CENTRAL PROVIDENT FUND (AMENDMENT) BILL

Order for Second Reading read.

The Acting Minister for Health (Mr Yeo Cheow Tong)(for the Minister for Labour): Mr Speaker, Sir, on behalf of the Minister for Labour, I beg to move, "That the Bill be now read a Second time." 3.38 pm

[Mr Deputy Speaker (Mr Lim Boon Heng) in the Chair]

The Acting Minister for Health (Mr Yeo Cheow Tong)(for the Minister for Labour): Sir, in 1984 the Government introduced the Medisave Scheme to help Singaporeans meet their hospitalisation expenses. Used prudently, account holders would find their Medisave funds adequate for their hospitalisation expenses. However, those suffering from major illnesses requiring prolonged hospi- talisation may run the risk of rapidly depleting their Medisave funds. They may be left with insufficient funds for their old age hospitalisation expenses as well as that of their family members.

The Government has since 1985 been studying how to lessen the financial burden on those suffering from catastrophic illnesses. Officers from my Ministry and the CPF Board have consulted insurance experts and studied the experience of other countries. We also appointed a firm of actuarial consultants to help analyse our hospitalisation data, bill sizes and other data. In formulating the Catastrophic Illness Insurance Scheme, the officers and consultants were guided by three considerations.

Firstly, the scheme must be low cost in order to benefit everyone, especially the low income earners. Secondly, it has to be simple. The public can then easily understand it and it would be easy and inexpensive to operate. Thirdly, the scheme must not encourage over-usage of hospital services. The result of this intensive study and careful consideration is the MediShield Scheme, details of which were announced on 24th February this year.

This Bill seeks to amend the Central Provident Fund Act to empower the CPF Board to establish and maintain this Catastrophic Illness Insurance Scheme. The premiums for MediShield have been kept low and highly affordable. The premiums range from as low as $1 a month for those up to the age of 30 years to $8 a month for those aged between 60 and 65 years. Medisave funds can be used to pay the MediShield premium.

Sir, the premiums have been kept low and attractive on the assumption that there will be mass participation by the public. This would have been easily achieved by making participation compulsory for the whole population. However, we decided not to adopt this administratively convenient approach. Many employees enjoy varying degrees of medical benefits provided by their employers. They may feel that it would not be necessary to participate in the Catastrophic Illness Insurance Scheme. Also, others may have purchased medical insurance coverage for themselves and their whole family and be adequately insured for all medical conditions. We therefore decided to let the public choose whether or not they wish to participate.

To enable them to make an informed choice we embarked upon an intensive programme of information dissemination. This was done through the mass media, through information booths that were installed in various busy shopping centres and at community centres. The CPF Board also sent information materials on MediShield to all households and to all Medisave account holders. Those who decided not to participate could then easily opt out by just mailing back the Insurance Certificate to the CPF Board.

In order to keep the premium low, it is also essential that MediShield does not encourage unnecessary hospitalisation. This is achieved through the imposition of a deductible amount and the concept of co-payment. MediShield cover will begin when the claimable hospital bill exceeds $600 a year for those using Class C wards and $1,000 per year for those using Class B2 and above wards. This represents about 15 days' stay in hospital. MediShield will pay 80% of the claimable hospital bill while the insured will pay the remaining 20%.

Sir, the age limit for MediShield coverage is currently 65. Many members of the public have requested that this age limit be raised beyond 65. I wish to assure Members that we do intend to do so in the future. As we are venturing into totally new grounds, it is essential that we first gain some experience with this new MediShield Scheme. My Ministry will closely monitor the MediShield usage rates and plan for the extension of the age limit at the earliest opportunity.

I am happy to inform Members that as a result of the mass communication programme, we have attracted the participation of 1,270,000 Medisave account holders, representing a participation rate of 87%. About 14,500 dependants have also applied for MediShield coverage. I believe the inexpensive premium and the attractive range of coverage are important factors that have persuaded most Medisave account holders that it is in their interest to have MediShield coverage.

Sir, the Government will continue to improve our already high level of health services. Every Singaporean regardless of his financial status has access to good medical care. Unfortunately, quality hospital services are always expensive to provide. This has been well borne out in every country. In Singapore our well established system of subsidizing certain classes of wards without compromising on the level of medical care allows every Singaporean to choose according to what he or she can afford. The introduction of MediShield will further reduce the financial burden on those who have the misfortune of suffering from serious or prolonged illnesses. It represents another important milestone in the development of our health care system.

Sir, I beg to move.

Question proposed.