How might Medisave be stretched?

The Straits Times, 1 Nov 2011

CLAIMS made on Medisave eligibility keep rising. The progressive inclusion in recent years of chronic disease monitoring, on top of the original purpose of meeting hospitalisation costs, had extended eligibility by a good margin. Medisave has been a comfort to many Singaporeans. Pressure for more liberal use will grow as inexorably as the quickening pace of population ageing. This week, dementia and bipolar disorder were added to the list for outpatient management, just as MPs and the health sector lobbied for more inclusions.

Joint degeneration associated with ageing could well be the subject of new calls - not necessarily hip and knee replacement, but for the purchase of renewable devices such as braces and wheelchairs to improve mobility.

The case for wider eligibility would seem self-evident. Ageing, rising health-care costs and the importance of disease management for those aged 50 and older will continue to impose strains on pockets.

This was how the Medisave scheme, started in 1984 - reinforced later by the launch of MediShield and the ultimate Medifund safety net, the widely praised 3M model - became a key component of health-care financing. Employer-paid coverage and private insurance, state subsidies, co-payment and deductibles still form the bulk of financing.

Whether ever-increasing use of Medisave money is feasible or wise in these circumstances is better judged against relative numbers. As of December 2008, the average Medisave balance was $15,000; enough for about a dozen hospital stays, by the Health Ministry's optimistic reckoning. The current contribution ceiling is $41,000, adjusted yearly for inflation. Only the top percentile will have reached it.

It is doubtful health economists will consider these amounts adequate for the projected use of an account holder's lifetime. While inflation indexation is possible, predicting diagnostic and treatment costs is difficult. Would it not argue against depletion of savings by allowing claims for more medical conditions? MediShield insurance is available to protect against catastrophic illnesses while the means-tested Medifund helps the indigent.

The case would ideally turn not on how restricted Medisave ought conceptually to be so that the money will last, but on whether it could be made flexible to meet growing health-care needs of older Central Provident Fund (CPF) contributors. Allocation rates could be raised for members aged more than 45, who now have 9 per cent of CPF contributions set aside for Medisave. This would be at the expense of the all-purpose Ordinary Account, but the assumption is that this age group would be well on its way to clearing HDB mortgages.