MEDISAVE AND MEDIFUND

Column: 738

MEDISAVE AND MEDIFUND: 3.

Dr Tan Sze Wee asked the Minister for Health, in light of the recent announcement to revamp the MediShield system, (a) whether the Medisave and Medifund policies can also be revised in tandem; (b) will there be enough Medisave to cover the increase of deductibles for poorer Singaporeans; and, if not, (c) what will his Ministry do to

Column: 739

ensure that the Medifund or Medisave schemes 'kick in' sooner to tide these groups of Singaporeans over.

Mr Khaw Boon Wan: Sir, our system of financing hospitalisation cost, comprising large Government subsidy and some co-payment by patients, supplemented by insurance and employer medical benefits, has served us well. It has helped us deliver a high standard of public hospital services which the vast majority of Singaporeans can afford.

The system has evolved over the years. We constantly enhance it in the light of experience, so that it remains effective and relevant to our circumstances.

The current reform of MediShield is part of that evolution. After 1st July, we will have a more robust system of leveraging on insurance to help ease the financial burden on Singaporeans.

Medisave is a key piece in this healthcare financing system. When every Singaporean regularly saves a portion of his income in his Medisave Account, he will over time build up a considerable balance to pay for the hospitalisation needs of himself and his family.

After 20 years, Singaporeans have collectively accumulated a total of $30 billion in their Medisave accounts. The average Medisave balance exceeds $10,000. This is not a small achievement. In another 20 years, when the scheme matures,ie, when every Singaporean would have started contributing to Medisave from the first day he starts working, we would collectively and individually build up sizeable savings for a rainy day.

For the current MediShield reform, almost all patients would have enough Medisave to pay for the increased MediShield deductibles.

Column: 740

For the small minority who are unable to afford their hospital bills, we have Medifund to provide the safety net. As Members are aware, the Government is doubling Medifund to $2 billion, with an immediate injection of $100 million.

Dr Tan Sze Wee (Nominated Member): Sir, I am glad to hear that, on average, Singaporeans do have an average of about $10,000 in their Medisave account. However, with the increase in deductibles, the amount that is going to be drawn out of Medisave to pay for deductibles would increase over time. Currently now, until over time when savings are increased, it is still a limited pool. I just want to ask a point of clarification.Is there any way in which the Ministry would look into, for example, what happens if, let us say, Medisave runs out? Will that mean there will be more out-of-pocket payments for hospitalisation bills?

Mr Khaw Boon Wan: Mr Speaker, Sir, I track the health of Medisave regularly. I look at the statistics. Of course, we could not attend to individual accounts because there are so many but, at the macro-level, I look at the various statistics associated with it - median, percentile, and other data. As I said just now, Medisave is a crucial part of our hospitalisation financing system and, without Medisave, one could not even start to begin to solve this problem. That makes Singapore quite unique. I helped to flesh out Medisave 20 years ago, and so I may be a bit biased, but I think Medisave is a very important part of this whole scheme.

We have often heard our colleagues saying that this is a 3M system - Medisave, MediShield and Medifund. I think it is not quite a good label because it shortchanges us. It is not just 3Ms. I prefer to describe it as an SMs financing system. A very big "S" for subsidy,

Column: 741

because we are talking about B2/C class patients here and subsidy is the first line of defence. We subsidise a lot, with Class C up to 80%. So this big "S" followed by several "Ms". I dare not pronounce it as "SMs" in case it gets confused with the other "SMs". So I shall pronounce it as "SMs" and the "Ms" mean Medisave, MediShield and Medifund and, I think, in due course, means testing too, although that is the next question we would be talking about later. This whole financing model makes us unique from the rest of the world and is a great asset which we should preserve, and making sure that Medisave collectively, and individually, remains healthy, is one of the key objectives.

Yes, with MediShield reform, deductibles go up, but I have been very careful when I set the deductible increases. I have long sessions with NTUC unionists, got their feedback and supported by statistical data. The increase of $500 is very affordable. As I said,most accounts have more than $10,000. You have to look at affordability from the viewpoint of whether you have enough in Medisave. I know where so much of the criticisms that it is unaffordablecome from. It is actually from the self-employed and I worry a lot about the self-employed. When you are young and healthy and still able to drive a taxi or cook char kway teow , if you do not save, you and your children would get into trouble. Even a small bill of $500, if you have no savings,is huge, but with savings, even if you earn $1,000 a month, you would be saving $7,200 every 10 years, and that is not a small sum.