By March, it can be used for outpatient treatment for asthma, and possibly chronic obstructive pulmonary disease (COPD) which largely affects heavy smokers.

From April, about 40,000 cancer patients will be able to draw up to $600 a year for outpatient MRI, CT or PET scans. Patients usually need two to three such scans a year.

Health Minister Khaw Boon Wan said on Tuesday he will also allow Medisave to be used for more diseases, following many requests from patients with chronic ailments.

He said: 'Just as safaris have their Big five (must-see animals are the lion, leopard, rhino, elephant and buffalo) chronic diseases also has its Big Five (high blood pressure, high cholesterol level, stroke, diabetes and asthma).'

Up to $300 per Medisave account a year can already be used for each of the first four ailments. Adding asthma will complete the group. The annual withdrawal limit for asthma will be announced later, as the Minister says he is still gathering data on the cost of treatment.

Mr Khaw added that he is thinking of extending Medisave use to other chronic illness where early treatment or proper maintenance can keep people out of hospital. One such is likely to be COPD.

Preventing expensive hospital stays in the future is the only justification for allowing Medisave to be used for outpatient chronic care, he said.

That is why he does not want to include mental illness or diseases like lupus or psoriasis. While this may solve the outpatient costs, it does not prevent hospitalisation, he said.