loss ratio between 2001 and 2012 had been, on average over this period, 63% (59% if year 2013 is included). It dropped from 75% in 2012 to to a historical low of 43% in 2013. The latter figure was revealed in the latest CPF Annual Report released on 6 June (after the Parliament sitting). It is likely due to the higher premiums collected as a result of the premium hike last year.

On his last point, about what if the “supposition that we could increase pay-outs is wrong”. He cited a “worst case scenario is that our public healthcare financing becomes insolvent and we are unable to support the healthcare needs of a generation possibly.”

Increasing the loss ratio to 80-85% is not going to make public healthcare financing “insolvent”. That is clearly a hyperbole (an accusation he made about me). But more importantly, wouldn’t it be better for a government to take on more risks, so as to prevent individual citizens from suffering financial ruin due to high healthcare costs?

The PAP MP’s argument that it is okay for the Government to “save more” (by collecting more premiums than necessary) but disastrous for it to pay out more, proved the central point in my speech: That the Government is reluctant to take on more risks on behalf of Singaporeans.

The MediShield Life Review Committee is expected to submit its full report to the Government this week. I hope the Committee can prove me wrong, and that the Government will show that it is willing to take on significantly more risks on behalf of its citizens. If not, this will certainly not the last time I will be raising this issue.

This is the transcript of the full exchange in Parliament:

——————————-

Mdm Speaker: Mr Gerald Giam.

Mr Gerald Giam Yean Song: Thank you, Madam, I just want to clarify a point that Dr Janil said in his speech earlier on. I never said or suggested that health insurance pay-outs should be more than the premiums collected. But for a social health insurance scheme which is what MediShield Life should be, the premiums collected do not need to be so much more.

As a point of comparison, the US Affordable Care Act, the new ObamaCare, mandates that a minimum loss ratio of between 80% and 85%. Ours is, on average, 63% over the last 11 years, and it was 75% in 2012. So, the US Affordable Care Act mandates that the minimum loss ratio should be between 80% and 85% and that insurers who do not spend 80-85% of their premiums in healthcare costs must now issue rebates to consumers. And these are all commercial insurers. These are not social health insurers.

Mdm Speaker: Dr Puthucheary.

Dr Janil Puthucheary: Thank you, Madam. Mr Giam brings up some very good points. And if I could take them in reverse order. Firstly, we are talking about a public social insurance and he is comparing it with a private, for-profit environment in the United States. So I do not think his comparison is valid.

Secondly, I am loath to use the United States as the be-all and end-all for a model of where our healthcare system should evolve to. Even the policy-makers and office holders in the United States would readily admit that the short-term electoral outlook significantly constrains their ability to take a long-term strategic vision for the healthcare system of their nation.

But lastly, I would like to make one point, which is that what if he is wrong? What if Mr Giam’s supposition that we could increase pay-outs is wrong? And we should compare that to what if the current situation is the wrong decision? If the current situation where, as he puts it, the pay-outs are far less than the premiums collected, that is the wrong decision. We save a little bit too much. If he is wrong, and we pay out more, if we pay out more and he is wrong, what is the worst case scenario? The worst case scenario is that our public healthcare financing becomes insolvent and we are unable to support the healthcare needs of a generation possibly.

This has happened in many other countries. The intellectually honest thing to do is to compare risks versus risks, benefits versus benefits, and worst-case scenarios against worst-case scenarios – not to cherry-pick the benefits of your proposal against the potential risks of the proposal in front of you. Thank you, Madam, for your indulgence.

Mr Gerald Giam Yean Song: Madam, I am glad he made that clarification. In fact, I cited ObamaCare precisely because of the US health system and the trouble that it is in today, and the fact that it is a commercial insurance scheme rather than a social insurance scheme. In fact, a social insurance scheme should have a much higher loss ratio than a commercial insurance scheme because commercial insurance wants to make money, whereas the Government is not in the business of making money. In fact, MediShield is supposed to be a not-for-profit insurance scheme.

Secondly, he asked about the grave scenario if pay-outs become more than the premiums collected. Now, in the case of medical insurance, it is relatively easy to be able to project what are the likely pay-outs to be and compared to, let us, say, earthquake insurance or something that has a much low frequency compared to health insurance, where you are able to see the trend and the cost of medical expenses over the years and be able to project what the pay-outs should be.

So, the question is: if it comes to the point where, because of the miscalculations, we aim for a 90% or 80% medical loss ratio but, for some reason, there is SARS that year or something like that happens, then we have a situation where the Government would have to step in to subsidise a bit more of the cost and the premiums can rise behind the increase in cost, not before you know that the costs are going to increase, then you raise the premiums.

Mdm Speaker: Dr Puthucheary.

Dr Janil Puthucheary: Madam, because we are talking about a social public good, it is therefore incumbent that we take a longer term, prudent approach, past one electoral cycle. I am glad that Mr Giam feels that medical expenditure is predictable. I and my professional colleagues would completely disagree. There is a lot of uncertainty about how costs will rise.

Myself and my brothers and sisters in the healthcare profession are part of that problem because we keep researching and coming up with all kinds of ways to spend the Health Minister’s money. Lastly, the example of SARS is a great example. It is precisely because of the prudent, conservative, risk-averse approach that we take on a day-to-day basis that when something like SARS comes along, the Government is able to step in and do what needs to be done.

Mdm Speaker: Minister Gan Kim Yong.

——————————–

Source: Singapore Parliament Reports (Hansard)

Get my latest updates. ‘Like’ my Facebook Page.

Technorati Tags: , ,

MediShield Life

I would like reiterate my call for premium subsidies to be extended to all vulnerable groups of Singaporeans, including elderly persons with low savings and not only members of the Pioneer Generation; people with disabilities; those who have exhausted their Medisave; and those who already qualify for government financial assistance schemes like Medifund, Public Assistance, ComCare and CHAS (Community Health Assist Scheme).

Parliament, 12 March 2014

Madam,

I would like to make a few proposals regarding MediShield Life before it is introduced next year.

First, I would like reiterate my call for premium subsidies to be extended to all vulnerable groups of Singaporeans, including elderly persons with low savings and not only members of the Pioneer Generation; people with disabilities; those who have exhausted their Medisave; and those who already qualify for government financial assistance schemes like Medifund, Public Assistance, ComCare and CHAS (Community Health Assist Scheme).

Second, can the $70,000 annual claim limit be removed for MediShield Life? For the affected policyholders, it would be financially crippling if their insurance cover were removed when they reach the claim limit, since they would already have spent a lot of their savings on the co-payments. Fewer than 0.1% of policyholders reach the policy year limits each year. Continuing to cover them should not result in significantly higher claims or premium burdens, but would provide tremendous peace of mind for them.

Third, MOH should ensure that MediShield Life does not follow the practice of some private insurers, which sometimes reduce coverage after policyholders are diagnosed with the an illness, to prevent them from claiming again if they suffer a relapse. This should also apply to the Integrated Shield Plans that ride on MediShield Life.

Fourth, can we have better coordination of MediShield Life with private and company health insurance to ensure that they do not overlap? This will avoid unnecessary premium payments, which benefit no one but the insurers.

Get my latest updates. ‘Like’ my Facebook Page.

Technorati Tags: , ,

Age profile of MediShield policyholders

I asked the Minister for Health on 21 October 2013 for the number of MediShield policyholders in each age group. Here was his written reply to my parliamentary question.

I asked the Minister for Health on 21 October 2013 for the number of MediShield policyholders in each age group. Here was his written reply to my parliamentary question.

————————————

Mr Gerald Giam Yean Song asked the Minister for Health how many MediShield policyholders are currently in age ranges of (i) 0-20 years (ii) 21-30 years (iii) 31-40 years (iv) 41-50 years (v) 51-60 years (vi) 61-65 years (vii) 66-70 years (viii) 71-73 years (ix) 74-75 years (x) 76-80 years (xi) 81-83 years (xii) 84-85 years and (xiii) 86-90 years.

Mr Gan Kim Yong (Minister for Health):

As at June 2013, 3.6 million members, or 93% of the resident population, were covered under MediShield. The breakdown of MediShield policyholders by age group is presented below.

Age Group

MediShield Policyholders

0-20

881,800

21-30

505,100

31-40

598,500

41-50

598,200

51-60

537,800

61-65

189,200

66-70

106,300

71-73

51,500

74-75

29,700

76-80

46,800

81-83

16,500

84-85

6,300

86-90

2,600

Total

3,570,200

The maximum coverage age for MediShield was recently raised from 85 to 90 years in March 2013, in view of the increasing life expectancy of Singaporeans. As a next step, with the proposed move to MediShield Life, we will be studying enhancements to provide universal, lifetime coverage for all Singaporeans, including the most elderly.

Get my latest updates. ‘Like’ my Facebook Page.

Technorati Tags: , ,

Govt considers covering congenital illnesses under MediShield

MediShield should be run on social principles, to ensure that no child, no adult, no elderly person is left behind because of their inability to pay.

I am glad to read that, in response to the calls from several Singaporeans, including Tan Kin Lian and myself, the government is now considering covering under MediShield, the national health insurance scheme, children with congenital illnesses.

Continue reading “Govt considers covering congenital illnesses under MediShield”

Get my latest updates. ‘Like’ my Facebook Page.

Technorati Tags: , ,

MediShield should cover congenital illnesses

If CPF Board can cherry pick who to insure and who to reject, then what makes it different from any profit-oriented private insurance company?

Two letters to the Straits Times forum in the past week shed light on a little known fact that our national health insurance scheme, MediShield, does not provide the universal coverage that many Singaporeans would have expected it to.

On September 2nd, a parent wrote in to express dismay that his newborn daughter was refused MediShield coverage because she was born with a suspected cyst in her lungs, a condition diagnosed during pregnancy. He said the CPF Board, which manages MediShield, denied her coverage, citing “the higher insurance risk posed by her pre-existing health condition”.

Continue reading “MediShield should cover congenital illnesses”

Get my latest updates. ‘Like’ my Facebook Page.

Technorati Tags: , ,