Don't raise Medisave ceiling

26 Apr 2005, Business Times

Question

Name of the Person: Leong Sze Hian 

Don't raise Medisave ceiling

I REFER to the report, 'Medisave, MediShield changes in the pipeline'' (BT, April 25). Higher income earners may have their Medisave contribution ceiling, currently at $30,000, raised in a year's time. 

The reason given was that MediShield was designed with the B2 and C class wards in mind, so for higher income earners, capping the Medisave contribution ceiling might mean that they would not have sufficient savings if they opted to stay in A-class wards. 

This policy change in a way contradicts the recent policy change of farming out the MediShield-Plus schemes to a private insurer because, on the one hand, we say that we want to give those who can afford the choice of a wider and competitively priced range of medical insurance schemes from private insurers, but, on the other hand, we are now told we have no choice but to have more Medisave for MediShield's design limitations. 

If the higher-income earners choose higher-class wards, it is their choice because they prefer it and believe they can afford to. So, why is there a need to lock up more of their disposable cash-flow and assets in the Medisave account? 

The more one's assets are locked up in Medisave, the less will be available for other uses like retirement expenses and desired health-related expenses. The restrictions on the use of Medisave actually limits the choice of many health-related services available such as out-patient, health screening, etc. This may mean more cash out-of-pocket medical expenses. 

The higher-income already pay more income tax and will be subject to means testing if they opt for class B1, B2 and C wards. So, is it fair to make them contribute more to Medisave? Increasing the Medisave contribution and withdrawal ceilings may have the undesirable effect of encouraging people to opt for higher-class wards, because some may feel that they might as well use it since it cannot be used for anything else. 

Moreover, the balance in the Medisave account goes to one's CPF nominees upon death. Perhaps, healthcare policies should focus on the lower-income like not closing the night services at polyclinics, instead of forcing the higher-income to contribute more.After all, if those with higher income do not have enough when they opt for higher-class wards, it should not be the government's problem. 

The CPF cuts, lower contribution for older workers, and lower contribution ceiling for the higher income, is already causing more financial hardship and stress for some higher-income earners, who have property mortgage repayments. 

So, why reverse the downward trend of CPF contributions by raising Medisave?This may mean even less disposable cash-flow for some whose earnings were cut during the recent economic downturn. 

By 2013, the CPF Minimum Sum will increase to $120,000 plus minimum Medisave amount of $25,000. How much more will Singaporeans have to set aside in their CPF in the future, when they reach age 55?

Reply

Reply from MOH 

MOH: Our priority is still lower income groups 

In "Don't raise Medisave ceiling" (BT, April 26) , Mr Leong Sze Hian argued that "healthcare policies should focus on the lower income". We agree. 

This is why our resources are prioritised towards basic medical services, including the provision of Medifund as a safety net for the poor. It is also for this reason that we are considering means-testing to better target healthcare subsidies to those who need them the most. 

As for higher income earners, Mr Leong is of the view that they opt for higher class wards because "they can afford it" and this should not be the government's problem. This is a valid view. Seen from this perspective, we should simply continue with the status quo. 

However, some anecdotal feedback suggests that there are people in the middle and higher income groups who feel differently about this issue. They would like some refinements to Medisave rules to allow them to help pay for the higher cost of hospitalisation in the private and Class A/B1 wards. 

We are approaching this issue with an open mind, and do not rule out any options, including the possibility of doing nothing, until we have analyzed the data. Meanwhile, we welcome all feedback to moh_info@moh.gov.sg