YESTERDAY'S report ("Pioneers package Part 2? 'It'll depend on next generation' ") missed the main thrust of Deputy Prime Minister Teo Chee Hean's comments on the pitfalls of transferring the health-care costs of the elderly to the next generation of younger Singaporeans, and how the new MediShield Life addresses this.
DPM Teo said many countries had "anonymous" inter-generational transfers where the cost of generous health-care benefits for the elderly was paid for by taxing those currently working. Singapore is addressing this through a slate of complementary measures.
First, the Pioneer Generation Package (PGP) helps the pioneers born in 1949 or earlier. Many of them had not saved much in their working lives as salaries were much lower during their working years and our system of Medisave and MediShield had not fully kicked in.
The PGP benefits are being paid for by funds set aside now by the Government to ensure that the benefits promised in the package will be paid for without burdening future generations.
Second, MediShield Life will cover all Singaporeans for life, including those with pre-existing medical conditions.
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.
Third, DPM Teo said one key reason MediShield insurance is affordable is that there are deductibles and co-payment that help avoid over-consumption of medical services, compared to the "buffet syndrome" in insurance systems that pay for everything.
As part of the shift to MediShield Life, the Government has committed $4 billion over five years to support the bulk of the costs due to universal coverage, and to provide various forms of subsidies for all Singapore citizens, the lower- and middle-income, and all pioneers.
Taken together, these measures mean that our MediShield Life premiums will remain affordable compared to health insurance, for example, in the United States.
We can also avoid the serious funding problems of health-care systems in Europe, especially in a time of recession or slow economic growth, where a smaller pool of workers in the younger generation now has to bear the cost of providing generous health-care coverage promised to older citizens by previous governments.
Finally, DPM Teo said that within the context of a well-structured system, it would still be "natural and organic" for one's children to want to take care of their parents beyond what is provided for through their medical insurance.
We should not discourage this mutual responsibility between children and parents within a family by over-socialising costs.
Yap Neng Jye
Press Secretary to Deputy Prime Minister, Coordinating Minister for National Security and Minister for Home Affairs
DPM Teo said many countries had "anonymous" inter-generational transfers where the cost of generous health-care benefits for the elderly was paid for by taxing those currently working. Singapore is addressing this through a slate of complementary measures.
First, the Pioneer Generation Package (PGP) helps the pioneers born in 1949 or earlier. Many of them had not saved much in their working lives as salaries were much lower during their working years and our system of Medisave and MediShield had not fully kicked in.
The PGP benefits are being paid for by funds set aside now by the Government to ensure that the benefits promised in the package will be paid for without burdening future generations.
Second, MediShield Life will cover all Singaporeans for life, including those with pre-existing medical conditions.
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.
Third, DPM Teo said one key reason MediShield insurance is affordable is that there are deductibles and co-payment that help avoid over-consumption of medical services, compared to the "buffet syndrome" in insurance systems that pay for everything.
As part of the shift to MediShield Life, the Government has committed $4 billion over five years to support the bulk of the costs due to universal coverage, and to provide various forms of subsidies for all Singapore citizens, the lower- and middle-income, and all pioneers.
Taken together, these measures mean that our MediShield Life premiums will remain affordable compared to health insurance, for example, in the United States.
We can also avoid the serious funding problems of health-care systems in Europe, especially in a time of recession or slow economic growth, where a smaller pool of workers in the younger generation now has to bear the cost of providing generous health-care coverage promised to older citizens by previous governments.
Finally, DPM Teo said that within the context of a well-structured system, it would still be "natural and organic" for one's children to want to take care of their parents beyond what is provided for through their medical insurance.
We should not discourage this mutual responsibility between children and parents within a family by over-socialising costs.
Yap Neng Jye
Press Secretary to Deputy Prime Minister, Coordinating Minister for National Security and Minister for Home Affairs
