Thursday, March 22, 2012

SDP defends health-care proposal

Mar 23, 2012

WE THANK Mr Jason Salim for his interest in our proposed health-care plan ('Health care: Why Govt's policy works while SDP's won't'; Tuesday).

First, his worry that the plan will lead to tax increases for ordinary Singaporeans is unfounded. We recommend that corporate tax, not personal tax, be increased.

This is because companies will enjoy savings as they no longer have to bear the costs of their employees' health care under the plan.

[First, are they currently bearing the costs of employees' health care? If so how much? IRAS allows only up to 2% of total payroll expenses to be deducted for medical expenses. Sure, some nice employers may cover more. Anyway, at the SDP website, they propose to fund this healthcare plan with a $10b plus injection from the govt. So how much corporate tax do we need to raise $10b? Well, the revenue from corporate tax in 2011 is estimated at $11b. We would need to DOUBLE the corporate tax then. That should chase away quite a few companies from SG. leaving the local SMEs to shoulder a heavier burden. Better TRIPLE the corporate tax rates. Oh, but SMEs are not very profitable. Even tripling the corporate tax, won't be enough to raise $10b. What's after "QUADRUPLE"?]

Second, we recommend replacing the bureaucracy of the current 3M (Medisave, MediShield and Medifund) system with a single-payer, universal health insurance system, with premiums and co-payment to ensure responsible use of medical services.

Instead of 'welfarism', we are promulgating a system in which all Singaporeans pool their resources together in a cooperative manner to address life's contingencies, which may affect any one of us.

[Define "Welfarism". How do citizens pool their resources? Who will be this "single-payer"? An insurance company? Oh wait, you already arrowed the Govt to pay $10b. So what's your definition of Welfarism again?]

Third, Mr Salim's impression that the 3M system is working is inaccurate.

In 2010, 3M accounted for less than 10 per cent of total health-care expenditure of $12 billion, with Medisave contributing $732 million, Medifund $80 million, and MediShield $248 million.

The rest is funded by employers' health benefits and out-of-pocket expenses - the highest level in developed East Asia.

[So how much is funded by Employers and how much by out of pocket expenses and which is the highest in developed East Asia? Employers Health Benefits or out of pocket expenses? Why is this two combined? I think it is fine for employers to pay more. In fact the SDP proposal is for the Employers to pay more via corporate tax. BUT the difference here is that under the current system, healthcare is peg to remuneration - up to 2% of payroll. (Sort of like a payroll tax). Pegging to corporate tax means only profits are taxed. And if the company makes little or no profit, the tax would be less. And so profitable companies will subsidise unprofitable companies. How is this better?]

We agree with Mr Salim that a health-care plan must not saddle future generations with higher costs.

Yet the 3M system is predicated on one generation's medical expenses being borne by the next, as evidenced by the criterion that an individual must first exhaust his own and his family's Medisave before qualifying for Medifund.

[Explain how this is saddling the future generation with higher costs? This is a mindless regurgitation of critique of welfare systems in the US applied without context or explanation to SG without any regard for truth, comparability, or relevance.]

Under our plan, students will receive subsidies for their premiums.

With the elimination of Medisave and MediShield, each Singaporean contributes less every month under our plan than what they are currently paying.

[Right... "all Singaporeans pool their resources", but "each Singaporean contributes less every month" and it is not welfarism. I like your math. "1 - 1 = 2" Lovely.]

Associate Professor Paul Tambyah
Dr Leong Yan Hoi

Healthcare Advisory Panel
Singapore Democratic Party

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