ELDERSHIELD SCHEME

Mdm Halimah Yacob asked the Minister for Health (a) how many people have opted out of the ElderShield Scheme; (b) what measures have been taken to dissuade them from opting out; and (c) whether he will consider giving those without Central Provident Fund accounts another chance to open one so as to benefit from the Scheme.

The Minister for Health (Mr Lim Hng Kiang): Mr Speaker, Sir, since the implementation of ElderShield, the Ministry of Health, together with the two ElderShield insurers - NTUC Income and Great Eastern - have been actively publicising the scheme through the various mass media and have conducted numerous grassroots briefings. Through the publicity efforts, we hope to create awareness and help Singaporeans understand the benefits of ElderShield.

So far, 21% of Singaporeans aged 40 to 69 who are eligible for auto-cover have opted out of ElderShield. Some of them may already have adequate coverage from private insurance plans, while others in the lower income group may feel that they may not be able to afford the premiums. For those in the low income group, the Government will continue to help them meet their healthcare expenses through other avenues, such as Medifund and subsidies at the nursing homes.

In recent weeks, 1,780 Singaporeans who opted out have changed their mind and opted back in again. For others who wish to do so, both ElderShield insurers have devised a simple process for these people to withdraw their Opt-out Forms, and still accord them auto-cover status so long as they inform the insurers of their new decisions before 30th September this year.

On the time limit of 15th August 2002 to open a CPF account so as to qualify for auto-cover under ElderShield, I believe Singaporeans have been given ample time to do so since the publicity on ElderShield started in end June 2002. As at 15th August 2002, only 11 Singaporeans in the age group of 40 to 69 have come forward to open an account. There was therefore no need to extend the deadline beyond 15th August 2002. The key priority now is to ensure that Singaporeans who have received the auto-cover understand the benefits of ElderShield and make an informed choice to join the scheme.

Dr Lily Neo (Jalan Besar): Sir, may I ask the Minister whether the fact that about 270,000 people or about 23% of those eligible have rejected ElderShield means that this scheme may not have been well designed, therefore requiring further review urgently?

Mr Lim Hng Kiang: Mr Speaker, Sir, we are quite realistic. The scheme cannot meet the needs of everybody. We try to start off with a basic scheme, and it is quite understandable that a certain percentage of Singaporeans may assess that this scheme does not quite meet their needs. For example, those in the high income groups may feel that $300 pay-out is too low for them, and they will find their own means to seek other covers.

For the low income groups, as I said earlier, the Government will continue to look after them if they meet the means test through our step-down care facilities.

Mdm Halimah Yacob (Jurong): Sir, the name "ElderShield" is actually very misleading because, as I see, it is actually a disability scheme. Will the Ministry consider changing the name, so as to be more reflective of the objective and purpose of the scheme?

Mr Lim Hng Kiang: Sir, severe disability insurance comes under different terms. In the private sector, it is called long-term care insurance. In other countries, it is called severe disability insurance. In our case, we coin the word "ElderShield" so that it is easier for people to identify the scheme. Essentially, severe disability sets in primarily when a person is elderly. So it is meant primarily for the elderly people. But, of course, severe disability can set in any time. A person can have a stroke when he is 45, and he will still be covered. But I think we want to reflect the primary purpose of this scheme, which is for the elderly. Hence, we call it ElderShield.

Dr Lily Neo: Sir, may I ask the Minister whether it is correct to say that the insured can only claim $300 per month should he or she be unable to do three activities of daily living of washing, dressing, feeding, toileting, mobility and transferring? Even with the aid of special equipment and always requiring the physical assistance of another person throughout the entire activity, may I ask the Minister how would the $300 help such a person, as employing a maid would probably cost twice that amount with levy?

Mr Lim Hng Kiang: Sir, as I said, we have to make sensible trade-offs in designing this scheme. We start off with a very basic scheme of $300, so as to keep the premiums as affordable as possible. If we raise the pay-out to $600, then the premiums will be double, and even more Singaporeans will opt out.

For purposes of introducing this scheme, we want a simple scheme and as affordable as possible. And as we gain more experience, we will allow the insurers to have top-ups to the scheme. So it is quite conceivable that 3-5 years from now, the insurers will offer higher pay-outs, and correspondingly higher premiums. But the primary objective in launching this scheme is to get as many Singaporeans sign up as possible. So we want a basic scheme with low premiums.

Dr Lily Neo: Sir, may I ask the Minister whether it is correct to say that the majority of Singaporeans take up insurance for peace of mind and for any eventuality? Therefore, if ElderShield does not adequately address this basic issue, then it is deficient. The purpose of this national insurance scheme as ElderShield can only lessen the load of the people and not help in their needs. Therefore, the rich, as the Minister has said, probably do not need this scheme, and those who are poor and the ones that are most in need will find this scheme inadequate to ease their difficulty.

Mr Lim Hng Kiang: Sir, that is not true, because if you are from the low income group and you are admitted to a nursing home and you meet the means test, the nursing home will probably charge about $1,000 per month. The Government will subsidise 75%, which is $750, and your pay-out is $250. So I think the $300 goes some way in meeting the expenses. We are not saying that the $300 will pay for everything that you need if you are disabled. We want to keep the scheme as simple and as affordable as possible. We set it at $300 because that makes some sense in relation to somebody who is in the low income and will enjoy subsidies from the Government if he is admitted to a nursing home.

As I said, if people think that this scheme does not quite meet their needs, they can opt out. And five years later when the insurers offer a higher pay-out of $1,000 and if they think that it meets their needs, they can opt in again. But at that time when they opt in, they will have to pass a medical test. It will not be auto cover.

Dr Lily Neo: Sir, the Minister just mentioned top-up or enhanced scheme. May I ask the Minister whether the enhanced scheme will be accompanied by a hike in premiums? Will Singaporeans feel the burden if premiums rose? And will people feel short-changed having to pay more and more for ElderShield coverage after some time, despite paying for many years, as the ElderShield premiums will only remain unchanged for the next five years?

Mr Lim Hng Kiang: ElderShield is a scheme based on actuarial calculations. So, the more people we have, the bigger the risk pool. Then, of course, those who are lower risk will subsidise those who are higher risk. The idea is to go out with at least a minimum cover of 250,000 people. That is what the actuarial consultants tell us is needed as the minimum risk pool. Anything beyond 250,000 participants, we have a sound basis for it.

We have put in the contract with the insurers certain safeguards. As I said, we start off with a very simple scheme - $300 pay-out and we keep the premiums as affordable as possible. We understand that this is a very new scheme. The insurers do not have very much data to go by. They use our own data. We have done two longitudinal studies. We have taken the data of developed countries. Here, you are calculating your obligations for the next 40-50 years. Because if you take somebody in at age 40, he may live till 85-90. So you are going to do all these actuarial calculations to calculate your obligations 40-50 years down the road. I think the consultants and the actuaries have been very conservative. And that is the reason why in the contract, we have built in provisions that if the claim history is less than what they projected, then they will offer a rebate to the holders. If the claim history turns out to be higher than the projection, then, of course, we will allow them to raise the premium. Because this scheme is actuarial based and it must be self funding.

In the end, the basis of the insurance is that you are paying a premium and the pay out ratio is between 1:4 or 1:5. And if Singaporeans want peace of mind and they are prepared to set aside this small sum from their Medisave, then they participate. If they think they can look after themselves, then they opt out. The choice is theirs. What we try to do is to provide this facility which is open to Singaporeans and encourage as many as possible to join in.

Dr Lily Neo: May I ask the Minister whether he agrees that a person who is unable to do three activities of daily living is unlikely to get better and, in fact, most likely to get worse with time? Therefore, is it not inhumane to cut off payment after five years? The Minister will probably reply that the majority of the disabled will not need aid for more than five years. My question to the Minister is: what about those who survive more than five years, by which time their financial needs will even become more critical?

Mr Lim Hng Kiang: Sir, as I said, we are starting a very new scheme. When we call the tender, we could have said $300 and pay out until death, in which case there is no prescribed cap. Or we could call the tender and say $300 up to a maximum of 60 months. Then there is a cap. And the insurers will tender accordingly. We decided that, as a start, we put a cap so that the insurers have as much certainty as possible to bid for the tender. If we have put $300 and pay out until the person dies, then there is additional uncertainty and the risk is that the insurer may tender at a higher price or ask for higher premiums to cover the risk. So we want to start off with a scheme which is as simple as possible. And as we build up experience and knowledge, then we can have enhancements. It is also conceivable that as we develop our claims history we can allow the claims to go beyond five years. Then the insurers will be able to calculate and say what additional premium you will have to pay to have that enhancement. So we are keeping things as simple as possible in the start-up, and then we can have enhancements as we develop experience.

Mr Low Thia Khiang (Hougang): Sir, since the insurance scheme is tendered out to insurance companies which are private companies, how much say has the Government in the modification of the terms and conditions of the insurance scheme?

Mr Lim Hng Kiang: Sir, we will have some say in the key parameters in the contract, eg, we ask them to stipulate the expected claim calculations on which they based their tender, so that sets the baseline. And if the claim history is higher than that, then we have certain provisions. If the claim history is less than that, we also have certain provisions. The provisions are in the premium adjustments, whether we get a rebate or whether we have an increase. In the contract itself, the Government, meaning the Ministry of Health and MAS, gave ourselves certain parameters that we can change, depending on how the claim history works out.

Mr Low Thia Khiang: Sir, will the Minister tell us what are the parameters? And in terms of rebate adjustment in the future based on the claim pattern, actual claim data or whatever is in the terms, will he tell us what is the maximum adjustment allowed in terms of increase in premium and how much rebate could be expected?

Mr Lim Hng Kiang: Sir, at the end of five years, we will allow the insurers to have an increase if the claim history turns out to be worse than they expected, but the increase will not be more than 20%. At the same time, if the claim history turns out to be more benign than they expected, we will look at the claim history and we will ask them to rebate 50% back to the holders. NTUC Income has come out publicly to say that if the claim history is more benign, in fact, they will look towards giving back higher than 50% rebate. But the contract calls for a 50% rebate.

Dr Lily Neo rose ---

Mr Speaker: Yes, Dr Neo. I will allow one last supplementary question because we have so many other Questions to deal with.

Dr Lily Neo: Mr Speaker, Sir, since we are discussing an important national issue involving many Singaporeans, in fact 1.2 million people, could I seek your indulgence to allow at least two more questions and one more clarification, please?

Mr Speaker: One more question. You can always come up with a motion, if you want to. One more question after this. We have more than 20 other Questions to deal with, Dr Neo.

Dr Lily Neo: Okay. I am just trying to figure out which questions that I want to ask. Could I seek a clarification after my question to the Minister?

Mr Speaker: We will wait till it comes up. Dr Neo, ask your question first.

Dr Lily Neo: Thank you. Could I ask the Minister whether it is correct to say that the specified medical assessors appointed by the insurers have to place very strict criteria on the other cases and all policyholders of ElderShield claims during their physical examinations? Is this not unfavourable to policyholders and working to the advantage of the insurers? May I ask the Minister what kind of percentage out of the present 8% of severely disabled people that can qualify for these claims? Based on the strict criteria by the medical assessors, I should think that this percentage must be very small indeed. Therefore, is this not a very profitable scheme for the insurers?

May I also ask the Minister whether the criteria set for ElderShield claims on the aid of special equipment will be increasingly disadvantageous to policyholders as technology becomes progressively more advanced and efficient?

May I also ask the Minister on the repeated publications by the Ministry of Health and the insurers citing that based on the British experience, men have 35% risk, and women 45% of being disabled some time in their lives. May I ask the Minister whether we should be more explicit and less misleading by adding that the majority of this disability will be either temporary or mild to moderately severe; therefore, they will not be eligible for ElderShield claims. But, more importantly, on a bigger picture, should the Ministry of Health and people not be alarmed by such possible high disability figure; therefore, more proactive actions on preventive measures should be embarked on urgently to prevent getting such incidents?

Mr Lim Hng Kiang: Mr Speaker, Sir, all insurance claims need to go through an assessment process. For the ElderShield, we have set up a group of assessors who are GPs to make this assessment. If the policyholder is not happy with the assessment done by the assessors, there is a channel for appeal to the Ministry. But it is very early days. The scheme will not kick in until 30th September. The assessors are not out yet. So, let us wait and see what the claim histories are like. Right now, we still do not have enough cases to determine one way or the other whether the assessors have been overly strict or overly lenient. I think we need at least two, three, maybe five, years to build up some kind of a pattern. At the end of that period, we will do a review.

Ultimately, Singaporeans must look at the scheme and determine for themselves whether the scheme meets their requirements or not. And if they do not, they opt out. If they do, they stay in.

Dr Lily Neo: Mr Speaker, Sir, I disagree with the Minister because the medical assessors have already done physical examinations on many IDAPE cases, and they were really strict on these cases. May I seek a last clarification from the Minister? On the report in the Straits Times published on 7th August, it was stated that the Minister for Health said that he felt like a koyok seller when he chaired a press conference on ElderShield. Mr Speaker, Sir, my understanding of a koyok seller, and I am sure of many others, is a medicine man selling products that are less worthy and often fake medicines that do not work! Therefore, could the Minister explain what he meant by referring himself as a koyok seller with regard to ElderShield?

Mr Lim Hng Kiang: Mr Speaker, Sir, I have been explaining ElderShield based on its merits for many, many months, if not years. And we have to clarify and clarify and sell it so many times that I feel like I am selling a koyok. Why don't we just look at the merits and decide for ourselves whether we are in or out?