MediShield reserves: $2.3b or even more?

July 9, 2014

We refer to the article “Puthucheary v Gerald Giam on MediShield reserves” (Straits Times, Jul 8).

200% capital adequacy ratio?

It states that “The ratio of the MediShield fund at the end of 2012 was 165 per cent. The fund has set a target ratio of 200 per cent (required capital adequacy ratio is 120 per cent), which Health Minister Gan Kim Yong has said is in line with industry best practices.”

$2.3b MediShield fund’s assets?MediShield Fund” – “As at end-2013, the Fund assets stood at $2.3 billion. Over the past five years, on average, about two-thirds of the MediShield Fund comprised reserves to fund the expected scheme liabilities. The remainder is capital which meets the same standards required of other insurers under the Monetary Authority of Singapore (MAS)’s risk-based capital framework”.

We believe this is the first time that the cumulative MediShield fund’s assets has been publicly disclosed.

What about the accrued % since inception?

In Table 1 – the insurance premiums of $372,132, 385,563. 404,732, 421,297 and $770,039 million, from 2009 to 2013, adds up to the total of $2,353,763 billion shown in the same table.

So, does the “Fund assets of $2.3 billion” include the interest that should normally accrue on the annual surpluses of premiums less claims, every year since the MediShield scheme started?

Surpluses before 2009?

Also, does the “Fund assets of $2.3 billion” include surpluses prior to 2009?

We have calculated from the table, that the claims to premiums ratio is 59 per cent (claims $1,395,382 billion divided by premiums $2,353,763 billion).

Most profitable scheme in the world?

Does this make MediShield the most profitable national health insurance scheme in the world?

Need 80% more?

Here’s what baffles most – Why would a national health insurance scheme that insured about 93 per cent of the population, and which has been made compulsory for every resident, need to have a capital adequacy ratio that is 80 per cent more than the expected minimum for private insurers?

S Y Lee and Leong Sze Hian

P.S. Come to the CPF Protest on 12 July 4 pm to 6.30 pm at Speakers’ Corner https://www.facebook.com/events/251518938371663/

A big thank you to Dr Tan Lip Hong for bringing the above, as well as those in the past, to our attention.

 

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About the Author

Leong
Leong Sze Hian has served as the president of 4 professional bodies, honorary consul of 2 countries, an alumnus of Harvard University, authored 4 books, quoted over 1500 times in the media , has been a radio talkshow host, a newspaper daily columnist, Wharton Fellow, SEACeM Fellow, columnist for theonlinecitizen and Malaysiakini, executive producer of Ilo Ilo (40 international awards), Hotel Mumbai (associate producer), invited to speak more than 200 times in about 40 countries, CIFA advisory board member, founding advisor to the Financial Planning Associations of 2 countries. He has 3 Masters, 2 Bachelors degrees and 13 professional  qualifications.