Speech by Dr Amy Khor, Senior Minister of State, Ministry of Health, for the Parliamentary Debate on ElderShield Review Committee Report, 10 July 2018

(A)          INTRODUCTION

1.             Mr Speaker, to support the needs of our ageing population, we need to approach the issue comprehensively. Besides financing, we should also invest in aged care service capacity, enhance care quality, and build communities of care and a strong social support system. In particular, Dr Lily Neo and Mr Ang Wei Neng asked how the Government is improving the long-term care infrastructure to help severely disabled seniors age and receive good home care. Let me elaborate on these efforts.

(B)          SIGNIFICANT INVESTMENTS TO SUPPORT THE NEEDS OF OUR AGEING POPULATION

2.             First, we have grown our aged care capacity significantly. We are on track to achieve 10,000 home care places and 6,200 day centre places by 2020. For seniors who may need institutional care, we have added 1,200 community hospital beds and 5,300 nursing home beds since 2011. We have also grown our healthcare workforce by about 36% since 2011. We will continue to expand the range of home and community care options and pilot new models of care, such as the Integrated Home and Day Care (IHDC) packages rolled out in 2016, which help to provide frail seniors with home and day care services that cater to their unique needs. In fact, by 2020, we hope to provide 90% of our seniors with access to an elder care centre within a 1 km radius from their home.

3.             Second, we will also invest in improving service quality. We have progressively raised care standards, such as introducing the Enhanced Nursing Home Standards (ENHS) to ensure residents receive safe and good care.

4.       We have also introduced developmental service guidelines as a reference for home and centre-based providers to work towards delivering good quality care for our seniors.

5.             Third, we are integrating social and healthcare support to better meet the needs of the elderly in our communities. We are building communities of care through the Community Networks for Seniors (CNS) programme to help seniors age well in the community, through preventive health and active ageing programmes, and the integration of social and healthcare support for frail seniors with complex health and social needs.

6.             With the new Silver Generation Office (SGO) under the Agency for Integrated Care (AIC), MOH can better serve our seniors’ needs in a holistic manner, with support from over 3,000 Silver Generation Ambassadors. Mr Gan Thiam Poh suggested recruiting ambassadors to explain the enhancements to residents.

7.             We will definitely leverage SGO’s outreach capabilities to reach out to seniors, explain how these new enhancements help support their long-term care needs and direct them to relevant financial assistance. Residents will find the Ambassadors a familiar face as they had also helped many seniors understand the Pioneer Generation (PG) package, MedShield Life and many other assistance schemes.

8.             Fourth, the Government will continue to support the needs of Singaporeans with ageing-related cognitive conditions, and their caregivers, under the Community Mental Health Masterplan. For instance, we have established six Dementia Friendly Communities to increase the awareness of dementia in these communities so that persons with dementia and their families feel included and supported to continue living at home. We aim to have 15 such Communities by 2021.

9.             While we continue to improve our service capacity and quality, and grow community networks to better support our elderly, we must also ensure that Singaporeans plan ahead and are able to financially cope with their long-term care needs.

10.          Minister Gan has outlined our long-term care financing philosophy, and the role that insurance plays together with family and Government support. The ElderShield Review Committee made many good recommendations, and I am optimistic these enhancements will provide better protection and assurance for Singaporeans to age actively and well in the community. Let me speak on three key aspects of the new scheme.

(C)          CARESHIELD LIFE IS AN INCLUSIVE SCHEME

11.          First, the new CareShield Life will be an inclusive scheme.

12.          For future cohorts, CareShield Life is not just an insurance scheme, but will be an important part of our social safety net.  It will provide universal coverage for all future cohorts of Singaporeans born 1980 or later, regardless of financial, health, or disability status. This means that all Singaporeans in these cohorts will have basic protection for their long-term care should they become severely disabled.

13.          Mr Gan Thiam Poh, Ms Jessica Tan, Mr Saktiandi Supaat, Mr Ang Wei Neng have asked why CareShield Life is not optional for future cohorts, given that some young Singaporeans might already have bought their own policies. Including all future cohorts allows us to maximise the size of the risk pool, which keeps premiums affordable and the scheme sustainable. If the scheme is optional, those with pre-existing disabilities cannot be covered, as healthy Singaporeans would be more likely to opt out of the scheme. Over time, the risk pool would worsen, and the scheme would become unsustainable. Other vulnerable groups like the low-income may also drop out of the scheme because of an inability to pay.

14.          As CareShield Life provides payouts in cash, they would not duplicate existing policies that Singaporeans may already have purchased. There is also a misperception that private disability insurance products such as total and permanent disability plans, or disability income replacement plans, provide similar coverage to CareShield Life. These plans typically only provide coverage during one’s working years, up to age 60 to 70, as they are meant to insure against loss of income. This means that in our old age, when we are most likely to become severely disabled and need long-term care, we will no longer be covered by these plans. On the other hand, CareShield Life will provide coverage for life.  

15.          There are different views among Members, about what age should Singaporeans be enrolled into CareShield Life. Mr Gan Thiam Poh suggested 21, Mr Ang Wei Neng suggested 40. The ElderShield Review Committee likewise received a range of suggestions. We agree with their recommendation to start at 30, and we understand this was an age that many youths engaged by the Committee felt would be reasonable. At 30, most feel that they would have started working and managed to build up some savings in their MediSave. Starting at 30 instead of 40 also means they have more years to spread their premium payments, which makes their annual premiums more manageable.

16.          The Government will provide means-tested premium subsidies and transitional subsidies to ensure that premiums are affordable, particularly for the lower-income. We will also provide Additional Premium Support for those who are unable to afford their premiums after subsidies, so that no one loses coverage due to financial difficulties.

Government and Policyholders to Jointly Support Pre-existing Disabled in Future Cohorts

17.          Including those with pre-existing disabilities in future cohorts in our national long-term care insurance scheme is part of our collective responsibility and is fundamental to our inclusive and caring society.

18.          Individuals in future cohorts with any pre-existing disabilities will only need to pay the first year premium to join CareShield Life, and thereafter, will be able to benefit from the payouts, as long as they remain severely disabled. The premium amount is less than the first monthly CareShield Life payout they will receive. An individual who will benefit is 36-year-old Mr Mohamed Hasan, who has cerebral palsy and is physically unable to perform all Activities of Daily Living (ADLs). As he will be part of the future cohorts to be enrolled in 2020, he will be able to receive CareShield Life payouts from 2020 for as long as he remains severely disabled.

19.          Mr Gan Thiam Poh and Mr Ang Wei Neng asked how many Singaporeans in the future cohorts have severe disability. The prevalence of severe disability at younger ages is low.  Only a very small proportion, less than 0.1%, of the future cohorts aged 30 to 40 may already be severely disabled when they first join CareShield Life.

20.          The Government will inject $100m into the CareShield Life insurance fund to cover a significant portion of the costs of including Singaporeans in the future cohorts with pre-existing disabilities. The remainder of the costs will be socialised across all CareShield Life policyholders in the future cohorts, with everyone playing our part to support fellow Singaporeans in need. This is in line of our vision of an inclusive and caring society. During public consultations, the Review Committee also found support for this among Singaporeans.

An Inclusive and Practical Approach for Existing Cohorts

21.          Ms K Thanaletchimi and Mr Zainal Sapari asked why CareShield Life is not universal and mandatory for Singaporeans from existing cohorts, since CareShield Life provides better protection and greater assurance than ElderShield. The Committee had considered this during their review, and decided this was not feasible given the nature of CareShield Life as a pre-funded insurance scheme.

22.          Unlike MediShield Life where premiums are paid for life, CareShield Life premiums are paid till age 67 even though it provides lifetime coverage. This means that CareShield Life premiums are heavily pre-funded. Older Singaporeans from the existing cohorts would therefore need to pay significantly higher annual premiums under CareShield Life, as they would have fewer years to spread out their premiums needed to support the benefits under CareShield Life.

23.          Some Singaporeans in existing cohorts have also previously made decisions about their ElderShield coverage when they were auto-enrolled at age 40. When ElderShield was launched in 2002, 38% of Singaporeans who were auto-enrolled opted out. While the opt-out rate has since dropped to 5% in 2017, about 1 in 4 people in the existing cohorts have opted out of ElderShield.  Others may also have made plans for their long-term care needs. As of 2017, about one-third of ElderShield policyholders have bought ElderShield Supplements from the ElderShield insurers.

24.          Taking into account these considerations, the Committee recommended that it would not be practical to make CareShield Life mandatory for these individuals.  However, the scheme should remain open for them to join, if they are not already severely disabled.

25.          I want to assure members that CareShield Life will still be an inclusive scheme for existing cohorts. Ms Chia Yong Yong asked about the treatment for Singaporeans in existing cohorts who want to join CareShield Life. Singaporeans in existing cohorts can join the scheme as long as they are not severely disabled or able to perform at least three ADLs, even if they have medical conditions such as diabetes or hypertension. This is consistent with our inclusive vision for CareShield Life.

26.          The Government will provide participation incentives to encourage existing cohorts to join CareShield Life within the first two years.

27.          These incentives will help to shoulder a significant part of the cost of including those in the existing cohorts with pre-existing medical conditions or mild disabilities. This is on top of the premium subsidies we are providing to lower- and middle-income policy holders. After the first two years, underwriting will be tightened such that those in the existing cohorts assessed to be unable to do any of the ADLs will not be able to join to minimise adverse selection and moral hazard so that the scheme remains sustainable and fair for all policyholders.

28.          For ElderShield policyholders who do not wish to join CareShield Life, they will continue to be protected by their current ElderShield policies.

29.          Dr Lily Neo and Ms K Thanaletchimi asked how would those who are already severely disabled in the existing cohorts be helped, if they are unable to join CareShield Life?

30.          Mr Zainal Sapari and Dr Lee Bee Wah also asked for the actuarial considerations and premium impact, if we were to include those with pre-existing severe disabilities in the existing cohorts from CareShield Life.

31.          If The proportion of Singaporeans who are severely disabled at the older ages is much higher – about 7% of Singaporeans aged 65 and above today are severely disabled, compared to less than 0.1% of Singaporeans aged between 30 and 40. Including the severely disabled from existing cohorts in CareShield Life would significantly increase premiums by about 30% for the rest of policyholders in these cohorts.

32.          The Government will support Singaporeans from existing cohorts who are already severely disabled and unable to join CareShield Life through other measures, including the MediSave and ElderFund – these are initiatives that Minister Gan spoke about earlier. Mr Saktiandi asked whether the payout amounts for these new initiatives are enough.

33.          I would like to clarify that these initiatives are designed to complement other existing Government subsidies and funding schemes such as the Seniors’ Mobility and Enabling Fund and Pioneer Generation Disability Assistance Scheme (PioneerDAS), as well as our other safety nets – including MediFund and ComCare, to help Singaporeans afford their long-term care costs. They should not be seen in isolation. Nevertheless, Ms Thanaletchimi, Mr Saktiandi and Ms Tin Pei Ling should rest assured that the Government will continue to review our financing policies to keep healthcare and long-term care affordable for all Singaporeans.

Gender Differentiation

34.          Many members like Dr Chia Shi-Lu, Ms Sylvia Lim, Mr Daniel Goh, Mr Melvin Yong, and Ms Tin Pei Ling, have also asked why CareShield Life premiums have to be gender differentiated.

35.          The Review Committee had debated this topic extensively and it was not an easy decision to make. Women live longer than men, and are therefore more likely to spend more years in severe disability as all of us are more likely to become severely disabled at the older ages.

36.          Let me share some statistics. In 2017, the average life expectancy at birth for women is 85.2 years as compared to 80.7 years for men. Minister Gan had earlier shared that 1 in 2 Singaporeans at the age of 65 are expected to become severely disabled by the end of their lives. Breaking this down by gender using the same information and statistics, 3 in 5 healthy women at age 65 are expected to become severely disabled by the end of their lives, compared to 2 in 5 healthy men at age 65.

37.          At the older ages, when disability is likely to take place, women are also more likely to remain in disability for a longer time than men and hence draw on CareShield Life payouts for a longer period should they remain severely disabled.

38.          Based on a longitudinal survey of older Singaporeans in 2009 and 2011 to 2012, researchers estimated women aged 60 are expected to spend 7.8 years requiring assistance with any of the ADLs compared to 2.6 years for men aged 60.[1]

39.          Other countries, like the US, found similar gender-differentiated disability trends. In a longitudinal study of US men and women between 1982 and 2011, researchers estimated women aged 65 in 2011 are expected to spend about 6 years requiring assistance with ADLs compared to about 3.5 years for men aged 65 in 2011.[2] Two-thirds of long-term insurance claims benefits paid out in 2012 went towards females.[3]

40.          It is of course possible to have a scheme where men and women pay the same premiums. The Committee did consider that women have less savings on average, and could therefore be better supported by the men.

41.          However, on balance, the Committee decided that applying gender-differentiated premiums for CareShield Life would more accurately reflect the differences in risk between men and women, and result in a more actuarially fair and sustainable scheme. While CareShield Life is compulsory for future cohorts, it must be noted that it is not compulsory for existing cohorts, so there will be adverse selection. Hence, it is better to be actuarially fair and correct. The Committee emphasised, however, the need to provide premium support to lower-income and middle-income policyholders.

42.          The Government accepts the Committee’s recommendations, though I must assure this House that the Ministry, not just myself but my other colleagues similarly had great difficulty in coming to this decision. It wasn’t an easy decision.  Some may assess, why should we differentiate premiums between men and women if we say CareShield Life is an inclusive scheme? While we have designed CareShield Life to be inclusive, on balance, it is equally important for the scheme to be equitable and sustainable, and avoid adverse selection. To that end, premiums must be actuarially sound.

43.          The Government will address the issue of affordability directly. In line with the progressive design of our healthcare financing system, the Government premium subsidies for CareShield Life is means tested, with the quantum of support based on a percentage of premiums. This also means lower- and middle-income females will receive larger dollar quantum of government subsidies compared to the men in their age cohort with same income levels. In line with our effort to promote strong family values, care and support, immediate family members such as their spouse can also help pay for their premiums with their MediSave or top up their MediSave to help them pay for their premiums. The Government will also provide Additional Premium Support for those with less financial means, so that no one will lose coverage due to financial difficulties.

44.          Overall, this design will support the sustainability of CareShield Life, while ensuring that premiums remain affordable for all Singaporeans, regardless of gender. We will continue to explore how to give help to women who face difficulties. But on balance, it is more prudent to keep the scheme actuarially correct and fair.

45.          Some will ask why this is a different approach from MediShield Life. MediShield Life premiums are payable for as long as a policyholder lives. While women may make more claims since they live longer, they would also have paid more years of MediShield Life premiums compared to men. On the other hand, CareShield Life premiums are only paid until the age of 67, although policyholders are covered for the rest of their lives.

(D)          CARESHIELD LIFE PROVIDES FLEXIBILITY TO AGE IN PLACE

46.          Second, CareShield Life provides flexibility to age in place.  In enhancing our long-term care financing system, it is also important to bear in mind that Singaporeans have different needs and preferences for their long-term care, and the majority prefer to age at home and in the community.

47.          Similar to ElderShield, the Committee had recommended CareShield Life to provide cash payouts instead of using CareShield Life to reimburse the use of specific long-term care services.

48.          We support the Committee’s recommendation. Let me explain. Reimbursement of specific long-term care services may, at first glance, provide more reassurance to claimants and their caregivers, as the reimbursements would be pegged to the costs of the service. However, cash payouts will provide claimants and their caregivers more flexibility to decide on care arrangements appropriate to their needs, and does not limit care to certain long-term care services in order to be eligible for claim. This design also recognises that long-term care needs might extend beyond medical needs, and will better support policyholders who choose informal care at home or in the community instead of formal care services. Cash payouts also support our overall efforts to go Beyond Hospital To Community, to support care in the community and allow more seniors to be cared for at home. The Government also currently provides subsidies of up to 80% for home and community care services.

49.          This is also why we designed the two new enhancements that Minister Gan announced ­­– MediSave withdrawals for long-term care and ElderFund ­­– to also pay out in cash.

50.          Mr Saktiandi Supaat asked what safeguards will be put in place to ensure cash payouts will be spent on the care of severely disabled individuals, especially those suffering from dementia. We recognise that severely disabled individuals may be more susceptible to exploitation, especially if they lose mental capacity. We will design the three schemes’ claims processes carefully, and put in place checks and audits to ensure that payouts are used for the care needs of the claimant. We will do this in a way that does not inconvenience the claimant or his caregivers.  It is also useful for all of us to make a Lasting Power of Attorney (LPA) early and choose our donee carefully, as Ms K Thanaletchimi pointed out.

51.          We should appoint someone we trust to act in our best interests should we lose the capacity to make decisions.

(E)          CARESHIELD LIFE WILL PROVIDE BETTER CLAIMS EXPERIENCE

52.          Finally, CareShield Life will provide a better claims experience.  As at end-2017, 15,600 policyholders have made ElderShield claims and benefitted from the scheme. Some of these policyholders and their families or care providers have provided feedback that the current ElderShield claims process is confusing. Mr Melvin Yong asked how we will ensure that severely disabled policyholders and their caregivers navigate the claims process more easily.

53.          We wholeheartedly support the recommendations by the Committee to improve the claims process for CareShield Life. The Committee had put in a lot of effort to understand the current ElderShield claims process, and developed a good set of recommendations to improve the claims process.

54.          Under CareShield Life, policyholders and their caregivers can expect a claims process that is easier to navigate. Today, in order to be assessed for ElderShield claims, policyholders will need to see an appointed ElderShield assessor, who will complete the ElderShield disability assessment for them. There are currently 127 assessors, 13 of whom can provide home assessments.

55.           For CareShield Life, we will not require policyholders to arrange for a separate disability assessment, if an equivalent disability assessment had already been done for them by their doctor, therapist, or nurse in the course of receiving care in a health or long-term care setting. For those who need a separate disability assessment, we will expand the pool of assessors beyond doctors, to include occupational therapists, physiotherapists, and nurses. This will make it more convenient to go for an assessment. Ms K Thanaletchimi suggested the assessment fee be waived for the cognitively impaired. The Government will waive the first assessment fee for all policyholders, regardless of whether the claim is successful, so that the fee does not deter eligible policyholders, especially the lower-income, from making a claim. Subsequent assessment fees will be reimbursed if the claim is successful. Ms Joan Pereira’s suggestion for proper communication to policyholders who make a recovery is also well-noted, and we will certainly follow through on it.

56.          Ms K Thanaletchimi and Mr Murali Pillai asked how we can help seniors who are cognitively impaired, for instance, with dementia, benefit from CareShield Life. I want to first clarify that those with cognitive impairment and are unable to perform three or more ADLs are already able to benefit from ElderShield today. Under today’s assessment framework, assessors are already supposed to take into account how cognitive impairment impacts the policyholder’s ability to perform the ADLs.

57.          Many policyholders with severe dementia are already able to make ElderShield claims today. One policyholder who benefitted from ElderShield is 77-year-old Mdm Leong. Mdm Leong has late stage dementia which impacts her ability to perform ADLs independently. Although Mdm Leong is physically able to eat and walk, Mdm Leong is unable to recall the way to specific places such as the toilet, or express her needs. Mdm Leong has been able to receive ElderShield payouts for the last two years, which has helped the family with the cost of medicine.

58.          Nevertheless, the Committee heard feedback that it is not clear how ElderShield assessors should take into account the impact of an individual’s cognitive impairment on his ability to physically perform the ADLs. This can lead to inconsistent claim outcomes for ElderShield policyholders with cognitive impairments.

59.          We therefore accept the Committee’s recommendation to improve the disability assessment framework to provide clear guidance for disability assessors to consider policyholders’ ability to initiate a task, plan, and finally complete an ADL effectively and safely. For instance, in the current assessment framework, the assessor may only evaluate solely whether a policyholder with severe dementia can execute the physical actions such as threading their arms through sleeves. With the improvement to the assessment framework, assessors may also evaluate their ability to do so without being prompted to. This ensures cognitively impaired policyholders with higher care needs will more consistently qualify for claims.

(F)           CONCLUSION

60.          Mr Speaker, to conclude, let me affirm the Government’s commitment to invest in a strong aged care system anchored by home and community care as well as communities of care supported by fellow Singaporeans.

61.          CareShield Life, MediSave withdrawals for long-term care, and ElderFund complement our efforts to build an inclusive and caring home for all of us as we age.

62.          Mr Speaker, I support the motion. Thank you.

[1] Gender, educational and ethnic differences in active life expectancy among older Singaporeans (Chan et al., 2016)

[2] Disability-Free Life Expectancy over 30 Years: A Growing Female Disadvantage in the US Population (Freedman et al., 2016)

[3] American Association for Long-Term Care Insurance (2014)