MEDISAVE ACCOUNT (Use of interest for purchase of health insurance)

Mr Heng Chiang Meng asked the Minister for Finance, Minister for Education and Minister for Health whether flexibility can be permitted in a member's Central Provident Fund Medisave Account for him to purchase life-long private health insurance policy with the interest earned on the balance in the Medisave Account and, if so, whether the CPF Board will cease transferring funds from the Ordinary Account into the Medisave Account when the interest earned is sufficient to pay the policy premium.

The Minister of State for Health and Foreign Affairs (Mr Yeo Cheow Tong) (for the Minister for Finance, Minister for Education and Minister for Health): Mr Speaker, Sir, I am answering on behalf of my Minister.

The Medisave Scheme was introduced in order to avoid the pitfalls of a general medical insurance scheme. The experience of countries where a third party, ie, an insurance company or the government, pays the medical bill has been that:

(a) it gives the consumers an illusion of free medical services, resulting in increased demand for such services; and

(b) it provides no incentive for providers of health care to economize since they are reimbursed on a fee-for-service basis.

However, the Ministry has not excluded the possibility of Medisave accounts being used to purchase supplementary catastrophic illness insurance.

Regarding the concern about whether contributions will continue to be paid into a person's Medisave Account should there be adequate funds existing in his account, the Ministry is studying the possibility of setting a limit on Medisave balances beyond which contributions could be paid into other accounts within that individual's CPF account.