How many Medisave dollars do Singaporeans die with?

Last week highlighted two very different philosophies to Medisave utilization by the Government and the Workers Party (WP). WP called for unfettered draw down for those >75 years of age while the Government urged avoiding “premature depletion” of Medisave monies. Who’s right?

“At the age of 75, most of our senior citizens are unemployed. For those who are employed, they can hardly make ends meet. This is why our seniors who are 75 and above should be allowed to use their Medisave for medical treatment without restriction. Medical cost has become a huge necessity as one grows older. At the age of 75, Medisave should be used to support immediate needs. Life expectancy in Singapore is 82 years. If our seniors cannot use their Medisave funds for immediate medical needs when they are 75 years old, when can they use it?

Allowing unrestricted use of Medisave for them will also ease the burden on families who have to take care of elderly parents and young children as well.”

Lee Li Lian, Workers Party candidate for Punggol East SMC, 19 Jan 2013


“Nevertheless, as Medisave savings are finite, there is a need to strike the right balance between allowing greater use of Medisave to help Singaporeans reduce their cash outlay, and avoiding premature depletion of their Medisave monies.”

MOH Spokesperson, Straits Times Forum 18 Jan 2013


The Government’s concern is probably around depletion of Medisave monies with no other payer left besides the Government. Hence the emphasis on reserving Medisave dollars and instead most likely having family members and loved ones paying cash since as Ms. Lee rightly points out, very few >75 year olds will have income. This is not unreasonable as the official position is that anyone is free to apply for further subsidies and be assisted by the Medical Social Worker on a case-by-case basis.

The bigger issue from a health financing perspective of unrestricted Medisave utilization is the risk of moral hazard with consequent over-consumption by the patient and over-serving by the hospitals since the patient is essentially writing a blank check with no fee limits until exhaustion of Medisave monies. After that, if family members are likewise impoverished, then it is the Government’s turn to sign the checks!

The WP’s concerns are focused on the ‘here and now’ and why families should struggle with paying for healthcare if there are still monies in Medisave accounts.

Is the Government being overly stringent? Or is it being sensibly prudent? It’s possible to get some glimpse of the truth by knowing what the Medisave balance is of account holders who have passed away. If account holders (other than the sudden death patients) are dying with just a couple of dollars in their Medisave accounts, then the rate of utilization and the constraint on drawing down are probably sensible. If account holders are leaving substantial monies to their next-of-kin*, then it appears that there is good basis to investigate further to understand whether their families are using cash and other means to pay for healthcare. And if so, perhaps Medisave could be liberalized further for older age groups.

Incidentally, there is only one instance where Medisave monies can be used without any caps. And that is for the ‘Last Medical Bill’- “The deceased member’s Medisave can be used fully, to pay his last medical bill, if he passes away during his hospitalization.” (CPF Board)


* The Medisave Minimum Sum and the Medisave Required Amount are the same and stand at S$38,500 currently; about 60% of account holders have the required Medisave Minimum Sum when they reach 55 years and the average balance of account holders upon hitting 55 years of age is almost S$30,000


One comment

  1. Response from a reader:
    “There is nothing special about age 75 (when expectation of life is still 11 to 14 years more); not sure why unfettered draw down would be justified. On the “how many dollars remaining at death”, I think this could be a very misleading metric. The rich don’t need to draw down any Medisave at all. Medical care will get more expensive in the future, with increased life expectancy, newer treatments, and less support from the next generation.”
    My reply:
    “Agree nothing special about age 75 but don’t agree that the current situation is ideal. On amount of Medisave left after death, easy to exclude or count separately those living in private property, provide a distribution curve etc. Basic point is this is a position that can be empirically tested for validity and the withdrawal limits calibrated accordingly.”
    I would tend to be cautious in the absence of data to make any sweeping, irrevocable recommendations. However, one important point to note is that everyone agrees that Medisave is for individual healthcare needs and healthcare needs cease upon death (!). The issue of how much to draw down from what age onwards then becomes a somewhat technical one which bureaucrats can crunch the numbers to determine a financial optimum after which politicians can take the call what is financially responsible, politically tenable and morally acceptable. We must have the exact numbers somewhere in government and so should not be accepting as good enough ‘motherhood statements’ from both sides.

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