OPENING SPEECH FOR SECOND READING OF CARESHIELD LIFE AND LONG-TERM CARE BILL BY MR GAN KIM YONG, MINISTER FOR HEALTH, 2 SEPTEMBER 2019

Introduction: Preparing for an Ageing Population

    Mr Speaker, I beg to move, “That the Bill be now read a Second time.”

2    Population ageing is a global phenomenon. For Singapore, the good news is that we are living longer, and many of our seniors live fulfilling and active lives, well into their silver years.

3    However, ageing also comes with related illnesses and disability. To enable more of our seniors to age well with dignity and purpose, we need to prepare ahead of time. We need to look at how we can better organise social and health care, how we can enable our seniors to stay healthy, age-in-place, and continue to contribute to the community, and how we can support them in their medical and long-term care needs.

4    We have made significant progress in these areas over the past few years.

a    In 2015, we implemented MediShield Life to provide universal health coverage, with better protection for all, so that all Singaporeans have peace of mind for their hospitalisation bills, and for life, so that older Singaporeans are covered too, regardless of their age.

b    That year, we also developed the Action Plan for Successful Ageing with various stakeholders, which now has over 70 initiatives underway to empower our seniors to live well, even as we live longer.

c    Earlier this year, we announced the Caregiver Support Action Plan to strengthen the support for caregiving for our seniors. These include the Home Caregiving Grant, respite care services, and caregiver empowerment and training.

d    More recently, we introduced the Merdeka Generation Package, to thank the Merdeka Generation for their contributions to Singapore and provide more support for their healthcare and long-term care needs in their silver years. This follows the Pioneer Generation Package that was introduced in 2014.

Recapping the ElderShield Review

5    One important area we need to address is long-term care financing. In 2016, the ElderShield Review Committee was set up to look into how we can provide greater financial support for Singaporeans who become severely disabled during old age. After rigorous deliberation and extensive public consultation, the Committee submitted its report to the Government last year with the following key recommendations:

a    Firstly, universal insurance coverage for Singaporeans born in 1980 or later, regardless of their health, disability, and financial status, so that our future generations will have basic protection against the costs of long-term care;

b    Secondly, higher payouts that increase over time and are for life, so that Singaporeans are better supported for as long as they remain severely disabled; and

c    Simpler claim processes, so that severely disabled Singaporeans and their caregivers can apply for claims more conveniently.

6    The Government accepted the recommendations made by the Committee and the Report was debated in Parliament in July last year. We announced our plan to introduce CareShield Life. The risk-pooling approach through the universal insurance coverage for CareShield Life reflects our desire to nurture an inclusive and caring society. I am glad that it had received support from Members of this House. Once again, I would like to thank the Committee for their work.

Our Long-term Care Financing Approach

Financing Long-term Care is a Shared Responsibility

7    Financing our long-term care needs is a shared responsibility:

a    We come together as a society to pool our risks through insurance, CareShield Life and ElderShield, to address the variability of long-term care costs;

b    Individuals and their families also play a part through their own savings; and

c    the Government provides significant support through subsidies and assistance schemes, particularly toward the lower-income.

8    All these three pillars are essential – in insurance, savings and government support – and achieving the right balance among them is crucial in keeping our system inclusive, affordable, and sustainable.

Strengthening Other Pillars of Our Long-term Care Financing Framework

9    Therefore, in addition to strengthening insurance, we have concurrently reviewed how other financing sources of long-term care can complement CareShield Life and ElderShield to better support Singaporeans with disability.

10    We will enhance Government support for long-term care through the establishment of ElderFund in January 2020. ElderFund will be a discretionary Government assistance scheme for low-income, severely disabled Singapore Citizens who are aged 30 and above. It will provide up to $250 per month especially to those who are unable to join CareShield Life, have low MediSave balances and face financial difficulties in meeting their long-term care needs.

11    This is in addition to existing subsidies of up to 80% for long-term care services, such as nursing homes, and various other Government disability assistance schemes.

12    Around mid-2020, we will also be extending the use of MediSave by allowing Singaporeans to withdraw cash from their own and spouses’ MediSave for their long-term care needs. Severely disabled Singaporeans who are at least 30 years old will be able to make cash withdrawals of up to $200 a month, from their own and their spouses’ MediSave Accounts, to support their long-term care needs.

13    This CareShield Life and Long-Term Care Bill provides the legislative framework for the establishment, governance, and administration of the CareShield Life Scheme, and also facilitates the implementation of other long-term care financing measures for the severely disabled I mentioned earlier.

14    Mr Speaker, I shall now highlight the key provisions of the Bill.

Establishment of CareShield Life and Transfer of ElderShield

15    First, clause 5 of the Bill provides for the establishment of the CareShield Life Scheme. It provides for the CPF Board to administer CareShield Life and be responsible for the issuance and servicing of the insurance policies, premium collection, payment of benefits, and management of the CareShield Life and ElderShield Insurance Fund. I will talk about the Fund in a short while.

16    We will also be appointing the Agency for Integrated Care (AIC) as the Administrator. AIC will be responsible for the assessment of an individual’s eligibility for the claim by ascertaining his or her disability status.

17    This division in administrative roles between CPF Board and AIC allows us to tap on the expertise of the respective agencies. In particular, as AIC administers all of MOH’s disability schemes, AIC will be the natural touchpoint for seniors. They are best placed to advise disabled seniors and their caregivers on the various forms of long-term care services and financing schemes they can tap on.

18    Clause 6 of the Bill defines the groups of individuals that will be covered under the CareShield Life Scheme.

19    In line with our vision for inclusivity, the Scheme will apply to all Singapore Citizens and Permanent Residents born on 1 January 1980 or later. Those who are at least 30 years old, will be covered when the Scheme is launched. Subsequent cohorts would be covered on their birthday when they turn 30 years old. This provides universal coverage for future generations of Singaporeans, ensuring CareShield Life coverage for them regardless of their health, pre-existing disability, or financial status.

20    However, the Scheme will be optional for older cohorts of Singapore Citizens and Permanent Residents born in 1979 or earlier, and they can join the Scheme if they do not have pre-existing severe disability. The ElderShield Review Committee had recommended to keep the Scheme optional for them because their circumstances and their needs could vary widely.

21    To encourage participation of the younger cohorts of this group, we will auto-enrol those born between 1970 and 1979, who are ElderShield policyholders and are not severely disabled. This makes it more convenient for them to join, and they can still choose to opt out before 31 December 2023, if they wish to do so.

22    The new CareShield Life Scheme will be launched around mid-2020 for Singaporeans born in 1980 or later, and we aim to progressively launch the Scheme for Singaporeans born in 1979 or earlier, from mid-2021, about a year later.

23    The Bill also provides for CareShield Life to cover all individuals who become Singapore Citizens or Permanent Residents after the Scheme commences. This way, all new Singapore Citizens and Permanent Residents will participate in this national scheme and benefit from better support for their future long-term care needs, just like all Singapore Citizens and Permanent Residents today. The only exception is if they are born in 1979 or earlier, the older SCs and PRs, and are severely disabled. Like Singapore Citizens and Permanent Residents in those cohorts who are already severely disabled at the launch of CareShield Life, they will also not be able to join the Scheme.

24    Now let me touch on Eldershield. Part 3 of the Bill provides for Government administration of the ElderShield Scheme. As announced earlier this year, we are transferring the ElderShield Scheme, which is currently administered by private insurers, to the Government. This will be done in mid-2021, together with the launch of CareShield Life for those older Singaporeans born in 1979 or earlier.

25    The transfer allows ElderShield to be administered on a not-for-profit basis, with CPF Board and AIC as the Government’s key administrators. This will facilitate a smooth upgrading from ElderShield to CareShield Life for those who choose to do so. This Bill will dis-apply the Insurance Act to the transfer, as otherwise the ElderShield portfolios cannot be transferred to the Government, because the Government is not included in the definition of “transferee” in the Insurance Act. However, in practice, we will take reference from the requirements MAS has put in place, in governing the transfer to protect policyholders. This includes appointing an independent external auditor to audit the transfer and providing MAS with the full audit reports.

26    Those who choose not to upgrade to CareShield Life will remain covered by their existing ElderShield policy. I would like to assure ElderShield policyholders that the terms and conditions of their ElderShield policy will remain. In addition, they will also benefit from the improvements to the claim process that will be implemented for CareShield Life.

Benefits and Payouts

27    Now, let me move on to the benefits and payouts of the schemes.

28    CareShield Life and ElderShield will remain as basic schemes to benefit severely disabled policyholders, as provided in clause 12 of the Bill. This keeps premiums affordable, which is crucial for a national scheme like CareShield Life that caters to a broad segment of Singaporeans. Policyholders who prefer higher coverage or better benefits can buy Supplements from private insurers. Existing Supplements administered by the private insurers will not be transferred to the Government.

29    Clause 16 of the Bill provides for claims to be made for CareShield Life or ElderShield payouts. We recognise that being severely disabled can be a stressful situation for policyholders and their caregivers. Hence, we want to make the claim process more convenient. To this end, we plan to double the number of disability assessors to about 300 by the launch of CareShield Life, and we are working with healthcare institutions to progressively expand the types of disability assessments that can be accepted for claims, so that policyholders need not undergo another disability assessment if we already have similar data on their disability status.

30    To further provide convenience to policyholders, Part 8 of the Bill will enable CPF Board and AIC to access an individual’s disability-related health information, and allow the information to be disclosed to authorised persons approved by the Minister, for the administration of prescribed public schemes, or provision of support to disabled persons for prescribed purposes. These provisions allow us to proactively reach out to disabled individuals to inform them of their eligibility for claims, not just for CareShield Life and ElderShield, but also for other Government disability schemes, using disability assessments already performed at our healthcare institutions.

31    These provisions also allow us to access and use disability assessments already performed at healthcare institutions to assess the eligibility of those born between 1970 and 1979 for the auto-enrolment exercise into CareShield Life without having to get them to be assessed again.

32    Nonetheless, individuals can opt-out from the access and disclosure of such disability-related health information, and we will release more details on how individuals can do so, near the launch date. If they do so, if they do opt out of the access and disclosure, they will lose some convenience – for example, severely disabled individuals will not receive any pro-active outreach to apply for claims, because we do not know their disability status, and they may need to go for a separate disability assessment even if they had been assessed for disability recently by a healthcare institution. In addition, individuals born between 1970 and 1979 will not be auto-enrolled, and may need to go for a disability assessment in order to join CareShield Life.

33    Part 8 of the Bill also enables CPF Board and AIC to access, subject to certain safeguards, an individual’s confidential information in the possession of another Government department or public authority for the administration of CareShield Life, ElderShield, and prescribed social or healthcare-related public schemes. Again, this is meant to increase convenience for policyholders.

34    The Bill makes the wrongful access, use, or disclosure of any information collected an offence. If convicted, a person may be liable for a fine of up to $5,000, or imprisonment of up to 12 months, or both.

35    Overall, we want to strike a careful balance between facilitating access and convenience for Singaporeans with the safeguarding of health and confidential information.

36    Mr Speaker, another key feature of CareShield Life and ElderShield is that payouts will be in cash. This gives claimants the flexibility to decide on their preferred care arrangement, so that they can remain at home or in the community if they wish and still receive the cash payouts. However, it is important that these cash payouts are safeguarded. We will balance between such flexibility and the need for safeguards in several ways.

37    First, some severely disabled policyholders may lack mental capacity, and are unable to manage their cash payouts, or even apply for claims in the first place. In this case, a donee or a deputy can act on their behalf, to apply for claims, and receive and manage the payouts.

38    In the absence of a donee or deputy, clause 16 of the Bill allows certain family members or caregivers to be authorised applicants to make claims on behalf of such policyholders, and receive payouts as approved payees so as to support the care of the policyholders.

39    However, to safeguard against the risk of misuse or fraud, the classes of persons who can make or receive claims will be a tight list approved by the Minister, and generally limited to those who are caregivers for the policyholder. They can only receive the payouts for a limited period of one year, subject to appeals for an extension, if necessary, to give them time to apply to be appointed as a deputy for the policyholder.

40    Second, we will allow policyholders or their authorised applicants to nominate healthcare institutions caring for the policyholders, such as nursing homes, as approved payees under the Bill. This will ensure the continuity of their care.

41    Third, we will require third-party payees to first apply the payouts for the policyholder’s care, as provided in clause 50 of the Bill. Not doing so without reasonable excuse is an offence. If convicted, the penalty is double that for the offence of false declarations or wrongful access of information under clause 48 of the Bill, given that these are offences against vulnerable persons. This ensures that payouts are prioritised for the care of the policyholder.

42    Further, we will protect the payouts from creditors. Clause 20 of the Bill protects CareShield Life and ElderShield payouts from creditors, with two tight exceptions. First, the Bill allows premium debt to be netted off from the payouts, and we will use this only in the case of wilful defaulters who do not pay CareShield Life premiums, but have made claims to benefit from the scheme. We will do so in a calibrated manner, and will cap the amount of debt netted off from the payouts each month to ensure that policyholders will continue to receive the bulk of the payouts to meet their long-term care needs. The second case is where there are moneys owed by the policyholder to a healthcare institution, for instance, a nursing home, arising from the care provided to the policyholder, if the policyholder or authorised applicant has already directed the payouts to this institution. This ensures that healthcare institutions providing care to the policyholder can continue to be adequately resourced to do so.

Premiums

43    Sir, I will now move on to premiums.

44    Clause 14 requires that CareShield Life and ElderShield policyholders pay their premiums in a timely manner. This is so that the schemes remain solvent and sustainable, and to be fair to other policyholders who have dutifully paid their premiums.

45    For those who need help with their CareShield Life premium payments, we will put in place measures to ensure premiums remain affordable.

a    There will be means-tested premiums subsidies of up to 30% to help lower- to middle-income Singaporeans with their premiums.

b    Transitional subsidies will be given to Singapore Citizens born in 1980 or later for the first five years from CareShield Life’s commencement, to ease their transition into the Scheme.

c    For Singapore Citizens born in 1979 or earlier, they will be given participation incentives of up to $2,500, if they join CareShield Life in the first two years after the Scheme is available for sign-ups from mid-2021. This is to encourage early participation in the Scheme. In addition, seniors from the Pioneer Generation and Merdeka Generation will receive additional participation incentives of $1,500, so that they receive a total of $4,000 in participation incentives. The participation incentives will be netted off their premiums payable over a period of 10 years, thereby reducing the amount of premiums that the policyholders will need to pay.

46    Policyholders who need further help with their CareShield Life premiums even after premiums subsidies and support measures, can receive Additional Premium Support. This is similar to MediShield Life, and is the Government’s commitment to ensure that premiums remain affordable and that no one loses CareShield Life coverage due to his or her inability to pay.

47    However, there may be a small group of wilful defaulters, who refuse to pay their CareShield Life premiums despite having the means to do so, even after reminders have been sent to them.

48    Any CareShield Life premiums defaulted that cannot be recovered is a burden that will be shouldered by other policyholders in the form of higher premiums eventually. To be fair to the other policyholders, we need to take a strict stance against these wilful defaulters. Thus, Part 7 of the Bill provides for a premium recovery framework that is similar to the approach for MediShield Life. Penalties and interest can be imposed on outstanding premiums, and we intend to similarly appoint IRAS as a recovery body to recover outstanding premiums. Let me reiterate that for those who genuinely need help, we will help them with the premium payments.

49    For ElderShield policyholders who do not pay their premiums, their ElderShield cover will lapse after the grace period, similar to their current terms and conditions.

CareShield Life and ElderShield Insurance Fund

50    Premiums collected under CareShield Life and ElderShield will flow into the CareShield Life and ElderShield Insurance Fund that will be established by clause 35 of the Bill. The insurance fund will be a self-sustaining fund, supported by the premiums collected under both schemes.

51    The CareShield Life and ElderShield Insurance Fund will be managed by CPF Board in a not-for-profit manner, for the benefit of policyholders. The insurance fund moneys can only be used for policyholders’ benefit and scheme administration. The Government or CPF Board as the Fund administrator cannot remove any Fund moneys for its own use, except for the cost of operating the schemes.

Governance

52    Let me now touch on the issue of governance.

53    I want to assure Singaporeans that there are safeguards in place to ensure proper scheme governance for both CareShield Life and ElderShield. These include safeguards over the scheme parameters and administration, the collection of premiums and payment of claims, and management of information. Let me elaborate.

54    First, the governance of scheme parameters and administration will be overseen by an independent CareShield Life Council, to be appointed by the Minister under clause 37 of the Bill.

55    The Council will review and make recommendations on policy and scheme parameters, to ensure that the schemes provide protection for Singaporeans in an affordable and sustainable manner. This includes reviewing CareShield Life’s premium and payout increases beyond 2025. For the first five years of CareShield Life’s implementation until 2025, both premiums and payouts will increase at 2% per year. Adjustments thereafter will be reviewed by the Council.

56    In addition, the Council will review the administration of the schemes and advise on matters related to the investment of the CareShield Life and ElderShield Insurance Fund.

57    The Council will be appointed by the time the CareShield Life Scheme takes effect. It will comprise members with various professional expertise and a wide range of experience to perform the key functions of the Council. We are in the midst of setting up the Council, and will share more information later.

58    Second, the Bill aims to ensure proper collection of premiums and payment of claims, to protect the interest of policyholders. Clauses 48 and 49 of the Bill make false declarations and fraudulent disability assessments offences, with penalties to deter such offences.

MediSave Withdrawal for Long-term Care

59    As mentioned earlier, the Bill will also enhance the role of personal and family savings, and Government support in helping the severely disabled with their long-term care costs. These measures will help older Singaporeans who are not covered under ElderShield, or CareShield Life.

60    Severely disabled Singapore Citizens and Permanent Residents who are at least 30 years old will be able to make cash withdrawals from their own and their spouses’ MediSave Accounts to support their long-term care needs. Clause 66 of the Bill will amend the CPF Act to allow for this.

61    To ensure that members have sufficient MediSave balances for other medical treatments, the amount that can be withdrawn for long-term care will be based on their prevailing MediSave balance, and up to $200 a month for each severely disabled individual. These cash withdrawals will supplement the CareShield Life or ElderShield payouts that they may be receiving. This will enhance the role of personal and family savings in supporting long-term care needs.

62    Like CareShield Life and ElderShield, similar safeguards will be in place for those who lack mental capacity.

Long-term Care Support Fund

63    Apart from allowing withdrawals from MediSave for long-term care, the Government will also play a part in helping Singaporeans with their cost of long-term care.

64    The Bill provides for the establishment of a Government fund called the Long-term Care Support Fund (LTCSF) in clauses 38 and 39. This Fund will be administered by the Ministry of Health.

65    $5.1 billion will be set aside in this Fund, as announced by DPM during the Budget 2019.

66    Moneys in the Fund will be used to fund premium subsidies and participation incentives for the CareShield Life scheme, and to provide financial support for severely disabled persons under prescribed public schemes such as ElderFund, which, I mentioned earlier. ElderFund is a new discretionary Government assistance scheme that will be implemented in January 2020.

67    The Long-Term Care Support Fund is in addition to existing Government subsidies for long-term care services such as nursing homes, home care and centre-based care services, existing Government assistance schemes, as well as the new Home Caregiving Grant.

68    I would like to emphasise that the Long-Term Care Support Fund is a completely separate fund from the CareShield Life and ElderShield Insurance Fund. The Long-Term Care Support Fund holds the $5.1 billion of Government moneys and is used to provide Government support, while the CareShield Life and ElderShield Insurance Fund holds the premium moneys collected and are used for CareShield Life and ElderShield payouts, and expenses. Both funds will be accounted for and managed separately, and the accounts of each Fund will be made public.

Conclusion

69    Mr Speaker, let me conclude.

70    Our society is ageing and we need to prepare for this ahead of time. CareShield Life is a major step in expanding the role of insurance in the long-term care financing landscape. But the CareShield Life and Long-Term Care Bill goes beyond long-term care insurance. The Bill also enables enhancements to be made to the other two pillars of our long-term care financing system through the withdrawal of MediSave for long-term care and ElderFund. With the strengthening of the role of insurance, savings and government assistance, Singaporeans can have better protection and greater assurance for their long-term care needs. This way Singaporeans can live long and with greater peace of mind.

71    Mr Speaker, I beg to move.