Medisave and the Concept of Individual Responsibility

singapore healthcare
Welcome back to our special look at the Singaporean healthcare system. Today we shall take a more in depth look at Medisave and explain what this first layer of healthcare protection is to the average Singapore.
"Medisave, introduced in April 1984, is a national medical savings scheme which helps individuals put aside part of their income into their Medisave Accounts to meet their future personal or immediate family's hospitalization, day surgery and certain outpatient expenses. Under the scheme, every employee contributes 7% - 9.5% (depending on age group) of his monthly salary to a personal Medisave account. The savings can be withdrawn to pay the hospital bills of the account holder and his immediate family members." - Ministry of Health Website
Medisave was a key initiative that implemented the principle of health as an individual responsibility. When Medisave was introduced, it was used as a tool to alleviate moral hazard and pushed Singaporean society towards becoming one that placed a heavy emphasis on healthy living within it's social norms. 
Medisave's inception resulted in the beginning of Singaporeans paying large amounts for healthcare services that they themselves consumed. The government's share of healthcare spending decreased from 76% to 30% since the introduction of Medisave (and subsequently Medishield). The birth of Medisave marked the beginning of Singapore's successful move away from collective responsibility through taxation for provision of healthcare to one of individual responsibility.
Medisave enabled this move because the mandatory national savings scheme guaranteed that working Singaporeans had money specifically set aside for healthcare purposes. Singaporeans were more willing to tap their Medisave for treatment because it would have simply gone unused if they decided to leave their Medisave account untouched. It drove home the message that we are ultimately responsible for our own long-term health and wellbeing and that we should exercise due prudence in drawing from our own savings.
Medisave today is somewhat different from it's original form. It has gone through several changes since it's inception over 20 years ago. The government has opened Medisave to allow account holders to pay for their outpatient and ambulatory needs.  The goal behind this was to help account holders save in the long run by focusing on preventative care. The government knew that preventative care would keep possible complications and hospitalizations in check and help people save in the long run. The government in recent years has also finally allowed account holders to draw on their Medisave to pay for chronic conditions. 
But why did it take so long for the government to open up Medisave to allow account holders freer access to their savings fund after repeated calls to do so? Former Health Minister Khaw Boon Wan explained why in 2007:
"$11,000 or $12,000 (the average amount in a citizen's Medisave account) is a five digit figure, but it is not a big number, bearing in mind that you have many years to go. With medical science, life expectancy is growing every decade by a year or two. So, really people should look at Medisave carefully and try to conserve, and that is the reason I have to be the very unpopular gatekeeper now and then when Members put up their hands and say, "Please, can I use Medusave for this or that?", I have to akways bring them back to the original purpose of Medisave, which is for costly hospitalization.
So when it is for outpatient treatment, a few dollars, or even if it is tens of dollars, please pay for it out of your pocket and conserve the amount in Medisave for the old age, especially at the time when you will not be working. That is why it took us 20 years after we introduced Medisave to decide to make a major change, which is from inpatient to outpatient, but even then to restrict it to four chronic illnesses (diabetes, high blood pressure, stroke and high cholesterol) and we have to restrict it carefully. We have started it for four diseases. Implementation so far has been smooth. It is a little bit of leap of faith. If all patients follow, comply with the instructions of their doctors and manage their chronic illnesses while they are still mild, the hope is that we can avoid very costly complications 20 or 30 years down the road. 
So, on a life-time basis, hopefully you save money and not just deplete your funds, That is why for the extension of this scheme to other illnesses, we restrict it to those where there are clear cut disease management protocols and not just for any kind of outpatient treatment. Because if it is purely consumption without any impact on the future health, then I think we should not do so." Khaw Boon Wan, Singapore Parliamentary reports, Hansard (Average savings of Singaporeans, 22 Jan 2007)
This lengthy discourse by the former health Minister is revealing because it illustrates the important principles that guide Singaporean healthcare policy makers:
1. A Medisave account has to last for the entire lifetime of it's account holder.
2. More and more savings will need to be tucked away thanks to advances of medical science increasing average life expectancy.  This is why in December 2012, the CPF Board announced that the Medisave minimum sum was going to be raised from $32,000 to $38,500 in 2013. This was later raised again in May 2013 to $40,500.
It is a grim reminder that living longer today has it's price and we really should take better care of ourselves to keep our future medical bills down.  Stay tuned for the next article where we take a look at the second M in our healthcare system and explain what Medishield really is.
A Special Look At The Singapore Healthcare System

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