Debate on CareShield Life – Speech by Png Eng Huat

(Delivered in Parliament on 10 July 2018)

The 2018 review of ElderShield is timely for our ageing society. At the launch of the scheme in 2002, more than a third of eligible Singaporeans and Permanent Residents aged 40 to 69 years opted out of the scheme. For some reason, the share of eligible residents not covered by ElderShield remained roughly the same, fifteen years later, in 2017.

I did not find the benefits of ElderShield meaningful or assuring back in 2002. Even after the scheme was reviewed in 2007, my opinion of the scheme remained unchanged. The current review, however, is a step in the right direction. The proposed lifetime payouts for as long as the claimant remains severely disabled will provide greater assurance for claimants and their families.

Similar to the review done in 2007, the definition of severe disability was left untouched again in the review of 2018. As Ms Sylvia Lim has pointed out earlier, I also find the criteria to file a claim under ElderShield too strict to begin with. The 2018 review report on ElderShield has a passing mention of some focus group participants suggesting some payouts upon mild or moderate disability instead of upon severe disability, but that suggestion was glossed over with a statement that the review committee preferred to prioritise “critical benefit enhancements to payout duration and quantum” in order to keep the enhanced scheme affordable.

Mr Speaker, not being able to do just one of the six activities of daily living (ADLs) is already a challenge for most of us in this House, yet one must demonstrate the inability to perform three ADLs, in order to qualify for benefits under ElderShield. If anyone of you is unable to eat on your own and use the toilet on your own, you are not deemed severely disabled. If you are unable to move from room to room or move from a bed to an upright chair on your own, you are also not counted as severely disabled under ElderShield. How is that so? Sir, I support Ms Lim’s call for the government to review the definition of severe disability, specifically to consider reducing the 3-ADLs criteria.

The proposed enhanced plan, also known as CareShield Life, is recommended to be made compulsory for all adults and for contribution to start as young as from age 30. It will have the legislative backing and muscle to achieve risk-pooling insurance coverage at an unprecedented scale. Thus, it is able to offer not just better benefits, but a more inclusive definition of severe disability as well. Why was this part of ElderShield not put under any review?

It is stated in the review report that many of the projections and parameters for formulating the enhanced scheme are based on local data and supplemented by international data. Did the committee review any international data on the approach to define severe disability versus ElderShield’s definition, which has remained unchanged since 2002?

If Japan, which has the highest percentage of senior citizens in the world, is deemed the most lenient in claims criteria for long-term care insurance across countries compared in the review report, would that make Singapore the least lenient then, looking at the comparison? And why is that so?

The 2018 review of ElderShield calls for expanding the insurance coverage to achieve greater inclusivity. Would it not be reasonable to expect the enhanced scheme to have a more inclusive definition of severe disability as well? Surely, inclusivity must also mean helping more people stricken with disability, beyond achieving universal coverage for all.

Next, it was stated in the review report that premiums for the proposed CareShield Life should be adjusted regularly to take into account changes in payout quantum and claims experience. It also lists down investment returns on the insurance fund as one of the factors affecting the pricing of premiums. Sir, I do not believe Singaporeans should be made to bear higher premiums due to bad investment returns on the insurance fund of CareShield Life. CareShield Life is supposed to be self-funding based on actuarial calculations and risk-pooling approach. The insurance fund accumulated should not be invested in high risk instruments to begin with.

The report also acknowledges that the role of insurance should be strengthened to play a more prominent part to help Singaporeans prepare for their long-term care needs while Government subsidies, personal savings and family support will continue to be the main source of support in this area. With the proposed transformation of ElderShield to CareShield Life, could the Minister reveal how much, in percentage, the Government is targeting for the proposed scheme to contribute to the projected cost of long-term care in Singapore when it is made compulsory for all in 2020, and how much would Government subsidies come down correspondingly as a result?

At this point, I welcome what the Minister said earlier in allowing members to withdraw cash from their Medisave accounts to support their long-term care needs. I have one clarification to seek on this point. Can someone who is deemed not so severely disabled by CareShield Life apply for such withdrawal i.e. that person is unable to perform only 2 ADLs instead of 3?

CareShield Life is superior to ElderShield in many ways. Universal insurance coverage is also a good thing but it should not be oversold with projections and assumptions that are bordering on paranoia. Thus, I wish to ask the Minister how the premiums for CareShield Life are determined. It is based on a doomsday scenario that 1 in 2 healthy Singapore residents aged 65 today could become severely disabled in their lifetime or based on actual claim experience from ElderShield?

As rightly stated in the review report, “it is challenging to accurately project claims experience, longevity and disability trends decades in advance.” So there is no need to stress and repeat that half our population could become severely disabled in time to come just to bring CareShield Life into existence. I note the Minister’s explanation on this rather depressing statement. Based on what the Minister has said, all of us would be severely disabled in our lifetime anyway, when we are nearer our deathbed.

I believe CareShield Life can stand on its own merit. The only thing left is for the government to be transparent with the actuarial calculations for premiums since the proposed scheme is meant to be not for profit. On this note, I urge the Government to release the actuarial computation report and thinking that went behind the formulation of the premiums for CareShield Life.