Today, Wednesday 13 November, 2002

Spread the risk

MOST civil servants get an additional one per cent contribution in their Medisave accounts as a form of medical benefit As most Singaporeans can finance MediShield plans with their CPF contributions, the Government contribution would only aid civil servants in settling the co-payment (self-insurance) element of a hospital bill upon a claim.

This is an inefficient use of taxpayers' resources as it fails to exploit established efficiencies of true risk-pooling, that is insurance. The additional contribution may be channelled into a public sector group insurance scheme or be given as cash for the purchase of private medical insurance. The benefits to civil servants are then maximised as $1 of Government contribution would provide for many more dollars of medical expenses via risk-pooling insurance.

The Government could even reduce the additional one per cent Medisave contribution because of the sheer efficiency of risk-pooling. This would perhaps obviate the need for an increase in GST.

Chong Kok Peng
New Independent Independent Financial Advisers
Singapore