Debate on CareShield Life – Speech by Daniel Goh

(Delivered in Parliament on 10 July 2018)

Mr Speaker Sir, the aims of the Government in designing CareShield Life to be inclusive, affordable, and sustainable are ambitious and impossible to disagree with. But I am concerned that the three aims make up an impossible trinity. This is what economists would call a trilemma. It means that, no matter how well and enlightened the design may be, it is impossible for CareShield Life to be truly inclusive, affordable, and sustainable at the same time. I would like to raise three issues in this regard.

Inclusive: Women and Retiring Workers

The first issue is that CareShield Life compromises inclusivity in two ways. The first concern with inclusivity is that women pay significantly higher premiums compared to men, 25 percent higher. I find it objectionable that women are being penalised for something that is not within their control, being born women, when lifestyle choices within the control of individuals are not being treated as risk factors for premium calculation.

CareShield Life is to be a publicly administered, compulsory insurance providing for universal social protection. This means that unlike privately run insurance schemes, risk-pooling should be done in such a way as to maximise the utility of social protection for all groups. Why then are we splitting the population divisively into men and women? Why are men paying only for fellow men who become disabled, and women paying only for fellow women who become disabled?

I have said this for CPF Life payouts and this bears repeating, I believe Singaporean men, who are husbands, fathers and sons, would not begrudge risk-pooling to subsidize women who would have done so much unpaid care-work out of love as mothers, wives, and daughters and who would have far lesser savings than men in general.

The second concern with inclusivity I have is the auto-enrollment of ElderShield members aged 41-50 years in 2021 into CareShield Life with the option of opting out. Why limit auto-enrollment to this age band? Why not extend auto-enrollment to ElderShield members aged 51 years and above, which would cover all the ElderShieldmembers? Is this because the older ElderShieldmembers have less Medisave savings to cover the base and catch-up premiums they have to pay to join CareShield Life? But the Government is already committed to helping existing ElderShield members through subsidies and other interventions, so why not auto-enroll the older cohort too?

My concern is that this division in auto-enrollmentbetween those in the 40s and those in the 50s and 60s would create a lost generation of retiring workers with less protection for long-term disability, when they are the ones who would need it most in the coming decade of the ageing society.

Sustainable: Public versus Private

The second issue is that in trying to be affordable and inclusive, is CareShield Life compromising on sustainability? I find it hard to square the argument that with the Government administering CareShield Life we will get better economies of scale, when the same Government has been saying that farming out ElderShield competitively to three private insurers is a cost-effective system. I do believe that a publicly administered social insurance scheme can do better than the three private insurers. But this begs the question. Why was ElderShield farmed out to the threeprivate insurers in the first place?

Minister does not seem to think the private insurers have profited handsomely in the answer to my February 2017 parliamentary question on ElderShield premiums and surpluses, but clearly there is a difference, or else the Government won’t be going for public administration of CareShield Life. So what is the difference between the old ElderShield model and the new CareShield Life model in terms of costs, profits and surpluses? This is not an academic question of public policy analysis or a question of history, as ElderShield will still be around.

This ties in to my other question here about limiting auto-enrollment to ElderShield members aged 41-50 years old. Would not allowing the older cohort to continue with ElderShield as administered by private insurers mean that their interests are being compromised if public management is better? If most existing ElderShield members make the switch to CareShield Life, would not this make a much reduced ElderShield membership pool unsustainable for a competitive system of three private insurers? Would this not end up penalising the remaining ElderShieldmembers? Why not nationalize ElderShield altogether and make the safety net truly universal, cleaner and clearer?

Affordable: Extreme Risk Profiling

The last issue is that in trying to be inclusive and sustainable, is CareShield Life compromising on affordability? I was shocked to read in the opening of the ElderShield Review Committee Report that 1 in 2 healthy people aged 65 and above today could become severely disabled in their lifetime. On what facts is this statistic based on? Is this 50 percent chance statistic used in the actuarial model to derive the premiums? One thing for sure, the health profile and therefore disability risk profile of younger cohorts to be covered by CareShield Life would not be the same as the older cohort today. The younger cohorts should lead healthier life given better nutritional, lifestyle, environmental and healthcare conditions. As such, isn’t 50 percent chance an extreme profiling of the population in terms of severe disability risk?


Mr Speaker Sir, it is impossible to disagree with the impossible trinity, so what can we do? In the end, it is a matter of balance and tradeoffs between the three aims and the Government has to explain this in greater detail and clarity to an educated public who wants to know the deal they are being compelled into. While we support the motion, the questions I am asking here are intended to achieve this, namely, greater clarity on the tradeoffs that the Government has decided on with CareShieldLife.

Nonetheless, after all the tradeoffs have been made, I hope the Government would step in to support and subsidize needy groups when necessary to make sure the CareShield Life balancing act does not exclude or disenfranchise any Singaporeans. This is especially since social risk-pooling would mean the Government would save on providing direct social support to the needy. It would be most uplifting for our vulnerable fellow citizens to know that they are being supported and carried up by their fellow Singaporeans with the help of the Government. Thank you