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Uniquely Singapore

Posted by theonlinecitizen on March 31, 2008

Uniquely Singapore

Medishield – one of the most profitable in the world

Leong Sze Hian

I refer to the Committee of Supply debate in Parliament on the Ministry of Health (MOH).

In 2006, as a result of requiring all private insurers’ CPF Shield plans to incorporate MediShield, the number of MediShield policyholders grew from 1.26 million to 2.75 million in 1 year. Its loss ratio was only 53 per cent ($67 million paid out over $126 million premium collected in the first 10 months of 2006).

In this connection, MediShield’s loss and expense ratio improved to 40 per cent ($119 million claims and expenses over $297 million collection), according to CPF Board’s 2006 annual report. (CPF)

In my letter “Cap co-insurance so Class C patients pay less” (ST, Feb 11, 2005), I asked: “Now that MediShield Plus will be hived off to a private insurer, will the surplus accumulated be transferred to MediShield and, if so, what is the estimated amount?”

I also asked the question again 3 months later, in my letter “Hello, Anybody listening?” (BT, May 25, 2005).

If the surplus from MediShield Plus was say $500 million[1], the combined surplus for both MediShield and MediShield Plus may now be about $1.4 billion. (Medishield surplus is over $900 million.)

Medishield – most profitable in the world?

To the best of my knowledge, MediShield may be one of the most profitable medical insurance schemes in the world, even by private insurers’ benchmarks, which generally operate with a claims and expense ratio of about 80 to 90 per cent – compared to Medishield’s 40 per cent, as explained above.

In contrast to most other countries’ national health schemes, which generally operate with a deficit, funded through the Budget, and a “pay as you go” basis, Singapore’s is probably the exception, in accumulating increasing surpluses.

Whilst policyholders getting older are expected to have more claims, we should also take into consideration that premiums increase with age, and the pool of insureds keeps increasing, especially with the inclusion this year of all new-born children.

The ad-hoc top-ups to Medisave accounts may be consumed by increasing premiums, which despite warnings of possible deficits, have always resulted in increasing surpluses, whenever premiums are raised to enhance coverage.

I would like to suggest that the MOH’s actuarial projections be made public, together with a year-to-year accounting of loss and expense ratios, surpluses, and accumulated surpluses, so that the question of how much surpluses is enough may be studied and reviewed on an on-going basis.

Higher healthcare costs but subsidies remain at same level?

According to the Ministry of Health’s (MOH) web site, MOH has been absorbing GST in full for all subsidised patients in public hospitals and polyclinics since 1994. For example, in 2005, when the GST rate was 5 per cent, the Government paid for the full GST at a total of $28 million. Last year, when GST was raised to 7 per cent, government subsidies to offset GST increased to $39 million, continuing to benefit subsidised patients.

Do the above statistics mean that the amount of total subsidies was $560 million ($28m divided by 5 per cent) and $557 million ($39m divided by 7 per cent), in 2005 and 2007, respectively?

As I understand that hospital admissions, polyclinics, specialist outpatient clinics, A & E, attendances, and hospital occupancy rates, have all hit record highs, with significant increases from 2005 to 2007, why is it that the total subsidy amount appears to have remained about the same for 2005 and 2007- $560m and $557m respectively?

Have subsidies for subsidised patients increased in tandem with the increase in patients and higher healthcare costs?

GST contributed to healthcare inflation

In a letter to the Straits Times on January 31, 2008, both the Ministry of Health and the Ministry of Finance said:

“Subsidised patients do not bear any GST cost, as it is borne entirely by the Government. Hence, GST did not raise the cost of subsidised health-care services.”

I think this may not have adequately addressed the calls by members of parliament and members of the public, to exempt hospital fees, medicine and medical-related equipment from GST, because the bulk of healthcare spending is from non-subsidised, rather than subsidised services.

Therefore, the GST increase may have contributed to healthcare inflation hitting a high of 6.3 per cent in December, 2007.

If hospital fees were exempt from the GST, and MOH didn’t have to pay for the full GST at a total of $39 million in 2007, could some of this amount have been made available and even more subsidies given to needy patients?

With another $39 million, perhaps the two national health groups running the polyclinics wouldn’t have to announce recently that they have to start fund-raising activities to supplement some of the estimated $2.5 million required under the Medical Assistance Scheme, to enable needy patients who cannot afford to pay, to go to polyclinics, because Medifund cannot be used for polyclinics.

By the way, inflation has hit another high since 1982. According to the Department of Statistics’s (DOS) latest Consumer Price Index (CPI) report, Healthcare registered the second highest inflation of 7.4 % (housing was the highest at 9.9 %) among all items, for Jan – Feb 2008 over Jan – Feb 2007.

Inflation for the lowest 20 % of Households by income, was 1.3, 1.8 and 2.0 % for 2005, 2006 and 2007, respectively, compared to -0.1, 0.4 and 2.3 % for the highest 20 % income households.

With the implementation of Means Testing, Healthcare inflation for some may be even higher.


(1) “MediShield’s financial status must be protected”, Straits Times, Feb 16, 2005


Uniquely Singapore by Sze Hian features every Monday on TOC. 



24 Responses to “Uniquely Singapore”

  1. Dr Syed Alwi said

    People – we are looking at the Post-LKY Finance Minister of Singapore – Leong Sze Hian. Forget Tharman – I nominate Leong Sze Hian ! Seconders ?

  2. Expected Analysis said

    As in my previous comment, means testing is meant to increase medical charges on Singaporean.

    First, govt will be ‘generous’ with means testing (higher income ceiling group)as professed by Khaw Boon Wan.

    At the same time, medical costs will keep rising and therefore, govt’s
    ‘subsidy’ can be misleadingly championed as being increased. As such, more surpluses will be generated in govt’s coffer. Who will truly benefit most from this?

    Medisave is a dead asset in Singaporean’s CPF contribution. It can only be used for limited medical purposes where partial cash is still required where actually, most Singaporeans have more than ample funds.

    With more accumulated funds in most Singaporean’s Medisave account, the time has come for govt to make Singaporeans pay more for medical services, thereby helping to generate surpluses.

    Make a visit to the hospital wards and witness for yourself. How many foreign staff (especially nurses) are there and what percentage are they and what level of pay are they taking? Do you believe that they are the source of increasing medical costs?

    Khaw Boon Wan has been highly praised and is touted as the “best health minister” by Goh Chok Tong. Naturally, the title is being bestowed because govt’s surpluses will get a hugh lift from the smooth implementation of means testing.

    “What to do? Singaporeans did not protest.”

  3. Gary Teoh said

    Khaw is a foreign talent,

  4. Local Talent said

    If Mr Leong becomes the Finance Minister, he will change his tune and tell us how raising GST can help the poor. Just a joke…

  5. Gary Teoh said

    people say in singapore you can die but dont get sick

  6. George said

    Shouldn’t the scheme operate on an ‘experience-refund’ basis? Whatever collected in access, less overheads and an agreed margin of profit, should be refunded to members’ CPF or be offset against their annual premium payment?

  7. Gary Teoh said

    power corrupts

  8. aygee said

    Yet another example of Singapore Inc at work.

    What happens to the surpluses? Do the people in MOH/CPF etc… get bonuses for being profitable?

    Sigh – there are a few people out there in the halls of power who have clearly lost their bearings on what their role is – to help citizens or to make money out of citizens.

    How i wish issues like these just dont stay in blogosphere but gets to the HDB heartlanders, so they truly know what happens to all that money – their hard-earned money.

  9. Gary Teoh said

    government dont serve the ppl sincerely

  10. Weijia said

    I think having a surplus does not necessary means that it is a poor programme… we should also see where the surplus goes to. so what happens to all this surplus? is it even possible to misappropriate such insane sums of money? assuming if it is being misappropriated of course. if it’s not, then where’s all this surplus going to? that’s what i’d like to know.

  11. aygee said

    weijia, it will not get misappropriated. that we all can be sure of.

    what we need to know is just the transparency. make money – but if pumped back for all to enjoy, i accept.

    and if we’re making all that money, why does it get more and more expensive, year after year? why cant the money be pumped back to make things less painful for the people?

  12. Jason said

    Those acturial numbers really need to be revealed to the public.

    If they collect higher-than-warranted premiums, then give periodic topups, it will make them appear far more generous than they really are.

    So, will MOH step up and reveal the numbers? lol. If not, are there people who can guesstimate?

  13. Seveneleven said

    We never really learned. How often are we told to the monkey and his bananas meal

  14. Lost Cause said

    Why don’t we stop all the pretense and declare Singapore a Monarchy. We have the King and Queen, the Crown Prince and Princess. We also have the second in line and the powerful little medical putri. We have the trusted network of royal elites connected by blood and marriage. Now we have the little grand vocal prince. Long live the King and the Dynasty

  15. Yi-Long said

    If only the ministers really really know what it is like to be poor in Singapore.

    For those of us who are here, I think we’re at least well-off enough to afford a computer. For those who can’t even afford one, I think the quote of “One can die but not be sick in Singapore” is more of a reality than something we can laugh at.

  16. NoWayOut said

    “One can die but not be sick in Singapore” is indeed very true.

    Recently I had to pay about $500 for referred consultation/blood test/X-ray/Ultrasound/MRI/prescription at NNI@Tan Tock Seng Hospital. I was referred by the polyclinic doctor. The result is that I am not having ‘stroke’ and referred back to polyclinic for further checkup.

    After about 1-2mths and $500, my illness is not diagnosed and still suffering.

    Back at polyclinic, a different doctor now prescript medicine for another possible cause. 3 days to go for the follow up, the illness has not improved.

    From the beginning, I wrote to MPs/CPF/hospital to seek help to used Medisave for these expensive testings and subsequent medical treatments but no avail. Even the hospital so called financial assistance is useless for paid treatment and maybe estimated 10% discount on future treatment at their hospital for the next 6 mths.

    I tried even CPF told me that medisave cannot be used for outpatient fee regardless the amount unless its diagnosed by doctor as one of the approved illness.

    Why I bothered? I am jobless and can’t hold on to a job because of this illness. My mthly income now is $500 and almost empty bank account.

    I don’t how much more to pay for the subsequent medical examination. Hope I am cured of the illness and be fit enough to find a suitable clerical job to survive. Sign…already very tough for mature worker to find a suitable job and worst for those like me with illness and limited to perhaps clerical job which mostly open to female and young workers.

    “One can die but not be sick in Singapore” is a reality now. Even to die willingly is illegal and need hopeless courage to carry out and worst its too expensive to immediate family thereafter.

    Well, no way out.

  17. Expected Analysis said

    A govt that formulates policies to benefit and assist its citizens in every conceivable way is deemed as legitimate.

    A govt that formulate policies to derive income excessively from its citizens cannot qualify as one.

    Others are keen to learn from S’pore’s success in introducing highly profitable schemes where citizens are taxed till they turn into ashes.

    Income tax and GST:
    GST was introduced because a significant percentage of the working population wasn’t contributing much in income taxes.

    The huge amount of annual paperwork in tax returns with low collections is not profitable. In order to tax this population, GST was introduced to ‘net’ them. Net result is that all will pay more than what they would have been paying.

    IRAS then announced that certain income group does not need to submit tax returns. Sounds fantastic if one does not rethink about the consequences.

    In order to grow the reserves, govt has to lure investments into S’pore with attractive incentives, tax holidays, etc. Looks good until one realises that it’s the citizens paying for it. How?

    Lower corporate taxes and increase GST. GST will generate much more income than corporate taxes which is subject to profitability of businesses. Singaporeans can be assured of further GST increases in order for govt to lure more foreign investments.

    Pay for most people stagnates or regresses with globalisation and worse, cannot keep pace with current inflation. With the high cost of living in S’pore, even tougher times are ahead for most citizens. Worst for those still serving property mortgages.

    Questions for those who have bought into very expensive HDB or private property.

    1. What is the outlook for S’pore in 10-20 years’ time with the economic awakening of many surrounding countries with their vast land, resources, younger population, etc?

    2. What and how can we compete then?

    3. If you don’t foresee a rosy future for S’pore, what will be the value of your property then?

    Herd mentality is a very dangerous instinct. An example is the current property market. It was just some months ago that euphoria ruled the market despite the loud warnings arising out of the US’ problems.

    The rich tempted the market with some high profile and record shattering prices. The masses did not bite this time with painful lessons from the last crisis. Well, those greedy rich got burnt this round and the worst has yet to come. A full blown crisis is likely within 2008.

    Will continue on COE another day.

  18. tiredman said

    In the other countries, their government takes care of their own people because they value them. However, in Singapore, thing is a bit weird. The government priority is to make more money than looking after their people. Money, money and money.

    So, they tried to take advantage of the citizens by asking their people to give in to the country’s needs. Sounds funny? They didn’t say but I felt it that way. The “Education” in SG is a very good example. By bring in more and FTs means reducing in the need of education subsidy and increase the UNI revenue!!! So the locals have no choice but to go SIM. Pay more then. Gahman is then a big WINNER after all!! Why? SIM is taxed by the gahman!! Money Money Money!! WOW!!!

    Let the FTs work in Singapore. Local wages being lowered and thus lured more companies in and hence, garman collects more taxes. An increase GST to tax the poor… more MONEY isn’t that great!! (I noticed our PM mention about making more and more money is very important) So, how much is sufficient? SGD $100000000000000000000000000000000000000000000000000000000000000000000 trillions? Singapore is NOT an INC but a country that look after their people, isn’t it?!!!

    What does Singaporean loose out? I believe in all areas… education… most Singaporean end up paying more for education when the FTs are paying lesser as compared (Local Uni VS “local oversea Uni”), loosing out to FT when looking for jobs especially for all the males (due to National Service), hence, protecting the FT’s life while the FTs enjoy to their maximum.

    Talking about old age, I see my dad, who previously supports PAP is now scolding PAP almost everyday. Why? He was laid of and cannot find a job of the same income. My poor old dad, working for life but end up loosing a job that command a higher pay when he got old. My dad’s family suffers as he is the sole breadwinner.

    Now, every goods on the shelves are on the rise. Our highly paid the gahman starts to blame the cause of inflation to the world situation and starts to hike all the prices of the goods. Aren’t they suppose to be the elites? They should solve our problem and not end the problem by sacrificing the Singaporeans’ interest. Sadly, with this, FTs suffer, Singaporeans suffer BIG TIME!!!

    I have seen my dad working so hard for the past years, and now he is old.
    However, the gahman shows no sign of appreciation. Our gahman only know how to ask the Singaporeans to save up for old age and if not work till you die. WHY? Our dear gahman don’t want to spend money on the useless of people who had been working so hard before!!!

    Simple mindmap:
    Born ~ Studyhard ~ If not please stay one corner and keep quiet. ~ Work hard, serve National Serve and don’t get kicked of by FTs or be sick ~ If so, your problem ~ Old age, Please take care yourself. You only have CPF to depend on ~ Come to me when you are dying of poor ~ if not, work to your death!! Does the pick card sound valuable? Isn’t it just too easy to get one and just too much obligations, with little benefit attached to it?

    I felt that the gahman is merely treating everyone as a “legal slave”. If I ought to choose, I would not want my children live in this horrible, money minded, materialistic, moral lacking, ungraceful environment. I am watching my dad’s path closely and predicting my future. I inspire to be a teacher however I don’t want to be a local teacher. Why? There is no point putting myself into an education system which I myself are not comfortable with.

  19. tiredman said

    Just too much to write about.My time is limited so I touched on topics, a little here and there. My previous post might look a bit messy. Sorry about that.

  20. wong dr said


    you can still do something about it as a citizen. vote them out next time round. not only by yrself. tell people around you. i doing that to friend and relative too. we need critical mass of people. tak boleh tahan !!!

  21. Expected Analysis said

    Next issue: COE

    COE was started with a legitimate reason – to control the growth of vehicle population. However, it had an unintended (maybe intended) windfall for the govt.

    Ridiculously, COE prices were chased up to the sky for some years and govt was flushed with big surpluses. Very profitable indeed, selling just paper.

    The Asian financial crisis served as an awakening for Singaporeans. COE prices tapered down to under $30K on average. Many car owners downgraded, selling their cars which were exported. Govt had to refund big amount of money for the remaining unused life of COEs. Painful for govt as profits had to be refunded.

    Out of the blue, the COE rebate system was changed. Rebate was amended a couple of times to make it unfeasible for export, naturally, to stop the outflow of profit.

    ERP was hatched to make up for the big drop in profit. As expected, ERP was gradually extended to many other places besides CBD areas.

    COE prices have been hovering below $20K for some time now. This is probably the price resistance level that people are prepared to pay. The number of COE will be reduced as well.

    How to generate more profit? Extend ERP to whichever location that people complained of jams. Now, even housing estates will be covered as well.

    As reported, there’ll be close to 80 ERP gantry points in operation come 7/4/08. ERP population will continue to grow to cover almost every part of S’pore. Reason? At any given time of the day, a well populated area will experience jams.

    A simple calculation will reveal just how much revenue can be generated through ERP.

    Ultra conservative example:
    80 gantry x 10,000 vehicles x $1.00
    =$800,000 per day x 24 working days
    =$19,200,000 per mth x 12 mths
    =$230,400,000 a year

    Eventually, the minimum ERP charge will be $2.00 as reported. You can do your own calculations and you know this example is just a fraction of the real numbers.

    ERP was not meant to reap profit for the govt?

    Food for thought:
    1. What’s the rationale for reducing COE rebates when COE is meant to control vehicle population?

    2. To control vehicle population is either allow lower growth or no
    growth. This will do away with the need to implement ERP nationwide.

    3. To encourage greater use of public transport, why subject taxis to ERP charges? Didn’t the govt call on citizens to switch to public transport? Taxis serve as public transport in every sense. For every taxi registered, a private car is deprived of its priviledge.

    Lately, Raymond Lim hinted that govt is considering cash rebate for unused portion of COE. Another artificially good move because the rebate system has been much reduced.

    This is how and why our ministers are rewarded with multi-million salary + bonuses.

  22. […] – The Online Citizen: Medishield – one of the most profitable in the world – The Online Citizen: A 28-hour wait for a bed at the Singapore General […]

  23. Awaken Citizen said

    I never got conned by Medishield because I refused to allow them to
    deduct monthly premiums from my Medisave an deplete all my savings.

    What ever they can scheme, I won’t want to fall into the scheming
    schemes. Since these people are smart, we have to be smarter than
    them. Otherwise, how to survive in this elitist society?

  24. patriot said

    Dear countrymen;
    if we have Catholic, Muslim and Bhuddist Ministers supporting and sanctioning casino and bartop dancing and what not, what do You think?

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