in C-class receive a subsidy of up to 80 percent of inpatient ward charges, drugs, and other medical treatment. C-class patients also receive subsidies on surgical procedures and on physicians’ fees. In all the other wards between A and C, amenities and choices decline as the subsidy increases. Financial means testing is used to determine eligibility for subsidy for anyone seeking admittance to C and B2 wards. I will provide more details on all this in a later chapter.3
Medisave
Medisave was the first health-related expansion of the Central Provident Fund. Initially unveiled in 1983 as part of the National Health Plan, Medisave was created as an account within an individual's CPF. At the time, Medisave was the first of its kind in the world. It contained a simple and powerful idea: help the people of Singapore save for their healthcare expenses, just as the Central Provident Fund helped people save for retirement. I view Medisave as an initiative in keeping with the national philosophy encouraging self-reliance, personal responsibility, and family responsibility. Since it was determined by the architects of the system early on that individuals would pay for most of their healthcare cost after heavy government subsidy, the government saw Medisave as a way to ensure everyone would have money to do so.
Contributions to Medisave
Under Medisave, workers and their employers contribute a specified percentage of monthly wages to the individual's CPF account of which a certain portion, as I pointed out above, goes into Medisave. Contributions are based on the age of the employee. As of 2012, workers up through age 50 contribute 20 percent of their wages, and their employers add another 16 percent for a total contribution equaling 36 percent of their wages. The money is divided into the three abovementioned accounts, with the Medisave account receiving between 7 and 9.5 percent of the wage depending on age. The worker contribution is lowered to 18.5 percent for those over 50 through 55, and the employer rate drops to 14 percent, with 9.5 percent going to Medisave. Above age 65, employee contribution drops to five percent, employers 6.5 percent, with 9.5 percent of wage going to Medisave (see Table 3.1). This is not considered to be a tax by the Singaporeans I have met, no more than are the 401k plans of the United States.
All the savings are tax exempt, both at the time of deposit and of withdrawal, and they are guaranteed to earn a fixed interest rate established by the CPF Board with a minimum rate of 2.5 percent. In recent years, the rate had stayed at 4 percent. The rate is often pegged to the average yield of specifically-designated Singapore Government Securities. Self-employed individuals initially were excluded from Medisave, but beginning in 1992, anyone earning above S
The government sets a maximum amount that individuals can accumulate in their Medisave account. The maximum specified for Medisave is presumed to be adequate for an individual's projected future healthcare needs, freeing up the person's other funds to go toward other retirement purposes. In 2012, it was fixed at S
The government also sets account minimums; this is the amount individuals must retain in their Medisave accounts when they make a withdrawal of CPF savings. In 2012, it required participants 55 and over to have at least S
Putting Medisave Funds to Use
Although dollars put into a Medisave account belong to the contributing worker, the government has issued tight guidelines over how the money can be spent. But as part of an ongoing task, it remains responsive to the healthcare environment and continually revises the guidelines on how funds can be used as conditions change. All this while keeping to its principle of balancing affordable healthcare against over-consumption and preventing the premature depletion of Medisave funds.
A Singaporean may use his Medisave to pay for certain medical expenses. Immediate family members (spouse, parents, and children) are allowed to draw upon each other's accounts. Initially, Medisave could only be used to pay for charges for a hospital stay in the highly-subsidized wards. Gradually it was extended to include other hospital ward classes but subject to maximum daily limits. Now it can be used to pay for hospitalization charges as well as specified outpatient expenses. Medisave can presently be used for medical and surgical inpatient cases, approved day surgeries, and psychiatry treatment. Stays in approved community hospitals, hospices, maternity, and day rehabilitation are also eligible. Also allowed are treatment in approved day hospitals, outpatient treatments of approved chronic diseases, vaccinations, outpatient MRI scans, CT scans and other diagnostics for cancer patients, assisted conception procedures, and renal dialysis treatment. Cancer patients may use Medisave for radiotherapy, radio surgery, and chemotherapy. Also eligible are HIV anti-retroviral drugs, desferal drug and blood transfusion for Thalassemia treatment, hyperbaric oxygen therapy, outpatient intravenous antibiotic treatment, long-term oxygen therapy and infant continuous positive airway pressure therapy, immune-suppressants for patients after organ transplants.5 Medisave and insurance do not cover the costs of consultation alone. Patients generally pay out of pocket if they wish to seek a second opinion.
Recent guideline changes have reflected the changing demographics of the nation and the changing needs of the populace, as well as voter sentiment. Some examples:
Women 50 and over may spend up to S
In Singapore, the birthrate has been well below replacement levels for many years, a matter of great concern for the future of the country. The total fertility rate in 2011 was just over one child per woman. A rate of two children per woman is considered necessary to keep the population at current levels. Rates below two children indicate that the population is decreasing with a growing percentage of older people.8 Furthermore, Singaporeans are marrying later, having children later,
