Medical Savings Accounts in Singapore: how much is adequate?
April 24, 2018
Are your medical savings adequate for your post retirement period?
In April 1984, the Singapore government introduced a compulsory Medical Savings Account (MSA) known as Medisave, with the objective of allowing each individual citizen to save a portion of their salary so that they have an adequate healthcare fund which they can use in the event of a medical emergency, or for their future medical needs.
In the article, Medical Savings Accounts in Singapore: how much is adequate? (Journal of Health Economics, 2005), A/P Ngee Choon Chia and A/P Albert Tsui (Department of Economics) review healthcare financing in Singapore by discussing the framework used to estimate the present value of lifetime healthcare expenses of the elderly, contrasted against the savings made possible by MSAs to determine the adequacy of mandatory healthcare savings. Chia and Tsui show that the entire healthcare financing system is integrated into 3Ms: Medisave, a medical insurance scheme for catastrophic illness (Medishield), and a means-tested medical expense assistance scheme (Medifund). According to Chia and Tsui, the healthcare philosophy promoted by MSAs is that of “no free lunch”, meaning that the savings are dependent on the person’s earnings rather than going into a fund that redistributes the savings equally. In this way, Medisave has contributed to the cultural conception of healthcare as an individual, merit-based responsibility.
Medisave can neither be considered a panacea nor a catastrophe to the healthcare system. Its efficiency for an individual is dependent on their own level of employment and salary. With an ageing population, it becomes imperative to consider whether medical expenses after retirement can be covered by medical savings acquired during employment.
Read the full article here.