MEDISAVE (Reduction of ceiling)

Mr S. Vasoo asked the Minister for Health whether he will review and reduce the present ceiling for Medisave for the time being, in view of the current economic situation.

Mr Yeo Cheow Tong (for the Minister for Health): Mr Speaker, Sir, for Medisave Account holders below 55 years of age, the Government has set a limit of $15,000 and any balance beyond this amount will be transferred to the CPF Ordinary Account. It will be implemented on 1st April this year.

The Ministry does not intend to reduce this ceiling of $15,000 as the amount has been computed based on the anticipated hospitalization expenses of the Medisave Account holder and his family.

The average Medisave balance today is still low, at $2,522 per account. 85% of Medisave Accounts have balances below $5,000.

Dr Ang Kok Peng (Buona Vista): Mr Speaker, Sir, would the Minister of State consider making the necessary arrangement with the Acting Minister for Labour to allow a CPF contributor to use the fund in his Ordinary account to replenish his Medisave account should it be depleted?

Mr Yeo Cheow Tong: There is no need for this procedure to be considered because patients going into the Class C wards and B2 wards can overdraw on their Medisave account.

Dr Ang Kok Peng: Would the Minister of State inform us how is the patient going to make up for the deficit?

Mr Yeo Cheow Tong: He can make up for the deficit from future contributions.

Mr Vasoo: Sir, in cases where both husband and wife are working and contributing to Medisave, is there a need to keep such a large sum in the Medisave account?

Mr Yeo Cheow Tong: Perhaps I would like to bring the point brought up by the Member for Bo Wen a bit further. I think this relates to how much flexibility should we have in the Medisave scheme. The Medisave ceiling has been computed based on certain assumptions relating to family size, whether they have children, whether they have parents or grandparents, or the lack of grandparents. If we are to extend the scheme and introduce flexibility into the scheme, then it would be very complicated to administer, especially since the Medisave scheme is on a national basis. From the point of view of the individual, flexibility would be both desirable and fair. I can understand that. Unfortunately, since we have to administer the Scheme on a national level, we must keep the Medisave Scheme simple and straightforward, in terms of administration. Therefore it is not possible for us to make exceptions dependent on the family circumstances.

Mr Chng Hee Kok: Mr Speaker, Sir, taking up what the Minister of State has just mentioned that 85% have at the moment less than $5,000 in Medisave. Does it not mean that the balance, ie, the other 15%, are actually over-providing? If at the moment 85% with less than $5,000 find it just about adequate, therefore those who are saving more than $10,000 are actually over-providing, is it not?

Mr Yeo Cheow Tong: The Member is assuming that $5,000 and below would be well provided for and those above $5,000 are over-provided. The answer is no. The realistic figure, or the appropriate figure at the moment, based on our computations, is $15,000. However, since the scheme has been in operation for only two years and we are still in the midst of liberalizing the usage of the scheme, it is prudent for the Ministry to monitor the operations of the scheme and observe the usage pattern for the next two to three years, and to make adjustments, if required, when the time comes.

Dr Koh Lam Son: Sir, in the two years of experience, what is the percentage of this 85% who have overdrawn their Medisave account?

Mr Yeo Cheow Tong: The Member for Telok Blangah has made an error. He has asked what is the number of those 85% who have overdrawn? The number who have overdrawn, out of the total and not just the 85% who have below $5,000 in their accounts, the total number who have overdrawn in the last two years have been small. But I think that relates more to the fact that the scheme is still very new.