Chong Wai Fung: Government must stop profiting from healthcare
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.
- 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?