Friday, 22 September 2023

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CPF – F1 or F9 : Pay up to 22% to use MediSave?

By Leong Sze Hian

According to the Ministry of Health’s (MOH) website, the Central Provident Fund (CPF) Board has been recovering the cost of Medisave deduction transactions to pay patients’ medical bills through an administrative fee of $3.05 ever since Medisave was introduced in 1984.

Information technology was still in its infancy 22 years ago and the number of Medisave accounts and transactions were much fewer than today.

With today’s advancements in information technology systems and economies of scale, how can the cost of a Medisave bill deduction transaction be still $3.05 plus another 70 cents to cover the cost of National Computer Systems, which in total is even higher than the $3.05 in 1984?

What was the total Medisave administrative fee collected by the board in 1984 compared to now?

MOH states that the fee ‘is levied on all institutions, which may choose to absorb it as part of their running costs’.

How many health-care providers have been absorbing the fee over the last 22 years?

Why is it that a fee is charged for Medisave withdrawals, but not for housing loan, investment, education and retirement annuity withdrawals from CPF?

More affluent Singaporeans probably do not need the $300 a year use of Medisave for out-patient treatment under the new chronic diseases scheme. It is the needy and lower-income who may have no choice but to use Medisave.

The flat $3.75 administrative fee penalises those who need it most, because they may typically incur smaller medical fees for each treatment.

For example, if the medical cost is $50, the amount that can be deducted from Medisave after the $30 deductible and 15 per cent co-insurance is only $17. In this example, the fee works out to be 22 per cent of the deduction amount.

If you are poor and cannot afford to pay in cash, what choice do you have, even though it does not make much sense to pay 22 per cent? This is simply not right.

I would like to suggest that charging on a percentage basis instead of levying a flat fee be considered.

For example, if the percentage is, say, 1 per cent, those making a $50 deduction will pay 50 cents, and $3 for a $300 deduction.

Alternatively, patients could be allowed to transfer the maximum $300 a year in one go to the health-care provider, so as not to incur multiple fees for each treatment.

We often see replies from government agencies justifying an existing practice by saying that it has been around for a very long time.

Instead, perhaps we could try to ask the question – Why are we still doing it the same way after 22 years?

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