Medishield Life Premium Increases: Are We Being Hoodwinked?

I refer to the article “Circle of trust in welfare system: Is S’pore ready” and Dr Yik Keng Yeong’s letter “MediShield Life must be stringently policed” (Straits Times, Mar 1).

The former states that “Its (MediShield Life) reception will show how willing Singaporeans are to commit more personal resources (pay higher premiums) to share risks with fellow citizens, and how they will feel about the unequal benefits derived, since the healthy will have lower claims than the less healthy.”


MediShield Life premiums expected to increase? 

The rhetoric has been incessant on the need to increase premiums for MediShield Life. My mind wandered as to what are the loss ratios and reserves of the MediShield scheme?

According to the CPF Board’s we site – CPF Statistics – the excess of premiums to claims was $476, 119.6, 138.3, 150.8, 176.3 and 158.5 million, for 2013, 2012, 2011, 2010, 2009 and  2008, respectively.


$1.32b “excess premiums” in the last 6 years? 

So, the cumulative “premiums less claims” for the last 6 years was about $1.22 billion. If I assume that the excess premiums earns an interest of 4% per annum, the “excess” plus compounded interest for the last 6 years is about $1.32 billion.

The loss ratio was thus 0.42, 0.73, 0.68, 0.63, 0.55 and 0.51, for the same 6 years, respectively.


“Excess premiums” jumped 4 times last year?

Why is it that there was a huge drop in the loss ratio from 0.73 to 0.42 last year – and a huge increase in the “excess premiums” to $476 million from the previous year’s $119.6 million? In other words, the excess of premiums to claims jumped almost 4 times last year.

Did the recent increase in MediShield premiums and deductibles contribute to this sudden jump?


How much “excess premiums” plus interest since MediShield started? 

Since as I understand it – MediShield has always been run as a scheme whereby the premiums exceed claims by an arguably wide margin every year- how much is the “excess” plus interest, since the inception of the scheme? Is it in the billions?


Need to increase premiums?

Looking at the above statistics – why do we keep talking about the need to increase premiums for MediShield Life? Is there really a need to raise premiums?

Can the actuarial studies and projections for MediShield be made public?


Govt did not spend a single cent?

Finally, since MediShield is as I understand it – funded entirely by the insureds’ premiums – does it mean that the Government does not spend a single cent on the scheme?

Are there any national health insurance schemes in the world that are run like this?


This article is courtesy of Leong Sze Hian. You can find more articles by Leong here.

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