Medisave or Medispent?

Patrick Kee

In September 1985, I had written the following editorial in
The Private Practitioner, the newsletter of the Association of Private Practitioners about the Medisave scheme. I am reproducing this article for SDP’s Perspectives column. More important, readers will note that time has proven that Medisave is an ill-conceived scheme.

The Government had introduced the Medisave scheme in order to ensure that our citizens will not find themselves in a situation in which the medical centres of the highest excellence will not be out of reach of its needy citizens. The Government had also eschewed health insurance on the ground that this will lead to spiralling health care costs and the abuse of medical services. But health insurance is only a problem if it is coupled with private medical care.

The Medisave scheme has its own inherent deficiencies. Firstly, many patients do not realise that while Medisave provides a convenient way to pay hospital bills, it is their own money and it is therefore limited. Many patients blissfully assume that their Medisave account will meet all their medical care needs. But Medisave is not an insurance scheme and the cost of medical care falls on the individual and the family.

For example, in the August issue of the
Mirror in 1985, it was reported that the whole amount in a woman’s account went into paying the hospital bill of her mother who was admitted for six weeks. One wonders what is going to happen if she herself requires hospitalisation or if the mother requires another long stint of hospitalisation. (This was in 1985 and Medifund scheme has since been introduced to cope with such situations.)

For minor and short term illnesses, the cost may not be a burden and may be within the scope of Medisave. However, in time to come, more families are going to have Medisave accounts which are in the red, especially with aged relatives afflicted with chronic illnesses.

Secondly, the economic downturn in 1985 highlighted another potential problem with Medisave. When unemployment strikes, further contributions to the Medisave account will cease. This will compound the problem of health care financing of the unemployed.

It may therefore be prudent to consider a modification to the Medisave scheme in which treatment of specific disorders such as accidents, vascular disorders, cancers, renal diseases and so forth are covered by insurance. The premium for such insurance can be paid from the Medisave scheme.

The term “uncompensated care” has been coined by the Americans to describe those who are without any health insurance and with less comprehensive protection. It is in fact ironic that one needs to be “protected” against the health care providers through health insurance. But this is inevitable in a society where medical care is practically under the rule of the marketplace.

In Singapore, we are fortunate as the Government is still providing subsidised care. But with increasing privatisation and without insurance coverage, the time will come when we will have to deal with “uncompensated care.”

In January 1986, we revisited the topic with the following editorial:

In 1983, the National Health Plan was unveiled with the message that there is an urgent need to balance the demand for and the capacity to supply health care services. The Medisave scheme was then introduced as a measure to increase the people’s ability to pay by building up individual financial resources so that subsidised services and the number of subsidised hospital beds can be reduced. By increasing the payment at the point of use, it was hoped that the Medisave Scheme would reduce abuse of hospital facilities and encourage personal responsibility for one’s own health.

Initially, the Medisave scheme was confined to payment of up to “C” class ward charges. Subsequently it was extended to the paying classes of the government hospitals and finally to all private hospitals today. Far from discouraging patients from abusing hospital facilities, Medisave has become the instrument to “help” patients make more use of hospital facilities.

It is also rather disturbing to note that most of the patients do not realise that Medisave is their own money rather than a government fund or medical insurance. Medisave has created the illusion of easy payment for medical bills without the painful awareness that it is a consumption of their life savings. Every cent withdrawn from the Medisave fund is a loss from the patient’s CPF savings. Unlike the CPF funds which are withdrawn for housing or even for stocks and shares, Medisave is not an investment but an irrecoverable expenditure. And CPF is supposed to be the savings for old age.

It would appear that Medisave has all the disadvantages of an insurance scheme without the benefits of the latter. We need to ask whether Medisave is encouraging our citizens to spend more on health care than is necessary. We need to be careful lest we are so obsessed with the golden egg of Medisave that we kill the goose to the detriment of all!

The success of the Medisave scheme cannot be measured in terms of the reduction of the financial burden on the government in the provision of medical care. It must be judged as failure if it results in a dramatic rise in health care cost.

There are better alternatives to health care financing. We need to learn from the mistakes of others. We can ill afford the expensive mistakes of the American private health care system. We need to recognise that there may have to be different methods of financing for primary care and specialist care. We need to realise that the cost of specialist care is too heavy a burden for any one particular individual or family.

In 1983, we have expressed the view that the National Health Plan and Medisave addressed the wrong question – it was an answer to the question “How can we best reduce the burden of escalating health care cost on successive governments?” rather than “How can we best look after the health of the people of Singapore.” Unfortunately, to quote Dr. Tony Tan, “it is not the easiest of functions for harried adminstrative officers to bring unpleasant facts to the attention of their political masters.”

It is most encouraging that Dr. Tony Tan, in his address to the Alpha Society, had expressed the need for a sense of when a government policy should be modified or reversed because it is no longer appropriate or is having adverse effects different from those which had been anticipated in order to formulate and implement public policy wisely. He rightly observed that persistence in an erroneous policy is the cause of folly in government. Let us therefore take another look at Medisave before it becomes a Medispent.

The above editorials was written more than 25 years ago and we are now reaping the fruits of a misconceived health care plan.

Dr Patrick Kee is a

specialist in Palliative Medicine and a member of the SDP’s Healthcare Advisory Panel.

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