Careshield Bill – Speech by Leon Perera

(Delivered in Parliament on 2 September 2019)

Mr Speaker sir, I declare my interest as the CEO of an international research consultancy that undertakes studies in the field of products and services for the elderly, among other industries.

Sir, the Careshield Life and Long-Term Care Bill seeks to establish the CareShield Life (CSHL) Scheme and the ElderShield (ESH) Scheme under Government administration, to provide long-term care financing support for severely disabled persons. The bill also amends the CPF Act, to make provision for Medisave withdrawals for long-term care. Most of the key provisions of this Bill were debated in this House last year as part of the debate on the white paper expressing the recommendations of the Eldershield Review Committee.

Subsequent to that debate in the House last year, the government announced that the Eldershield Scheme will be administered by the government from 2021, on a not-for-profit basis. The insurers will transfer to the Government the liabilities and corresponding assets backing these liabilities for all policies under the ElderShield scheme. The valuation comes up to approximately $2.9b

During Budget 2019, Minister Heng announced that a total of $5.1 billion will be earmarked for a Long-Term Care Support Fund to help fund subsidies for disability insurance CareShield Life and other long-term care support measures. This Bill also establishes this fund.

Sir, all of these changes are steps in the right direction.

Key Points from the Careshield Life Debate in 2018

WP MPs debated most of these provisions in the House last year and supported the general move towards risk-pooling for financing elder disability, while raising a number of questions and suggestions.

I shall make a number of points at this stage to reiterate the views we had expressed earlier.

Firstly, we reiterate our call that premiums should be set at equal levels for men and women, as the advantage of sending this signal about gender equality in major public policy formation outweighs the disadvantages explained by the government.

Secondly, will the Government publish the actuarial model behind the setting of premiums such that Singaporeans can assess these assumptions and can be aware of how these assumptions track against future realities as the years go by? This kind of transparency would ensure greater public buy-in by providing some assurance that premiums have not been set at too high a level that would tend to over-reserve funds that may either need to be disbursed by way of future premium rebates or which may be retained for the benefit of future cohorts. Such transparency would also pre-empt the spread of misinformation and ill-informed speculation about the Careshield Life scheme, as MP Pritam Singh argued last year.

Thirdly, will transparent policy guidelines be given to the Careshield Life Council to determine the extent to which excess funds, if any, are to be disbursed via premium rebates as opposed to reserving those funds for future cohorts, so that the system is seen to be inter-generationally fair?

The Eldershield Review Committee Report, in the context of the existing ElderShield scheme, states that the premium rebate is a feature that provides for the three insurers that administer ElderShield to return 50% of any accumulated surplus to existing ElderShield policyholders, if the actual claims experience turns out to be better than what was projected. Premium rebates are considered once every 5 years. Careshield’s acceptance would benefit from similarly transparent guidelines binding on the Careshield Life Council, rather than the Council simply having discretion to make such decisions and inform the public after the fact.

Fourthly, would the government consider reducing the onerous three ADL test to two ADLs, using the Long-Term Care fund to administer premium subsidies to defray and defer any premium hikes that may be necessitated by this change?

Clarifications on the Bill

Next, moving on from points made in the 2018 debate in this House, I would like to raise several new points and questions.

Firstly, holders of ElderShield Supplements will continue to be served by their existing ElderShield Supplement insurers. Does the government envisage that a competitive CareShield Life Supplement scheme market will emerge providing competitive premiums supplements in exchange for higher or less onerously-determined pay-outs; and if so are any steps being taken to facilitate this?

Secondly, Clause 15 states that in the event of premium rebates being given, refunds for grants will be recovered. To clarify does that mean that if the state had provided a grant to reduce the premium and in future a premium rebate is given to that Careshield Life policy holder, the grant plus interest will be deducted from the premium rebate and returned to the Long-term Care fund?

A vibrant, successful aging eco-system for Singapore

And lastly, for the changes that this Bill concretises to have optimum effects on our aging society, we should work towards the creation of a vibrant eco-system that supports many different pathways for the rising number of Singaporeans embarking on their aging journey.

In the past, the mantra for aging was that family members should take care of their elderly. But with our demographic pyramid looking the way it does now, where the ratio of younger people supporting elderly people in every family is much lower than it was say 30 years ago, it is no longer possible to view the question of an aging society solely through the prism of family responsibility alone.

What would such an eco-system look like?

It should include employment for those who want to continue work. This group has the right to employment opportunities unscarred by the stigma of ageism.

And it should include social support for high levels of activity and social engagement for all older Singaporeans, whether working or not.

The eco-system we strive for should include strong capacity for institutionalised care in nursing homes and step-down care facilities to provide care at harmonised and high levels of quality; not to mention elder-friendly facilities in existing and new HDB flats, where some progress has been made.

It should include pathways for aging in place. Home care and day-care should be widely available, with a variety of providers offering an environment that is competitive and rich in variety, experimentation.

It would include options for assisted living – facilities which allow a high degree of autonomy for residents, with shared activity programs, round-the-clock medical support available on-demand and proximate mixed facilities catering to various age groups, so that older Singaporeans don’t feel cut off.

How does assisted living differ from nursing homes? Please allow me to quote a short passage from Atul Gawande’s moving book “Being Mortal”, where he talks about one of the founders of assisted living, Keren Brown Wilson in the US state of Oregon in the 1980s and the concept she championed:

“The services were, in most ways, identical to the services that nursing homes provide. But here the care providers understood they were entering someone else’s home, and that changed the power relations fundamentally….her philosophy was to provide a place where residents retained the autonomy and privacy of people living in their own homes – including the right to refuse strictures imposed for reasons of safety or institutional convenience.”

For all pathways, financial assistance should be available that is means-tested and also automatically inflation-indexed based on inflation trends and fiscal resources. Facilities catering to a range of budgets should be nurtured. The Korean silver town model, which I have spoken about in this House, includes a range of facilities offering different prices and with different degrees of government support, from government-run facilities to purely private, profit-driven facilities.

The facilities in such an eco-system should be provided by companies, not-for-profits, VWOs and where necessary government agencies. Not all elder-care services should be provided by or paid for by government.

Where fiscal cost is required, it should be seen in the context of the cost of not providing such assistance, which could lead to elderly people living alone, becoming cut off and gaining access to medical services only when it is too late, when catastrophic conditions set in for example – and this could amount to a far greater drain on the state coffers downstream in terms of hospital subsidies, Medishield Life premium subsidies, Medifund disbursements and so on.

The cost of providing such financial assistance should also be seen in the context of the opportunity cost of not providing it – if older Singaporeans lack help to age with purpose and dignity, we could lose out on the vital role of elderly Singaporeans as contributors to the workforce and economy as employees, entrepreneurs and customers. And let us not forget the significance of older Singaporeans as role models, mentors, counsellors and care-givers, even when not working. If an elderly Singaporean cannot afford to leave the house because he or she cannot afford a mobility device, for example, he may be unable to work, he may be unable to be a customer for neighbourhood businesses and he may be unable to help his family.

As we move towards a future where 1 in 4 Singaporeans will be aged over 65, let us strive for successful aging, both for older Singaporeans and those of us not yet old.

Having said this, I have a few questions and suggestions regarding our whole-of-society approach towards successful aging that is of indirect but nevertheless unmistakable relevance to the concerns that underlie this Bill.

Assisted Living

Firstly, what is the progress towards launching assisted living facilities? It seems that other countries are far ahead of Singapore in this respect, as the concept dates back to the 1980s.

During the Committee of Supply debate this year, Minister Lawrence Wong said:

“Typically, in such assisted living apartments, there will be more communal and shared spaces for residents to interact with each other, there will be services that are part of the package and the individual living units will be a bit smaller. That is a typical typology of an assisted living apartment.  As the assisted living model is new, we will conduct Focus Group discussions to seek views on the proposed concept for assisted living in public housing. We will take in feedback and views from the discussions and ensure that seniors will welcome such an option, and that the model will be sustainable for the service providers. We will work towards the launch of our assisted living pilot site for public housing at Bukit Batok next year.”

Sir, the assisted living model is new to Singapore but far from new abroad. In advanced countries like Finland and Japan, ALFs are growing faster than nursing homes. A 2016 survey by the Lien Foundation and Income found that nearly 50 per cent of almost 1,000 respondents were willing to stay in ALFs.

I would urge the government to accelerate the launch of new sites. Assisted living at its best, and not all existing ALFs in the world represent that best by any means, but at its best, assisted living promises to marry autonomy with good-quality medical care and social connectedness. It could be a key pillar for successful aging.

And in building this pillar, we have the opportunity to work with local enterprises and start-ups to develop know-how on operating ALFs in a Southeast-Asian cultural context – know-how that could be exported to the region in future, where aging is a major challenge in countries like Thailand and Malaysia, to the benefit of our economy.

The Role of Innovation

Secondly, elder-care is a field that is seeing a good deal of innovation through the application of technology and new business models to increase choice, reduce cost and raise productivity. In fact productivity is a key challenge for this traditionally labour-intensive sector. Social robotics, wearable technology and other innovations are being used in the elder-care sector globally, including in some countries in the region like Japan, Korea and China.

What efforts are being made by the government, and by non-governmental players, to study these innovations and to bring them to Singapore by way of engagement with companies and not-for-profits, both at home and abroad?

Thank you.