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Last week, I wrote about how there is a limit as to how much citizens in the Asian Tigers and Japan need to pay for healthcare but in Singapore, there is instead a limit as to how much Singaporeans can claim. In fact, there is no cap as to how much Singaporeans have to pay – thus in 2012, more than 2,400 Singaporeans paid more than S$10,000 for their hospital bills.

This week, I decided to look further – at how much citizens in the Asian Tigers (Taiwan and South Korea), Japan and Germany pay into health insurance and how much they get back, in comparison with Singapore.

In Taiwan, citizens paid NT$546 billion into National Health Insurance in 2014. They got back NT$519 billion.

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Source: National Health Insurance Administration, Ministry of Health and Welfare – The National Health Insurance Statistics, 2014

In Taiwan, citizens got back 95.1% of what they paid.

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In South Korea, citizens paid 41.6 billion won into National Health Insurance in 2014. They got back 42.8 billion won.

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Source: KOrean Statistical Information Service – Statistical Database Financial Indicators of N.H.I.S by Year

In South Korea, citizens got back 102.9% of what they paid.

(Government subsidies and surcharge on tobacco account for 12.5% of the income of the National Health Insurance which pay for the administrative expenses.)

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In Japan, citizens paid 128,019 (100 million) yen into National Health Insurance in 2010. They got back 127,726 (100 million) yen.

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Source: Ministry of Health, Labor and Welfare – Overview of Medical Service Regime in Japan Financial Situation of Health Insurance

In Japan, citizens got back 99.8% of what they paid.

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In Germany, citizens paid 199.6 billion Euro into the national Statutory Health Insurance in 2014. They got back 200.4 billion Euro.

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Source: GKV-Spitzenverband – Statutory health insurance Annual Report 2014

In Germany, citizens got back 100.4% of what they paid.

(Note that “0.8 billion Euro was financed from reserves”. The report also said that, “The better off health insurance funds were able to pay bonuses from their reserves to their members amounting to roughly 0.7 billion Euro.”)

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But what about Singapore?

Singaporeans only get back very little bit of what they pay.

Let’s take a look at Medisave national health insurance. In 2013, the Medisave balance is S$64.9 billion. In 2014, the Medisave balance is S$70.5 billion. The government does not reveal statistics on the annual Medisave contributions paid by Singaporeans, so one estimate is by deducting the 2013’s Medisave balance from 2014’s.

This would suggest that Singaporeans paid S$5.6 billion into Medisave in 2014 (Note that this figure would be higher but there is no publicly-available way to verify.)

In Singapore, citizens pay S$5.6 billion into the Medisave national health insurance in 2014 (by this estimate). But they got back only S$0.852 billion.

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Source: Ministry of Health, Singapore – Government Health Expenditure and Healthcare Financing Statistics

In Singapore, citizens got back only 15.2% of what they paid.

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There is another way to estimate – by looking at the total contributions into the Central Provident Fund (CPF) pension funds. Singaporeans pay for Medisave by channelling part of their CPF into the Medisave.

In 2014, the total CPF balance is S$275.4 billion. The Medisave balance is S$71.2 billion, or 25.9% of the total balance.

In 2014, the total annual contributions into CPF is S$29.7 billion. So, if 25.9% of the total CPF balance is made up of Medisave, and if we assume that Medisave also makes up the same 25.9% for the annual contributions, then Medisave contributions would comprise S$7.7 billion. (Note again that this figure would be higher as the CPF was set up in 1955 but the Medisave was implemented in 1984, which means that the Medisave makeup of new annual CPF contributions would be higher than the total CPF balance.)

In Singapore, citizens paid S$7.7 billion into the Medisave national health insurance in 2014 (by this estimate). But they got back only S$0.852 billion.

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Source: Central Provident Fund Board – Members’ Accounts Statistics

Which means that in Singapore, citizens got back only 11.1% of what they paid.

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However, taking note that Medisave contributions in 2014 are likely to be higher than both the S$5.6 billion and S$7.7 billion figures, Singaporeans would be getting back even lesser.

If Medisave contributions go above S$8.5 billion, then Singaporeans were only getting back less than 10% of what they pay. Socio-economic blogger Leong Sze Hian estimated that Singaporeans paid S$10 billion in contributions into Medisave in 2014.

If so, if Singaporeans paid S$10 billion into Medisave but only got back S$0.852 billion, then Singaporeans were only getting back 8.5% of what they paid.

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What do you have to take away from the above discussion?

In Taiwan, citizens get back 95% of what they pay. In Singapore, the government profits from 91% of what citizens pay, citizens only get back 9%.

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There are two points to take note of for Medisave:

(1) One point to note is that the Medisave is more convoluted than the national health insurance schemes in the other countries. Other than Medisave, there is also the MediShield national health insurance which Singaporeans have to pay into – and which the government profits from as well (as you will see later).

Whereas in other countries, the payouts from the national health insurance goes directly into paying for healthcare expenses, the Singapore government developed a two-step catch system where the premiums paid to the first national health insurance scheme (Medisave) is also used to pay a second one (MediShield), and since both schemes profit from the premiums paid and accumulate surplus, it creates a two-step catch where the government profits from premiums paid by citizens on two levels.

In 2014, S$766.5 million was withdrawn from Medisave to pay for MediShield premiums, which is as good as diverting 8% of Medisave premiums into MediShield which the MediShield profits from. In the same year, only S$448.1 million was withdrawn in MediShield claims and if you factor in that MediShield earns surpluses, this means that if we are to frame the argument to look at how much citizens get back from MediShield, in the context of Medisave premiums paid (so as to fit into the discussion in this article), citizens might only get back another 1% to 3% (which is negligible) – the government still profits from about 90% of Medisave premiums paid.

(2) Another point to take note is that whereas in the other countries, premiums paid for national health insurance are returned in full, in Singapore the government profits from premiums paid into Medisave, and accumulates surpluses.

Therefore for Singapore’s national health insurance, there is another way to look at the discussion – in 2014, there was a total Medisave surplus of S$70.5 billion but Singaporeans only got back S$0.852 billion.

This means that Singaporeans only got back 1.2% of what they paid.

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Indeed, as mentioned above, Singaporeans are not just getting a very bad deal from Medisave. We are also getting a very bad deal from MediShield.

Thanks to a question by the Worker’s Party’s Gerald Giam who asked in parliament in 2011 how much Singaporeans were paying in MediShield Basic premiums and how much claims we were getting back, we now know that the government has been giving back lesser and lesser to Singaporeans, out of how much it collects.

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From getting back 83.8% of what we paid in 2004, Singaporeans only got back 47.2% in 2005 and 53.1% in 2008.

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This went down even further in 2013.

The Singapore Democratic Party (SDP)’s Chong Wai Fung gave a speech in 2014 and revealed:

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.

In a speech given by Mr Giam in parliament in 2014, he added that, “this is the lowest loss ratio since 2001.”


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As we have seen above, in the other countries, of S$100 that was collected in premiums, about all the S$100 would be returned to citizens.

But not in Singapore.

MediShield only gave back S$43 and worse still, Medisave only gave back a miserly S$9.

Mr Giam asked in parliament:

Is there really a need to set aside so much in reserves? While this manages the risk for the Fund, it could be placing an unnecessary premium burden on policyholders.

If the pace of reserves accumulation can be adjusted to be more in line with MAS requirements, premiums can be made more affordable.

Mr Giam also said:

Let me state for the record that I believe that MediShield Life should be financially sustainable in the long term, and that enough reserves must be set aside for temporary spikes in claims and long term liabilities.

However, there is a big difference between setting aside enough for reserves, and setting aside too much for reserves. Setting aside enough ensures that the MediShield Life Fund remains solvent even when claims in a particular year are higher than expected. Setting aside too much could mean collecting excessive premiums to cater to an extremely unlikely, but catastrophic event.

On his blog, Mr Giam said: “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.”

So, what do you think now – with the background knowledge of what the other countries are doing? Is the Singapore ruling government collecting excessive premiums from Singaporeans for Medisave and MediShield?

In its National Healthcare Plan, the Singapore Democratic Party said: “Instead of locking up our monthly Medisave contributions in individual accounts, the money should be pooled together towards a proper National Health Insurance scheme that adequately covers all medical bills, with affordable co-payment.”

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Source: The SDP National Healthcare Plan – Caring for All Singaporeans

The Singapore Democratic Party (SDP) pointed to the example in America, where:

Under ObamaCare, private profit-making health insurance companies are restricted in the amount of profit they can make out of health insurance schemes.

ObamaCare mandates by law that the total pay-out for claims has to be at least 80% of the total premiums collected. This ensures that not too much premium is collected so that the insurance companies do not make too much profit (in this case a maximum gross profit of 20% before expenses).

However, in Singapore, the government is taking as much as more than 57% in profits from MediShield and as much as more than 90% in profits from Medisave!

The Singapore Democratic Party (SDP) thus said: “Until this government commits to putting in place measures like the capping the MLR (Medical Cost Ratio) to ensure that we do not overpay for MediShield Life, there remains no assurance that huge profits will not continue to be made in the name of national health insurance in Singapore.”

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Source: The SDP National Healthcare Plan – Caring for All Singaporeans

In Germany, the government uses the reserves to pay for the citizens’ healthcare and to even return to the citizens bonuses.

In Singapore, the government uses the citizens’ healthcare insurance to pay for the reserves.

Is this ethical?

But where do the reserves go? Nobody knows.

And if the Medisave is not paying for your healthcare, then what is it paying for?

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In his reply to Mr Giam’s question in parliament, then-Minister for Health Gan Kim Yong said: “MediShield operates on a not-for-profit basis and … premiums will be kept affordable and yet ensure the fund remains solvent.”

But from the evidence we have so far, it is clear that it is not just MediShield, but even more so for Medisave, that operate on a for-profit basis. In fact, premiums under the current ruling People’s Action Party (PAP) government is actually NOT affordable.

What solutions then has the Singapore Democratic Party (SDP) propose?

The Singapore Democratic Party (SDP) wants to make healthcare truly affordable.

The Singapore Democratic Party (SDP) wants to reduce contribution rates for national health insurance, from the S$1,680 to S$3,360 that Singaporeans have to pay into Medisave every year, and reduce it to between S$0 and S$1,800 under the SDP’s National Healthcare Plan.

Premiums would be progressively tiered by income, and low-income families with incomes of less than S$2,000 would not need to pay premiums.

It is clear that this is doable and should be done – Singaporeans are currently over-paying for the premiums and the government is profiting excessively from Singaporeans’ contributions.

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Source: The SDP National Healthcare Plan – Caring for All Singaporeans

Not only that, the Singapore Democratic Party (SDP) also proposed caps as to how much Singaporeans have to pay for healthcare in a year – Singaporeans need only pay a maximum limit of S$2,000 every year for chronic and major illnesses. The rest would be fully subsidised.

For Singaporeans who earn between S$800 and S$1,500, they would only need to pay a maximum of $500 every year, with the rest fully subsidised.

And for Singaporeans who earn less than S$800 or are on social welfare benefits, the Singapore Democratic Party (SDP) proposes to fully subsidise these Singaporeans.

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Source: The SDP National Healthcare Plan – Caring for All Singaporeans

As I had shown in my previous article, the SDP’s proposal is in line with what the other countries are doing – citizens in the other Asian Tigers and Japan all only need to pay up to a maximum cap on healthcare.

It is only in Singapore where there is no cap on healthcare costs but under the current People’s Action Party (PAP)’s policies, Singaporeans instead can only claim a limit for healthcare.

And have to pay excessive premiums on Medisave and MediShield which are not returned to Singaporeans but which the government takes as profit.

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Why did you choose to hurt yourself?