23 February 2015

PAP vs. WP AHPETC Audit Circus

Member of Parliament Hri Kumar Nair said, in conjunction with the debate in Parliament on Auditor-General's Office's Audit of Aljunied-Hougang-Punggol East Town Council, that the people he discussed the matter with kept telling him not to attack The Workers' Party ("WP") because they will only get more sympathy. But he couldn't get his head around that.

He should have heeded their advice and cautioned his colleagues to refrain from going overboard.

Town Council Management System
The decision by the town councils managed by the People's Action Party ("PAP") to sell their town council management systems ("TCMS") to PAP-owned Action Information Management Pte Ltd ("AIM") in 2010 and immediately lease it back is the source of many of the difficulties faced by AHPETC that were highlighted in AGO's report.

This is because the lease allowed AIM to terminate the contract with any town council by giving that town council one month's notice in the event of material changes to the membership, or to the scope and duties, such as changes to the boundaries, of that town council.

When WP took over Aljunied-Hougang Town Council, it had to rapidly upscale and improve the TCMS it used in Hougang. But it was difficult.

13 February 2015

Government Silent About Disamenities Of Pre-Funding MediShield Life

At Singapore Perspectives 2015, Deputy Prime Minister Teo Chee Hean repeated his Government's oft-mentioned selling pitch on pre-funding MediShield Life premiums[1]:

When MediShield is not compulsory, each age group pays the premium appropriate for its medical costs because otherwise they would opt out when they are young when they have to pay more (because of pre-funding) and opt in at an older age (when the pre-funded moneys are drawn down to reduce the premium appropriate for their medical costs at that older age).

But we have made MediShield Life compulsory. Then you do inter-generational transfers for yourself by paying a higher premium than is appropriate for your age group when you are young. This makes sense because when you are young, you have earning capacity, you have excess / surplus and you can pay more than the premium appropriate for the age group. Instead of a slope that looks like this, the premiums rise more gradually because you pay more when you are young and you pay less when you are older.

As his Press Secretary explained in a letter to The Straits Times[2]:

"If premiums were set solely based on the health risks and consumption at each age, they will rise very steeply with age. Hence, we sought to distribute the premiums more evenly over the insured's lifetime and moderate what he has to pay in old age.

When the insured is younger and in his prime working years, he 'pre-pays' part of the higher old-age premiums that are payable when he is older and no longer working. With this 'pre-payment', the premium he pays when he becomes older will be less than the actual insurance cost for that age group."

In an earlier article Government Says Pre-Funding Medishield Life Is A New Feature. Really?, I explained that, contrary to what Mr Teo claims, pre-funding is not new; MediShield premiums already have a pre-funding component. However, pre-funding has many disamenities, which the Government doesn't talk about, and should be discontinued. I'll refer to the pre-funding arrangement as the Pre-funding Alternative.

10 February 2015

Government Says Pre-Funding MediShield Life Is A New Feature. Really?

At Singapore Perspectives 2015, Deputy Prime Minister Teo Chee Hean repeated his Government's oft-mentioned selling pitch on pre-funding MediShield Life premiums:

I think quite a number of the health care systems in the world do inter-generational transfers in a rather irresponsible way because they tax the next generation to spend on the health care of the previous generation anonymously without any mutual obligation directly to each other.

In the design of MediShield Life, we try to avoid inter-generational transfers.