Friday, August 5, 2016

The (pre-warned) Cracks Emerging In Obamacare

Wow, check that out.

Obamacare premiums are going to surge 13-54% in 2017 although US inflation rate is... 1%.

Fantastic. I just love Obama and Obamacare, don't you? /sarc (No, I hate Obamacare and I think it is one of the biggest dumb policy ever implemented)

As big of a proponent I am for capitalism, I do recognize that some socialism projects can be a positive to society if crafted and executed correctly (I'm a big fan of Workfare). Obamacare is a perfect example of a horrible crafted and executed socialism project that probably set back the country in medical care access and affordability than progress it.

It ain't rocket science why it wouldn't work. I refuse to explain it because I know it would be an insult to all of my readers' intelligence.

Oh, but wait wait wait! Doesn't Singapore also face RISING HEALTHCARE COSTS? We hear that in the media all the time, right? Doesn't your insurance agent tell you that too?

In all honesty, I do believe that healthcare costs are increasing, but so is the quality of the care as well. Perhaps it's just me and I've only experienced my adult life in this period of low/negative inflation, but so far that is not something that I have personally experience, and there's stats to back me up.

I've pulled out CPI stats from SingStat and guess what I found for healthcare? Since Jan 2014 and Jun 2016, healthcare costs has increased a massive... 0.7%. And no, that number is NOT annualised. That is the absolute increase over the past 30 months. Runaway healthcare inflation? I think not.

Now, one rebuttal that I expect to hear is that the CPI stats are not reflective of "real life" medical costs (ie. your medical bill). To that, please flip to page 39 and we shall see that the categories that are being covered are... very broad based. They even include spectacles and contacts for our very myopic society. Yes, hospitalization fees are counted. Yes, health insurance is counted. You think they don't count all these things meh?

The biggest shortcoming of my stats that I have to admit is that my dataset is small. I haven't been able to find stats going further back, although I am pretty sure they do exist. I'm just kinda lazy to search very hard. My current effort for searching for more data is about 7/10. More than average, but not maximum effort.

That said, I think that my point is still relevant. Core inflation is up 1.1% over the past 30 months while healthcare lags it and is only up 0.7%. Which, by all means could be considered as negligible in the short term.

My healthcare costs is increasing because of my AGE and not because of inflation. It's simple logic. Older people have more medical needs. If you are comparing medical costs right now as a 40 year old to back 20 years ago when you were a PES A fighting fit soldier, I really don't think that is a good comparison. Of course your medical costs would have gone up. But as a result of your age, not because hospitals are out to fleece you.

I'm always glad to be living in Singapore where medical costs are not out of whack. Medical costs take up a HUGE chunk of American's salary and we pay a fraction of it while enjoying high standards as well. Is cheap and good possible? If the USA is our comparison, then yes, it does seem so.



    Any thoughts on this?


    1. Hi FFE,

      The premium freeze and the eventual rate hike on the IPs have been known for a while since they announced Medishield Life, although the magnitude of the rate increased have only been speculated.

      A 50 year old median income worker who is paying for an class A ward coverage with a rider that covers fully is now only paying about 2% of income for his medical healthcare coverage.

      Presidential nominee Hilary Clinton has just announced that she plans to reduces household healthcare expense from 9.5% to 8.5%. Healthcare costs in the US are astronomical. Just drop by any of the Obamacare state websites and get an estimate. Their monthly premiums look like our annual premiums.

      A 20% increase from a low base is acceptable (to me) considering that (I personally find that) healthcare in Singapore is relatively cheap. If private insurers are not making money, then they should definitely be raising premiums to ensure that they are profitable. Insurances aren't charities, it is risk-pooling. If medical costs are going up and claim rate is going up, it only makes sense that premiums go up as well. Increased cost to reflect increased risk.

      Unfortunately, for those who cannot afford to pay the higher premiums, they cannot have the extended coverage by the private insurers. However, they still do have the excellent fall-back option of Medishield Life, so it really isn't a tragedy if you can't get IP coverage. For a 50 year old, Medisheild Life is just $258 a year with the transitional subsidies now, which can be paid from CPF MA. For the median person, that's less than 1% of income.

      Unlike Obamacare, Medishield Life only forces risk-pooling by healthy people to be together with unhealthy people until a very basic limit. Unhealthy people are also loaded to reflect their higher risk. However, since the Medishield Life portion only makes up a proportion of most people's regular IP, the healthcare insurance system in Singapore is not facing the same risks as Obamacare, which is fundamentally flawed to begin with.


Observe the house rules.