Chairman, I beg to move, “That the total sum to be allocated for the Ministry of Health be reduced by $1.”
Medical spending is lumpy
Those of us who have fallen seriously ill at one point or another will be keenly aware of how our healthcare expenditures are lumpy; that is, we may go one year without any medical expenses, but in another year, we may end up spending far more than we may have anticipated. This is often even the case for chronic conditions, since new diagnostic procedures or treatment procedures may be required on occasion. This reality is corroborated by more systematic research in health economics.
Moreover, it is also well-known that end-of-life spending tends to be elevated. This is another manifestation of lumpiness: patients tend to spend most in the final few years of their life.
But Medisave limits are not
Medisave currently faces annual withdrawal limits for several types of care. The policy is well-meaning: one does not wish for a patient to exhaust their Medisave funds, especially knowing that most healthcare costs will indeed be incurred at the tail end.
But this is problematic, because the policy is not aligned with the lumpy nature of medical expenses. It also glosses over the role that insurance—including public ones such as MediShield Life—plays in such instances, since these are more likely to pay out for major illnesses that would otherwise exhaust their Medisave.
Actual data from CPF supports this notion that there may be excess forced saving in our Medisave accounts. In response to a PQ posed in 2022, Minister Tan See Leng reported that Medisave account balances for members significantly exceed those in their retirement accounts, with the ratio for those aged 85 years and above close to five times larger.
Better calibrating Medisave limits
There are two ways to better calibrate Medisave limits.
First, we can permit carrying over of unspent limits, for up to 3 years. This will allow those who incur larger-than-expected bills to not have to rely on out-of-pocket funds—which, especially for retirees, are frequently paid for by working-aged family members—to top up medical expenses.
Second, we can have a tiered system of claim limits, with the amounts allowed for claims gradually raised according to age. While nobody can accurately predict when an individual’s demise might be, we can rely on aggregate statistics on mortality by gender to adjust claim limits accordingly.
