Dr Janil Puthucheary makes complete nonsense

I refer to the 28 May 2014 Straits Times report “Clash over MediShield premiums v payouts”.

Dr Janil Puthucheary made complete nonsense when he asserted that it is not valid to compare Medishield’s 63% loss ratio (payout) against American health insurance’s 80 to 85% loss ratio (payout) because Medishield is public and not-for-profit whereas US medical insurance is private and for-profit scheme. Any idiot will know that all else being equal, America’s for-profit scheme should end up with a lower payout while Singapore’s supposedly not-for-profit scheme should end up with a higher payout but the reality is the other way around.

Dr Puthucheary also claimed that the American model has short term electoral outlook which constrains their long term strategic vision. There was no need for Dr Puthucheary to use such grandiose terms that doesn’t explain what is really a very simple thing. According to MOH website (http://www.moh.gov.sg/content/moh_web/home/pressRoom/Parliamentary_QA/2013/medishield-reserves-.html), Medishield’s capital adequacy ratio was 165% (2013) but the targeted Medishield capital adequacy ratio is 200% so we still have some way to go. It would be good if Dr Puthucheary simply explained, based on the current 37% retention ratio, how long more will it take for us to reach the 200% capital adequacy ratio and after that, can the loss ratio be made higher? Or will there be some magic “long term strategic vision” designed to extract ever more money out of Medishield?

Dr Puthucheary warned that Medishield will become insolvent if payouts are more than premiums collected. But that didn’t address Mr Gerald Giam’s concern about low Medishield payout when Medishield capital adequacy ratio was already 40% above MAS requirements. Does Dr Puthucheary know that the targeted capital adequacy ratio is 200%?

Both he and Health Minister Gan Kim Yong argued that it is very difficult to estimate health-care costs. In that case, how does Minister Gan come up with a Health Ministry budget every year?

Dr Puthucheary said it was because of government’s prudence that it was able to step in when SARS occurred. But much of what the government stepped in for during SARS was for non-Medishield related expenditure like purchase of protective gear for health care workers, cost of setting up isolation rooms, upgrading of hospital facilities and stocking up on medical supplies. The government stepping in during SARs for non-Medishield related expenditure doesn’t explain why Medishield payout has to be so low when its capital adequacy ratio is already 40% above MAS requirement.

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