I've been thinking through some of the secondary and tertiary effects of the new MediShield Life premiums/taxes. Here are a few more interesting side effects:
1. If you own an HDB unit, you have a forced sale if you lose or give up your PR status or citizenship. The introduction of MediShield Life taxes makes it a little more expensive to time your national status termination for purposes of better timing the forced sale of your HDB unit.
2. It's the same thing with landed properties if you own one. The MediShield Life premiums mean there's a price (a tax) to delay a national status termination, and so it's more expensive to time your real estate sale as you would prefer based on real estate market conditions.
3. Since the MediShield Life premiums are both subsidized and capped, they have different impacts depending on your income and wealth. If you have lower income, then you get a premium subsidy, and so these taxes don't matter too much (or at all). It's less expensive for you (or even free) to defer your termination of citizenship or PR status. If you're high income/wealthy, then the premiums are pocket change. For example, S$435 per year (the premium that one adult in his/her 40s pays) might be less than the price of one bottle of whiskey, and you just don't care very much. This level of tax isn't something that will affect your life much at all. But if you're merely middle income, then you bear the full premium
and it's a bigger percentage of your total income, so you feel it -- it's not "pocket change." Add that all together and it means that specifically middle income, "loosely attached" citizens and PRs are the ones who will be the most highly motivated to bring forward their national status terminations. Singapore is still going to hang onto its "loosely attached," wealthy citizens and PRs -- this tax won't change
their behaviors with respect to maintaining or terminating their national statuses. And Singapore is still stuck with its lower income citizens and PRs, although Singapore doesn't have to grant citizenship or PR status to them in the first place, as always. (And some of them are kind of fun and adorable after all, e.g. artists and writers.)
4. Likewise, since the premium/tax increases with age,
older "loosely attached" citizens and PRs will have a greater incentive to bring forward their national status terminations compared to their otherwise identical but younger peers. For example, that S$435 annual premium in your 40s almost doubles to S$815 if you're in your late 60s. And that's good, because those older people are such a burden (or could be), so why not encourage a few more of them to give up on Singapore and retire elsewhere, without the prospect of coming back?
Again, I believe all of these impacts are already well understood, that this is all "working as designed." If you were trying to design a new policy to chase away "loosely attached" PRs (mostly) and citizens at the margins, especially those who are older and/or of moderate means, and to return HDB units and landed properties more quickly to local citizen/PR occupancy, then the new MediShield Life taxes seem to be well designed.
One has to admire the government's policymaking (deviousness?) at least occasionally. They do know how to twist the knobs and pull the levers gently but deliberately, don't they?
costing USD$6100 is covered by our dental plan. All of it out of our own pocket.
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