SDP Treasurer, Ms Chong Wai Fung, spoke at the Hong Lim Park Return Our CPF rally today. Ms Chong is a healthcare research analyst and holds two Masters degree, one in Clinical Epidemiology and another in Business Administration. Below is the text of her speech:
Good afternoon fellow Singaporeans! It is wonderful to see so many of you here today. We can all agree that the CPF issue is a very important one as it affects every single one of us here.
I am not speaking for the organization that I work for but I am speaking here in my capacity as the Treasurer of the SDP.
I would like to thank Hui Hui for inviting the SDP here this afternoon.
The Government recently announced that it will pump in $4 billion to subsidise Medishield Life. This may sound like a lot of money until we are told that that is over 5 years. In other words, it is $0.8 billion a year.
How much do we spend on healthcare each year?
Our nation spends a total $12 billion a year on healthcare. So, $0.8 billion is only a measly 6.5%. Let’s put things in perspective:
How much money did the government collect in GST last year? The Government collected nearly $10 billion in GST revenue last year, more than 10 times the amount of subsidy to be given to Medishield Life.
The revenue from Road Tax in one year itself can cover the $0.8 billion easily.
The $4 billion over 5 years is the same amount that Temasek so easily offered in March for Olam International, a debt-ridden company.
And yet, the Government has already warned us that the Medishield Life premiums will eventually increase after holding it steady for the first 5 years.
Furthermore, we are concerned that these subsidies may not go directly to patient care but rather towards the Medishield Life provider which is already one of the world’s most profitable insurance companies based on its Medical Loss Ratio.
For the past 11 years, Medishield has an average medical loss ratio of 63%. For 2013, the medical loss ratio reached a historical low of 43%! In other words, for every $100 Medishield collected, it paid out only $43 and pockets $57! I think very few businesses in the world can achieve this level of profit.
By comparison, the US, which is the most capitalist of countries, private health insurance schemes are not allowed to have a medical loss ratio of less than 80%, meaning they cannot have profit of more than 20%!
But wait! The rest of the world is wrong. According to our government, the private insurance companies have got it all wrong by using the Medical Loss Ratio.
Our very responsible government takes a long term and sustainable approach to everything. It says that the Medical Loss Ratio is a less appropriate approach. So, it introduced what it called the Medishield Incurred Loss Ratio, that takes into account “future liabilities”. Using this calculation, the ratio is 96%. So Medishield is not so profitable. It only makes $4 profit for every $100 that is collects in premiums.
Do you believe them?
The Government needs to stop making money from Singaporeans at every turn. It is unacceptable that while it makes a big deal out of increasing subsidy for healthcare and then making money from us through Medishield Life.
How were premiums calculated? Where is the transparency for this? Premiums keep increasing as we get older, but that is the time when most of us see our income decline as we are pushed out of the job market.
In addition, the premiums for Medishield Life will be taken from our Medisave accounts. Medisave money is taken from our CPF accounts.
There is already little left in one’s CPF after the money is used for paying HDB loans. Taking even more money out to service Medishield Life premiums will mean greater hardship from Singaporeans when they retire.
The Government also says it will not increase premiums for five years. In other words, it will increase premiums after 5 years. Singaporeans must be very wary of this. This is a sugar-coated poison that will cost us dearly in the years to come.
Remember the GST? It started from 3%, increased to 4%, then 5%, and now 7%. After the next elections it will probably go up again.
The CPF Minimum Sum Scheme started by withholding $80,000 of an individual’s CPF savings but has, through the years, doubled to $155,000 presently. When premiums increase, more of your CPF money will be transferred to your Medisave Account to meet the Medisave Minimum Sum. We will always be chasing after the minimum sum! What is wrong with this government?
The healthcare financing system is getting too complicated for us to follow. You get payment of our hospital bills from multiple sources: Medisave, Medishield, Medifund, Pioneer Generation Package, from our own pockets – which by the way is the highest in East Asia – private insurance, employers, and now Medishield Life.
And just like the CPF scheme, the complexity of the system allows the Government to extract much cash from us. The government says that it has multiple tiers of protection to ensure that healthcare is affordable. How is affordability decided? How much of household income is spent on healthcare when we need it?
Why can’t it be made simple? Why does the government spend so much of our money on outreach and public education, trying to explain all the options on healthcare financing?
Why not simplify the whole system? The SDP has a proposal that is rather simple. Let’s get rid of the 3Ms and institute only one source of payment – the National Health Investment Fund or NHIF.
Under the SDP’s system, we return the Medisave money to Singaporeans’ CPF accounts which people can keep for their retirement. Under our plan, Singaporeans then pay an average of $400/year into the NHIF.
The Government will pay the remainder of the $12 billion into the NHIF.
When we are hospitalised, we pay only 10% of the bill (capped at $2,000/year) while the NHIF pays the remaining 90%.
In this way, the government pays 70% of our country’s total healthcare expenditure, a percentage which governments from other developed economies are paying. At present, the PAP government pays only 30% and makes Singaporeans and businesses shoulder the main bulk of our healthcare expenses. This is wrong.
I repeat: The Government must stop making profit off the back of Singaporeans when they fall ill. It must assume its responsibility in line with what other First World governments are doing. There is no need to raise taxes to 50%, or raid the reserves, as suggested by the government.
Stop telling us that it is irresponsible to withdraw our CPF money, or that it is irresponsible if the government does not increase our reserves every year.
We must reduce the burden on the sick especially those who are poor. This is only possible in a co-operative and compassionate society. The government has the responsibility to ensure that the taxes collected are used for the common good. Caring for the sick is not welfarism but the fruit of a compassionate society.
Our proposal spelt out in The SDP National Healthcare Plan: Caring for All Singaporeans, makes healthcare in Singapore universal, compassionate and more efficient. It is the better alternative.
This alternative to the government’s plan, and our proposals on housing and education, are available on our website yoursdp.org. Come talk to us to find out more. We will present it again at the next general elections and we ask for your active support and get us into Parliament. Now more than ever we need a competent, constructive and compassionate opposition in Parliament. SDP is that opposition!