Pioneer Generation Package – The brass tacks

While the euphoria is still in the air that the 2014 budget is as generous as one could expect, let’s get down to brass tacks to know what it really means to the beneficiaries. As a 65er, it is up close to want to know what one will get from this package.
 
Assuming that one is healthy and not going to visit the outpatient clinics often, one is not going to get any subsidy from this provision. The main thrust of the Pioneer Generation Package is the life long subsidies of $200 to $800 per annum which are targeted at the impending introduction of Medishield Life Insurance. Presumably the Medishield Life will cover all and sundries of medical conditions of an oldie and there is no need to quibble over what is covered and what is not, and also no need to look at the fine prints of the T & Cs.
 
As I pointed out in my first post on this subject, the 65ers will get $200 per annum for life. And if this is fixed, meaning no incremental adjustments over the years as the 65ers grow older, it is likely that most of them will get about $4000 in all for another 20 years of lifespan, plus or minus depending on when one kicks the bucket. And that is it, nothing more, nothing less.
 
The next part that a 65er will be interested to know is the premium for Medishield Life. The current Medishield Plan premiums for a 65er are around $400 to $800 per annum depending on the coverage. The Medishield Life premiums cannot be lesser than these for the same age group. Assuming that the premium is $1000 and a 40% subsidy, a 65er will still have to pay $600 for the annual premium. The net cash impact is another $400 outlay on top of the $200 top up.
 
For the 65ers in the current Medishield basic plan, the net cash impact is unchanged but presumably with better coverage. Not sure about the co payment part and how much one will eventually have to pay for hospitalization under the Medishield Life.
 
The impact on the premium is not going to be static on two grounds. One, if the $200 per annum top up is going to stay as it is over the years while the Medishield Life premium rises with age. Another expected change is the annual adjustment of premiums by the insurers tagged to the amount claimed and the escalating cost of hospitalization bills. The status quo situation as projected by the current computation may not stay and the premium cost to the 65ers could go up and up with time. The compulsory Medishield Life Scheme may not be what it is today, and the funny thing, we don’t even know what this animal is like except to assume that it is benign. Would it be so and for how long before it turns into a beast like the dreaded CPF schemes, started with good intention but not the same any more?
 
There are many variables that can change along the way when the agenda changes. On the whole, the govt is giving away $8b over a 20 year period. With 3.5m citizens, excluding PRs, and at an estimated average premium of $400 pa, the premium to be paid to the ‘insurers’ will be $1.4b a year or $28b over 20 years ceteris paribus. Who is going to benefit from this $28b? Leong Sze Hian and Roy Ngern wrote in their joint paper that the govt needs not pay a cent more for healthcare with the schemes proposed in the budget.

Kopi level - Green