MediShield Life

Mdm Speaker, in Mandarin, please.

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(In Mandarin): [Please refer to Vernacular Speech.] Birth, ageing, sickness and death are the natural laws of life. Ever since ancient times, people have been actively exploring ways to overcome sickness and ageing, and have spent huge amounts of resources in the hope of a healthy life and longevity.

I would like to thank the MediShield Life Review Committee for its efforts. The Report balanced the interests of different parties, hence, I support the recommendations.

MediShield Life is designed to help Singaporeans pay for the medical expenses of serious illnesses; it will benefit both the young and the old. Now, Singaporeans can have peace of mind and live their golden years without worries. People no longer have to worry that they can afford to die but not to get sick.

Singaporeans do not want to burden the next generation. Last night, I went to a resident's wake. The family told me that they, too, did not want to add burden to the next generation with their sickness. In fact, they hope the next generation can live better, without being burdened by the heavy medical expenses in the future. These are the exact benefits that MediShield Life can bring by reducing the burden on the children and alleviating these worries for them. By 2030, there would be more than 900,000 people aged 65 and above which will make MediShield Life even more meaningful and crucial.

I also agree with the following observations raised by the Committee.

First, with MediShield Life, will healthcare expenses rise subsequently? The Committee pointed out that it could lead to over-consumption of healthcare services, but I do not think the possibility is high. This is because nobody wants to fall sick; if we could help Singaporeans maintain a healthy lifestyle and go for regular health checks to prevent illness from happening, we can prevent healthcare over-consumption. When it comes to looking after our loved ones, it is quite understandable for people to be kiasu or kiasi. They simply want to make sure their loved ones are taken good care of and nothing bad will happen to them.

At the same time, standardising the prices of medical services can effectively control Singaporeans' healthcare cost. Even with Government subsidies, Singaporeans are still facing rising medical expenses. If we could train more outstanding healthcare professionals and step up medical research to develop better and more effective medicines and equipment, patients may be able to recover faster, thereby reducing the length of hospital stay. This will greatly reduce their medical expenses.

With population ageing, do we need to adjust the patient-healthcare professional ratio? I hope more private clinics can joint CHAS. The Government may also need to increase the

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number of B2/C beds to meet demand.

We need to encourage the younger generation to do financial planning; we need to step up education to help them understand MediShield Life is a major social policy shift. They should save and prepare for the future and not to indulge in unnecessary consumption or spend the money of the future; they should understand pleasure comes after toil, and change the mindset of muddling along.

(In English): Meeting healthcare needs is not a simple demand-and-supply linear equation or relationship. It can be as complex as a matrix of many factors.

One of the important factors is confidence in our healthcare system and practitioners. That explains why a lot of people are seeking treatment in Singapore. It will not be acceptable even if it is cheap or even free if our healthcare system is poor and badly managed – as pointed out by Singaporeans. Therefore, it remains paramount and important that we need to continue to work towards building a world-class and best healthcare system and people.

We must continue to attract the best medical practitioners to remain in Singapore and continue to invest in the best equipment ever possible for Singaporeans. We must continue to pursue world-class and the best and renowned medical institutions to set up office, training and research centres in Singapore.

On this note, we already know how successful the Government has achieved so far and what more can be done to attract more such world-class institutions to set up centres here.

Mdm Speaker, it was reported that a team of American psychologists found that people who were positive in their thinking lived an average of 7.5 years longer than those who regretted the passing years. The researchers, led by Dr Becca Levy from Yale University in Connecticut, said the effect of a positive attitude towards ageing was greater than physiological measures, such as low blood pressure and cholesterol – each of which is thought to add a maximum of four years to life.

In short, not only positive thinking impacts your ability to cope with stress and your immunity, it also has an impact on your overall well-being. It helps reduce risk of death from heart problems. It prevents depression and, thus, increases lifespan and avoids suffering as a result of serious illnesses.

With that and all the positive benefits associated with MediShield Life, I support the Motion and wish everyone here a healthy and happy life.

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Mdm Speaker, the introduction of MediShield Life was announced by Prime Minister Lee Hsien Loong in his National Day speech in 2013 as the third key shift which compliments other policy shifts in healthcare financing for all Singaporeans, with lifetime basic protection against large medical cost and for greater peace of mind.

The Committee has completed its review and submitted its report on the universal health plan with key principles adopted by the Committee on 23 June 2014. Its recommendations for the proposed MediShield Life national health insurance scheme are: better protection against large medical bills, extending coverage for life until age 92, and insurance for those with pre-existing conditions.

Madam, demographics is the most important factor putting economies at risk. Our healthcare financing needs to evolve with changing demographics and healthcare needs. An older population, with smaller families, is many times more expensive to manage than a younger population. Medical insurance and pension schemes do not necessarily take into consideration the huge risks caused by demographic changes. Women can be discriminated against, because they outlive men, and pay less into retirement schemes because of family commitments.

A rapidly ageing population has linkages to discount rates, yields, longevity risks, social stability and, finally, economic growth. If we do not ensure that the CPF takes into consideration risks of increasing longevity, we will not be doing our future generations right by transferring the burden to them.

Since we have chosen the annuities route, we hope to see a more complex strategy by CPF Board that can effectively hedge inflation risks. The use of the Special Singapore Government Securities (SSGS) is not sufficient as a tool by itself. The Government needs to develop a strong system to avoid individual poverty and a collapse of our annuity and medical funding frameworks.

We understand that the Government is considering increasing taxes, direct or indirect taxation or income tax and so on in order to meet Singaporeans' request for higher benefits from medical insurances and retirement funds. But we hope that the Government can make their working assumptions transparent so that Singaporeans can better understand the Government's intentions.

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The Singapore People's Party places a very high premium on the health of all Singaporeans for all illnesses. The provision of healthcare facilities must be accepted as a social responsibility by the Government.

Madam, I am in favour of the revised MediShield Life scheme which will give Pioneers better peace of mind for their healthcare bills and ease the burden of caregivers and family members. We believe that the aged will rely heavily on long-term care services. As we age, we will have a significant right-tail distribution of healthcare expenditures. In figure 7.4 of the White Paper, we note that the revised scheme may pay up to 70% of the case study provided as an example – a higher percentage than the previous rate of 43%.

However, we hope MOH can come up with simpler ways of explaining the complex policy to Singaporeans, perhaps with a straightforward short video on YouTube in the four official languages, to help the average citizen understand the workings of the proposed MediShield Life scheme.

The scheme should be made more equitable for the "asset rich, cash poor" group who may be unfairly penalised because of their annual home values of above $21,000. Help should be given to them to "deal with bureaucracy" to ease those who need help to cope with their premium increase.

The Government should form a committee to look into the impact of rising health costs, caused mainly by the vested interests of pharmaceutical departments and manufacturers of hospital equipment which have pushed up health costs to the rate of inflation.

We would also like to ask a hard question. If the Government can make it compulsory for all CPF account holders to subscribe to an annuity scheme, why is it not making all Singaporeans buy MediShield Life? After all, the bigger the pool of insured, the more manageable is the shared risk which will also help in reducing premiums across the board.

Universal coverage under the new MediShield Life will imply higher premiums – there is no free lunch. A trade-off has to be made between better benefits and higher premiums. But for those who cannot afford the enhanced package, could the Government provide subsidies after means-testing? And how will the Government plan to help the two-thirds lower income group cope with the premium rises after the transitional period of subsidy is over in 2019, bearing also in mind that there are over 1.65 million or 45% inactive CPF members out of 3.53 million CPF members who may not have sufficient money in their Medisave account to pay their MediShield Life premiums? Or should the unemployed have lesser schemes than the employed? To be a truly inclusive society, no one should be left out of insurance coverage with the Government bearing most of the costs together with

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Singaporeans.

We are not sure how much more the Government would spend to support the revised healthcare insurance plan when it announced that it will also be providing premium subsidies and Medisave top-ups for the Pioneer Generation for life and premium subsidies for lower to middle income households. Mr Leong Sze Hian, a regular blogger, has asked for the actuarial study to be made public so that Singaporeans can understand if there is a real net cash outflow to maintain the MediShield Life scheme. It was reported that, every year, premiums exceed claims since the inception of the MediShield scheme, to the tune of an estimated more than $1 billion to date.

May we also take this chance to highlight the importance of pre-emptive healthcare management? Promoting healthier lifestyles is more important than the best insurance schemes. No claim bonuses could encourage the pursuit of healthy life styles, reduce claims and lower premiums.

In this vein, perhaps the Minister could consider a calorie tax on high calorie foods and drinks in Singapore, just as what Mexico has done – the higher calorie the food item, the greater the tax on the item. It is generally a pre-emptive system to increase burden on irresponsible food providers. A recent study by the Robert Wood Johnson Foundation in the United States suggested that applying a tax based on the amount of calories contained in a serving rather than its size would be more effective in reducing obesity.

I am glad to note that greater subsidies are provided for patients of B2 and C class wards but would like to ask the Minister whether this will affect the holistic service quality and the range and options of treatment in the lower class wards. Some patients have even expressed the doubt whether medications provided for patients have the same potency of those in B1 and A wards – like the saying in Chinese: “一分钱，一分货”. You get what you pay for.

The Government should allow Medisave to be fully utilised to pay for MediShield Life premiums or Integrated Shield Plans that cover all deductibles and co-insurances for B2 and C class. There should not be a limit imposed.

The Government should encourage more companies to have greater portability plans and allow the employers to switch between insurers that ride on MediShield Life without additional underwriting and duplication of their employees' medical benefits. This will lower their premium costs.

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We hope MOH will also address pensioners' concern about their existing life-long pension benefits and to avoid duplication of their medical benefits with MediShield Life.

In this respect, it was noted that pensioners who stay in community rehabilitation hospitals are only allowed $5,000 limit of Medisave usage.

Madam, rehabilitation stay in community hospitals usually take months for elderly patients' recovery. I would urge the Minister to extend the Medisave limit as in other restructured hospitals to help pensioners defray the out-of-pocket bills which may amount to thousands of dollars, depending on the ward, even with MediShield plans.

Additionally, we advocate for more choices for affordable premiums as long as citizens understand the downside risks of Integrated Shield Plans. I think Singaporeans also provided the same feedback on page 46 of the White Paper.

MOH should take this opportunity to do a thorough overhaul to the MediShield and IP schemes and make it truly comprehensive and easy to understand.

MediShield should also cover pre- and post-hospitalisation care that adds up to significant costs. MediShield premiums should be kept within Medisave contribution levels that are affordable to Singaporeans.

In conclusion, there is no perfect healthcare system in the world. A country must have the ability to constantly change and evolve to stay relevant to the needs of the people, the quintessential quality for a good healthcare system.

I would like to thank the MediShield Life Committee Review Board for their comprehensive work.

Thank you, Mdm Speaker. Before I proceed with my speech, let me just highlight a few points in response to hon Member Mrs Lina Chiam's comments. First and foremost, I would like to inform her that no one will be left out of the MediShield Life scheme. It is a scheme for every Singaporean and PR in Singapore, from life to death.

Secondly, in terms of the subsidies and expenditure, the Government is going to subsidise to the extent of $4 billion in the next five years. So, that is a substantial amount of

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subsidy.

Thirdly, when the Member brought up the point about the type of care that is rendered to people who choose the lower class wards, for example, the subsidised wards of B2 and C class, let me reassure her, speaking from the point of view of a practitioner of medicine for the last 24 years, the type of care that we provide for our patients is the same across the classes. It is just the level of subsidy that differs with the different classes. But the doctors, medications and the type of treatment that we provide are the same.

Madam, our 3M framework offers a strong foundational healthcare financing system which has generated the interest of health economists and many countries over the years. Over the decades, it has been reviewed and liberalised to make it more flexible, robust and adaptable to the changing needs and expectations of the populace. The critical point about this scheme is its long-term sustainability.

MediShield Life is a bold and progressive move on the part of the Government and MOH, covering our citizens from birth to the end of life. The move comes at a critical period whereby countries are all grappling with ageing population, rising healthcare costs and, of course, inflation.

In general, I support the proposals put forth but I do have several concerns to raise.

Firstly, the subsidies for premiums in MediShield Life are tagged to the value of your property and, for the group whose property is more than $21,000, there will be no subsidies offered for the high-income group. I feel this could be a concern because this group may comprise of people who are retirees, who had purchased their homes many years ago at an affordable price or inherited them even, and they may not be cash-rich either. Even if they be eligible for the Pioneer Generation Package now, come 2019, their premiums will be relatively high, without the subsidies. Recently, the Minister for Health announced that they will be eligible for the transitional subsidies on a case-by-case consideration, but my concern is: what happens after these first four years?

The rate of appreciation with age can also be a concern. The question is, "Is it too high?" and is age-banding the best way to categorise and do this, if one considers the table that has been put forth? From 2019, for Singaporeans aged between zero and 20 from high-income families, they would pay an annual premium of $130, whilst those over 90 years would have to pay $1,530 annually. This is a whooping 12-13 fold rise.

In view of this, should we decide on setting the increments using a ratio or rate-banding? That means if we set the ratio at 4:1 or 5:1, then the older individuals will not have to pay

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beyond four to five times being paid by the younger person. Something for us to consider.

As MOH is reviewing, with insurance companies, on the finalisation of the Integrated Shield Plans, I support the move to have the key features of the standardised plans tagged at the B1 rate, but it is also important for us to educate and make sure that people make the right choice of ward class when they seek healthcare.

Also, I hope MOH can take this opportunity to review our private healthcare insurance with the respective companies to make them more progressive and robust, as in some countries.

One more query I have is, will those with existing illnesses be managed differently, Madam, from those with no pre-existing illnesses in the revised Integrated Shield Plans which are to be announced?

Next, on portable healthcare benefits, it will be a good move for a vibrant economy, such as ours, where workers will go to where their options and opportunities are better. Perhaps, we can consider further dialogues with the tripartite partners and even offer grants and incentives for supporting employers and companies. As I see it, this can help reduce duplication of the coverage between employers' medical benefits and the MediShield Life scheme in the long term.

As the Minister mentioned in his speech yesterday, there has been some progress in this area with the dialogues. I hope that we can have some updates and, perhaps, an estimated possible timeframe for consideration as well.

One other group of people who have been wondering how it will affect them as well will be the pensioners. Thus far, not much has been shared on this. I wonder if the Minister has any further updates on this. Currently, we have about 32,000 pensioners on various schemes in Singapore.

One group of people that we can tap on to serve as our ambassadors for MediShield Life will be the healthcare professionals and healthcare workers. Can we also ensure that we reach out to the institutions to educate them further on MediShield Life and other related policies? Why am I saying that they should be our ambassadors? Well, because the healthcare professionals are the ones ordering the tests and investigations, making the decisions. They have a role in contributing towards our healthcare expenditure and, thus, towards a cost-efficient healthcare system as well. They are also the ones we can count on to help educate their patients. I do hope MOH can work with the various institutions and even primary healthcare providers to empower them and garner their support and help on

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this matter to communicate and help us explain MediShield Life. This will also be necessary with private healthcare institutions, I feel.

Will MediShield Life affect our population's healthcare consumption patterns and profile? Well, we will have to monitor and do surveillance and see what happens. Simultaneously, I feel that education and health promotion are critical for informed choices and decisions which are going to be made for long-term affordability considerations. Madam, in Malay, please.

(In Malay): [Please refer to Vernacular Speech.] Madam, the MediShield Life Scheme is very comprehensive and is a good move to help Singaporeans cope with healthcare costs. It is supported by various subsidies, especially for the Pioneer Generation, as well as those in the low and middle income groups. MediShield Life not only helps individuals but can also lessen the burden of their family members because it is their children and grandchildren who usually help out with the premium payments.

Our Malay/Muslim community also has a high rate of chronic diseases. This means more risks, complications, treatments, medication as well as admissions to hospitals for treatment and therapy. Thus, MediShield Life, which has removed the annual or lifetime claim limits, will bring major benefits to those who frequently utilise our healthcare system. For example, those who are suffering from end-stage renal failure and require lifetime dialysis treatment, or diabetics with various complications as well as patients with stroke and many long-term complications. These are the groups who will benefit most from this scheme.

I also hope our community will take note and try to find out more about this scheme which is very beneficial to them. Come to our dialogue sessions and share it in your constituencies. Ask questions so that you can gain the benefit from this long-term scheme.

For those who have Integrated Shield Plan policies, do not rush to make a decision whether to stop or to continue with it. First of all, I would like to ask that they study the details presented and understand it fully. Discuss it with your family members and also get their views about your decision.

(In English): Finally, Madam, can MOH consider setting up a Review Committee or some representatives and include a hotline as well to assist in handling queries or clarifications and case-by-case consideration for appeals and matters related to the topic within the next year or so, especially in this initial period leading up to the implementation? There should be representation in the various languages as well. This would be very helpful to assist the public and our citizens in enhancing their level of understanding.

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Moving forward, there is no perfect healthcare system, nor is there a perfect healthcare funding model worldwide. We have to do what works for us and our citizens, but we must remain flexible and nimble, as appropriate.

Health promotion and prevention must still remain the thrust of our healthcare system. Primary care must continue to be strengthened and gaps must continue to be filled.

Healthcare is a basic need we must fulfil for society, but our health lies in our own hands. I support MediShield Life and its implementation.

Mr Yeo Guat Kwang (Ang Mo Kio) (In Mandarin): [Please refer to Vernacular Speech.] Mdm Speaker, the MediShield Life is a significant milestone in our healthcare reform and is a clear demonstration of the Government's will to improve the healthcare insurance safety net for Singaporeans, especially those who have fallen through the cracks in our current system.

The MediShield Life, in tandem with revamps of MediShield in the earlier years, is yet another reform which provides a comprehensive cradle-to-grave medical protection for Singaporeans. This is probably a first in the world. Although other countries have similar systems, ours have our own unique features. We do not insure from the first dollar but focus on protection against serious illnesses. By doing that, we make sure the premiums are affordable to all.

More importantly, the Government provides permanent, transitional and additional premium subsidies so that no one will ever lose their coverage because they cannot afford their premiums. For the pensioners, Public Service Division (PSD) announced a series of measures last week to ensure that they will continue to enjoy comprehensive medical benefits and will not lose out because of the introduction of MediShield Life.

Madam, MediShield Life is a new, yet not completely new national healthcare insurance scheme. To put it simply, MediShield Life is built on the foundation of the current MediShield, then "plus 2, reduce 2 and multiply by all". The two "pluses" mean the increase of coverage and claim limits; the two reductions mean the reduction in co-payment and deductible. "Multiply by all" means that everyone will be covered, even those with pre-existing conditions who could not join any insurance scheme previously. Singaporeans and their families will no longer face the predicament of not being able to pay for large medical bills due to serious illnesses. This insurance scheme, which is "for all, for life", is most timely in our rapidly ageing society.

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Often, we hear people say that, in Singapore, you can die but you cannot afford to get sick. But in fact, in Singapore, we have not seen anyone who cannot receive treatment because he is unable to foot his medical bills. In addition to the current 3M framework, the introduction of MediShield Life and CHAS will render this old saying obsolete. It also shows that the Government is determined to build an effective medical social safety net that gives Singaporeans peace of mind when they are ill.

I hope that the Government will pay more attention to explaining the details of MediShield Life. At the same time, Singaporeans should also try to understand it with patience. Although MediShield Life looks simple, it is quite complicated when implemented, because it has to look after everyone's interests. The communication efforts should focus on the elderly who will benefit most from the scheme. I urge the Government to adopt the same communication modus operandi as the Pioneer Generation Package to explain to the elderly the benefits of MediShield Life.

I hope the Government can introduce various measures in the future to ensure that the revision of the premiums of MediShield Life would be within reasonable limits. We cannot solely depend on the Government to control the premiums; medical providers and hospitals should all play an important role. This is because the biggest factor influencing the premiums is the claims amount. I urge our medical providers to be prudent and carry out only essential and critical treatments so that we can keep insurance claims at an accurate level and that premiums will not inflate unnecessarily.

The basic principle of any insurance scheme is risk pooling. The Government has committed $4 billion to help Singaporeans join MediShield Life. This is a right move. I hope the Government can strengthen Singaporeans' awareness of staying healthy and introduce measures to promote a healthy lifestyle, thereby preventing the ballooning of healthcare expenses. An old gentleman told me that he welcomed the Pioneer Generation Package and MediShield Life with joy and happiness, but he emphasised that although the schemes were good, it was best not to utilise them!

Let me use a few verses to summarise:

"MediShield Life protects everyone.

If you become seriously ill, no need to worry.

The premiums will be steady for five years. But in the sixth year, it will jump.

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Hope the Government can extend a helping hand and improve communications to reduce anxieties.

Even with a medical safety net, it is most important to stay healthy!"

I hope everyone in Singapore will do his best to allow MediShield Life to achieve its target so that we have peace of mind when we are old or sick.

Now that we have deepened and enlarged the scope of our national medical insurance, I urge employers to take this opportunity to adopt portable medical benefits for their employees. If employers say no, we have to understand why. Is it due to lack of resources or intention? Is it because they do not want to or they are not able to do it?

Mr Teo Siong Seng said that employers should be allowed to keep the flexibility offered by their current medical benefits arrangements. I do not understand this. With the implementation of MediShield Life, all employers should take this opportunity to restructure their employees' medical benefits to maximise employee benefits and avoid wastage. With MediShield Life, employers would no longer need to be concerned with cost issues associated with employing older and part-time workers, back-to-work women and people with pre-existing conditions. MediShield Life is for all and for life. I am not sure whether keeping the current scheme is an option. I feel all employers should take this opportunity to improve their medical benefits so that all Singaporeans will be better taken care of. The Group Hospitalisation and Surgical Plan is, in fact, an unguaranteed cheque. In the last few recessions and in the economic restructuring process, we saw many workers who could not get this cheque cashed in times of need. So, I hope employers can make up their mind to reform their medical benefits.

I understand that in the past few years, higher rentals and a tight labour market have driven up the overall business cost. While cost is the most important consideration on the employers' mind, for employees, medical benefits are the thing they value most. Hence, employers should give priority to this concern. From now to the end of 2015, employers have more than one year to prepare for this new scheme through the Tripartite platform. The Singapore Business Federation and Singapore National Employers' Federation should work together with unions to help employers understand the benefits and urgency of restructuring their current medical benefits.

For a long time, our model has been depending on partial contributions by employers, employees and periodic Government top-ups. Within this three-way structure, while the Government plays an important role, the employer is another important pillar. Currently, only 5% of employers have adopted the Portable Medical Benefits Scheme; I hope MOM can

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introduce more incentives, such as tax deductions, to encourage more employers to redesign their medical benefits.

Finally, whether MediShield Life can ensure people have no worries when they fall seriously ill and need to be hospitalised depends on not just the Government. Medical providers, employers and each of us must contribute by staying healthy and making sure there is no wastage of medical resources. Only by making the efforts together can we build a sustainable healthcare system. I support the Motion.

Mdm Speaker, I rise in support of the Motion. Better Protection. For All. For Life. These three simple yet powerful phrases exemplify the impact that MediShield Life will have on the lives of Singaporeans. First, MediShield Life will provide better protection for Singaporeans against large hospital bills and rising medical costs, now and in the years to come.

Second, MediShield Life will cover all Singaporeans, regardless of whether they suffer from pre-existing conditions, or their financial situation. Thirdly, MediShield Life will be available and will provide medical coverage for Singaporeans for life, regardless of age or background. Better Protection. For All. For Life.

Further, the Government has committed to ensuring that the proposed increase in premiums for MediShield Life remains affordable and manageable for all Singaporeans, by providing help to them with their MediShield Life premiums. To ensure that all Singaporeans will be a part of and will benefit from this insurance scheme, the Government will provide

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close to $4 billion in subsidies and financial support over the next five years.

What is before Parliament today is a product of the recommendations of the MediShield Life Review Committee (MLRC) that was tasked to provide recommendations on the proposed MediShield Life scheme. The impetus for the Committee was to allow the Government to put into action its commitment to allay concerns of Singaporeans about healthcare – and there were many concerns about healthcare and continue to be – to address gaps in the existing MediShield scheme and to study the shift to universal and lifelong insurance coverage under MediShield Life.

Therefore, to ensure that MediShield Life will provide better protection for all Singaporeans for life, the Committee's recommendations strike a careful and delicate balance between providing more benefits for MediShield Life and keeping it affordable, while ensuring that the healthcare system is sustainable in the long run.

By calibrating the MediShield Life scheme with these factors at the forefront of their minds, what is envisioned is a healthcare scheme which provides stronger protection for all Singaporeans against large hospital bills, especially those at the B2 and C levels – and a system which will provide them with peace of mind against large healthcare bills, for life.

Although not within their original mandate, the Committee also made suggestions to the Government to review the landscapes and features of Integrated Shield Plans (IPs), including the possible development of a standard IP with B1-level coverage, which will enhance healthcare protection for Singaporeans beyond the basic MediShield Life levels.

As a whole, the proposed MediShield Life scheme will provide a more holistic approach to healthcare for Singaporeans and, together with other levers in our existing healthcare system like Medisave, it will ensure that Singaporeans have a stronger and more robust protection for their healthcare needs, throughout their lifetime.

I firmly support the Motion for two main reasons. First, the recommendations of the MLRC on MediShield Life exemplify how the fruits of Singapore's economic success and growth will be shared amongst all Singaporeans. Second, the White Paper outlines how the Government will ensure that the proposed changes to our healthcare system will be effective in providing better healthcare protection, while remaining affordable for all Singaporeans.

First, I support the Motion as the proposed MediShield Life scheme will benefit all Singaporeans for life, regardless of age, financial background or if they are currently suffering from a pre-existing medical condition.

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As many Singaporeans have had a part to play in the economic prosperity that we have enjoyed, especially our Pioneer Generation, it is only fitting that all Singaporeans are included as part of the MediShield Life scheme and will be able to share in the fruits of Singapore's economic prosperity. This effort to include all Singaporeans as part of what some argue is a national insurance scheme will ensure that no one is left behind. Further, all Singaporeans will be able to share in the economic success of our nation.

One important group of individuals that will benefit under the MediShield Life scheme are Singaporeans who suffer from pre-existing conditions. These are individuals who may not be covered by the existing MediShield scheme but are, in fact, the ones who are most in need of protection. These Singaporeans have had to bear the brunt of rising healthcare costs likely on their own, and would have often times struggled to pay hospital bills for the treatment of unexpected illnesses or even expected illnesses. With MediShield Life, these fellow Singaporeans will now be provided with basic healthcare protection that will help to significantly reduce their long-term healthcare costs and hospital bills.

Other groups of individuals who will also benefit from the MediShield Life scheme are Singaporeans from our Pioneer Generation, as well as Singaporeans who are from lower-to-middle income households or who are needy. These are Singaporeans who are also in need of better protection, healthcare wise, but may need more help in the near term to ease the shift from MediShield to MediShield Life. Therefore, these individuals will be given additional premium subsidies to tide them over in the transition over to MediShield Life. Therefore, no Singaporean will be left behind and everyone will be afforded basic healthcare protection.

As Singapore continues to develop into a global hub and grows from strength-to-strength economically, it is heartening to see that all Singaporeans will be able to have a share in the economic pie of Singapore's success, and that a robust social safety net will be created or is being created to better protect Singaporeans. Further, I support the Motion as it outlines how the Government will provide better healthcare protection for all Singaporeans, while ensuring that MediShield Life premiums remain affordable for all.

As a whole, in order to ease the shift to coverage under MediShield Life, particularly for the cost of bringing those with pre-existing conditions into MediShield Life, the Government will be bearing the bulk of the costs to ensure that the impact of premiums are kept manageable for all. To this end, the Government has earmarked close to $4 billion in subsidies and other forms of financial support to operationalise the proposed MediShield Life scheme in the next five years.

Funds, which have been set aside already, will be channelled to bring Singaporeans with pre-existing conditions onboard the national scheme. I think this reflects the responsibility of this Government. Over and above special premium subsidies, Singaporeans will receive

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transitional subsidies for the first four years to help them with the increase in premiums by offsetting the net increase in their premiums.

The wide scope of coverage for the subsidies illustrates how seriously the Government is committed to ensuring basic healthcare protection remains affordable and attainable for all Singaporeans. However, Mdm Speaker, while I support the main tenets of the proposed MediShield Life scheme, could the Minister explain how this scheme will continue to be funded for generations to come, such that it is a coverage that Singaporeans can rely on some 30, 40 years down the road? Further, given the rapidly ageing population of Singapore, could the Minister explain if that projected demographic will affect MediShield Life premiums in the longer term? Essentially, this looks good and feels good now, but how will it be funded to ensure it is a financially sustainable endeavour that will remain in existence 30 or 40 years down the road when there will be Singaporeans relying on MediShield Life coverage?

Lastly, to ensure that there is greater awareness and understanding of the above-mentioned changes, the Government and the community as a whole must make consistent efforts to ensure that all Singaporeans, young and old, understand the upcoming changes to and the intricacies of MediShield Life, and how it will provide them with lifetime basic protection against rising medical costs. All of us in this House have a role to play in that regard. This public education element will ensure that Singaporeans have a better understanding of our healthcare system, and it will also empower them to play an active role in planning for their own and their family's long-term healthcare needs.

On the whole, MediShield Life and the other proposed changes to the healthcare system will, indeed, provide better protection for all Singaporeans, for life. As we continue to build a compassionate and caring society, we are reminded that each of us has a part to play in sharing in the modest cost to expand the coverage of MediShield to include all Singaporeans, under MediShield Life.

By working together and helping one another, we can ensure that all Singaporeans can look forward to their golden years with peace of mind knowing that they will not be overwhelmed by rising medical healthcare costs or left without adequate medical protection. With MediShield Life, all Singaporeans will have the assurance that they will be adequately protected, for life. Madam, I would like to register my firm support for MediShield Life.

Madam, I rise in strong support of the White Paper on MediShield Life. I would like to especially focus on a very significant feature

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of the Review Committee's recommendations – that of universal coverage.

During the Our Singapore Conversations conducted with 47,000 Singaporeans, healthcare has emerged as one of the top three concerns for them. Many people worry that as the population ages and life expectancy increases, healthcare would not be affordable. It is clear that access to affordable healthcare throughout life is an important basic need of all Singaporeans.

Yet, 7% or 270,000 Singaporeans and PRs are uninsured under the MediShield, which is our basic public insurance scheme. Out of these uninsured, 60,000 of them have pre-existing conditions of varying severity. Amongst those who are insured, another 65,000 are estimated to have exclusions. In total, I would say more than 100,000 Singaporeans and PRs have been uninsured for years

For many years since I joined this House, I have asked for health insurance to be a "must-provide" service by the Government, for all. Health insurance and affordable healthcare are basic essential services that must not be denied to anyone in our Singapore family, whatever health conditions they are born with, or acquired during their lifetime either through accidents, old age or other reasons.

I often wondered and had articulated in this House, why, for instance, a person with Down's Syndrome would be deprived of health insurance-paid hospitalisation if he should meet with an accident through no fault of his. Or why a person who acquired a heart condition or diabetes should be denied basic health insurance or other medical benefits that other citizens have access to. I had asked for Government and other key insurance providers to look into addressing this big gap for the several years that I have been in Parliament.

To be fair, the attention and support given to the special needs community especially by the Government have been remarkable in the last decade. This is thanks to the clear signal sent by the Prime Minister since his inauguration. The call to consider the special needs community, those who are disabled, was also supported by the active leadership and good work of several Ministries, such as MSF, MOE and, more recently, MOT.

But one important missing piece has always been health insurance. It is not an easy piece to fix. Inclusion has a price. Even as Singaporeans call for an inclusive society and to ensure that everyone has access to public health insurance and healthcare, not all the calls share the same degree of conviction. Many people do not mind sharing the cost of insurance for all, only if it means they are made to pay just "a little bit more". Many, of course, want the Government to pay the bulk of any premium increase. In my less optimistic moments, in the last year when MediShield was being considered, I had thought that the MediShield Life

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Review Committee and the Government will continue to leave the uninsured behind, citing cost as an obstacle.

While all this is happening, baby steps, indeed, had been taken. MOH had cautiously introduced the policy of ensuring all children born after 1 March 2013 to be covered under MediShield, whatever their condition; leaving out only those who were born before March 2013. Another encouraging baby step that was taken last year was when I was able to work with NTUC Income – thanks to then CEO Tan Suee Chieh and his team – they piloted and launched their first disability-specific insurance product for the autism community. So, that was really encouraging.

But the real deal has now come in a reformed MediShield Life that features universal coverage – for life, for all; albeit with a recommended 30% loading for those with pre-existing conditions but with Government agreeing to foot 75% of the cost of inclusion.

I am extremely encouraged by this show of moral courage of the Government in supporting this particular recommendation of the Review Committee to cover everyone. It is a move that has so far earned the support of most Members of Parliament, regardless of the party colour that they don; not to mention the many special-needs persons who previously were being denied health insurance. I have spoken to them and they are very, very supportive and grateful. Good leaders do the right thing despite challenges, despite difficulties. Including every Singaporean in a basic healthcare scheme – regardless of their age, condition, ability to contribute economically or other perceived liability – is the right thing to do. I therefore thank and salute the Minister and his team for strongly endorsing the universal coverage recommendation by the Committee. Thank you for putting your money where it matters – to pay for the bulk of the cost to bring the previously uninsured into MediShield Life.

I have five suggestions to make, for Minister's consideration.

Suggestion One is Universal Permanent Subsidy. On the recommendation to apply permanent subsidies only for two-thirds of the population, I wish to ask the Minister to consider a subsidy formula that is currently used in Government-sponsored, for example, Early Intervention Programmes in MSF. This model applies a universal flat subsidy to All Singaporeans, whatever their income is; and then add a second component of means-testing to those of lower income. Considering that health insurance is a very basic essential service, I urge the Ministry to consider applying a universal flat permanent subsidy to all Singaporeans first, regardless of income; and then apply another layer of subsidy that is means-tested.

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Suggestion Two is regarding the premium loading for those with pre-existing conditions. On the recommendation of an additional 30% loading on the standard premiums for the first 10 years to be paid by individuals with pre-existing conditions, I would like to seek Minister's clarification on: (a) how this additional loading of 30% is computed; (b) how the duration of 10 years is derived at; and (c) the criteria by which individuals with disabilities are evaluated for this additional loading. Because, as most of us know, disabilities come in varying degrees of severity – some are mild, some moderate and some more severe. Just because someone has been to a Special School, just because he has a form of mild or moderate autism or just because someone meets a technical definition of intellectual impairment, for example, an IQ of below 70, does not mean that that person is automatically a high-risk profile, subject to the loading.

Suggestion Three relates to the IP option for all. On the recommendation that the Government works with the insurance industry for a Standard IP at Class B1 level coverage, Madam, I fully agree with this recommendation. But I would also like to ask the Minister to play a regulatory role so that key IP providers adopt fair and consistent practices so that persons with pre-existing conditions will not be at the mercy of or be totally left out by the for-profit providers. IPs, as the Committee pointed out, are of significant public interest, with 60% of Singaporeans having bought IPs of various forms. Persons with pre-existing conditions should not be denied and deprived of the choice of upgrading to Class B1 because of either unfair risk-loading practices or private insurers' lack of interest to cover this target group. I ask the Ministry to consider working out to offer a standard IP for all, regardless of health conditions, using the same principles of standard loading if need be, as the basic MediShield Life.

My Suggestion Four concerns employer plans. At the job front, for persons with pre-existing conditions, I urge the Government to ensure that persons with pre-existing conditions are not excluded from plans that provide some basic employment benefits, such as Workmen's Compensation, Group Hospitalisation and Surgical Plans and Term Life Insurance Plans. I think these plans need to be aligned so that people with pre-existing conditions or congenital conditions will not be left out.

My last suggestion refers to Small Enterprises and Voluntary Welfare Organisations (VWOs). For small enterprises and the not-for-profit VWOs, I urge the Government to consider a rebate of sorts. These are set-ups that can scarcely afford a further increase in operational costs, and the mandatory additional 1% Medisave contribution to pay for the MediShield review will certainly impact them. I ask the Minister, MOH, the Government and the relevant Ministries to consider how these Small Enterprises and VWOs could be supported.

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So, these are the five suggestions.

In conclusion, Madam, it has been said that "where your treasure is, that's where your heart is also". This Government has committed a hefty treasure of close to $4 billion over the next five years to provide every Singaporean with lifetime basic protection against medical costs so that they can have greater peace of mind. This move tells me that the Government's heart is in the right place – with the People. Thank you for agreeing to deploy the country's treasure to where it should rightly be – basic protection for every Singaporean, regardless of their health status.

I thank the Review Committee and the Secretariat for its excellent work. A very well-written and reader-friendly White Paper. Thank you very much. I thank the Government for strongly endorsing the Committee's recommendations. I strongly support the White Paper on MediShield Life.

Madam, I wish to congratulate and thank the MediShield Life Review Committee, led by Mr Bobby Chin, on their hard work and extensive recommendations.

The Committee has managed to strike a good balance between several competing demands in coming up with their recommendations. These demands include:

(a) The need for MediShield Life to be financially sustainable so that there is no inter-generational transfer of liabilities. We have avoided the situation in which our children and our grandchildren end up paying for our elderly's healthcare costs, other than within the same family unit.

(b) To reinforce the original aim of MediShield which is to pay for large healthcare bills, while leaving smaller bills to be paid for by other means, either by out-of-pocket payments, Medisave, employee benefits and so on. MediShield Life rightly pays more than the old MediShield for the big bills.

(c) To avoid the two main pitfalls of private insurance schemes, which are adverse selection and moral hazard; which, in layman's terms, means "cherry picking" by insurers and "buffet mentality" by the insured. The scheme is all-inclusive, even for those with pre-existing diseases, and deductibles and co-payment remain as key features.

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(d) To give Singaporeans peace of mind – there is now no lifetime limit-caps and annual limits of withdrawal have been substantially raised.

(e) To keep MediShield Life premiums affordable and well within what the vast majority of working Singaporeans contribute in terms of Medisave contributions so that there need not be out-of-pocket payments to fund MediShield Life premiums.

(f) To foster a spirit of collective welfare through healthy Singaporeans funding a small portion of the additional premiums of less healthy Singaporeans in order to achieve universal coverage.

Mdm Speaker, each of the above six demands is, in itself, already a formidable policy aim to be achieved, let alone all six. But if we just reduce MediShield to its elemental state – MediShield Life is essentially about healthcare financing.

Healthcare financing can also be divided into two broad elements – funding and payment. Actually, to the man in the street, or the auntie in the market, they are not very much interested in how healthcare is funded, even if policy wonks are so obsessed. For example, whether the Government funded the Pioneer Generation Package, which is essentially also about healthcare financing, $800 million or $8 billion makes little difference to Mr Tan or Mdm Wong. Mr Tan or Mdm Wong is primarily interested in payments – how much are they going to pay for the remainder after Government funding.

So, the two biggest things on everyone's minds are: how much will the premiums be in the long run? And, two, how much will the payouts be when we need to use MediShield Life?

These two aspects will determine whether MediShield Life will work and achieve its policy intents in the long run. I am quietly optimistic that MediShield Life will work as long as the Government can maintain control over the MediShield Life ecosystem.

Yes, the key word is "control". Control is not a nice word. In this Internet Age, it is probably a politically incorrect word. But I would like to proffer that control is exactly what is needed for MediShield Life to work. The other is moderation.

Implicit or otherwise, the MediShield Life Review Committee already has built in the elements of control and moderation in its recommendations, the most important being the recommendation that MediShield Life can be used no matter what class of beds the patient chooses, from C to A, but the withdrawal limits will be pegged to B2 and C Class bills. In other words, the A Class patient and the B2 patient will withdraw the same amount of money for

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the same treatment from MediShield Life.

Madam, herein lies the most critical success and differentiating factor of MediShield Life from other insurance schemes, especially private insurance schemes. For any insurance scheme to work well, aside from relying in good actuarial practices, one has to contend with three factors: one, the size of the insurance premium; two, the payout; and, three, the out-of-pocket portion, that is, the difference between the total healthcare bill as given by the healthcare provider and the payout.

Most healthcare insurance providers cannot control the size of the healthcare bill. They can only control the premium and the payout. In other words, other than in very limited cases, the healthcare insurance provider has little control over the healthcare provider.

But MediShield Life is very different. In effect, the Government controls all three aspects of the ecosystem. By pegging payouts to B2 and C Class bills, it has put into place control and the avoidance of mission overreach. The offering of B2 and C Class services is essentially that of a monopoly run by restructured hospitals that are wholly owned by MOH.

Although there are many restructured hospitals offering B2 and C, by virtue of the funding formulas and the ownership and the appointment of board directors, the Government also has very good oversight and governance over these same hospitals.

So, in systems design, we have good control over both the demand and supply sides of the equation, unlike conventional healthcare insurances in which there is little control over the supply side.

Madam, if MOH can truly exert control over how B2 and C Class services are scoped and delivered and subsidised, then I think we can be very optimistic that MediShield Life will work. If costs and scope of B2 and C Class services are not well controlled and moderated, then two things will happen: first, premiums will have to go up significantly or out-of-pocket payments by patients will have to painfully increase. In the worst case, both will happen simultaneously and MediShield Life may fail as a healthcare funding policy tool.

Madam, I would like to now spend a little time on my favourite MediShield Life Review Committee recommendation, that is, providing a standardised IP for B1 Class. Personally, I like this because it also addresses the sandwiched portion of our society. Those who are not poor but also cannot afford the un-subsidised A Class or private hospital charges, that is, the middle and upper middle class folks.

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But philosophically, I also have a problem with the IP continuing in its present form. I would like to suggest that the private insurers concentrate on providing products for A Class and private hospital services and exit the B1 segment. This is logical because if you think about it, we want several providers for a certain product or service so that, through competition, innovation and differentiation between providers, the consumer can benefit.

But once a product is standardised, there is very limited if any scope for competition, innovation and differentiation to take place. Also, like C and B2, the B1 service is also a uniquely restructured hospital product in that it receives a 20% subsidy rate. Most private hospitals offer very few four-bedders and these beds are not subsidised. So, if the service product is standardised and unique to restructured hospitals and the insurance product is also now standardised, then, in theory at least, there is little economic sense for there to be many providers. In fact, a single insurance provider will enjoy economies of scale and better risk-pooling.

Hence, I would like to call on the Government to consider taking over the administration of IPs for B1 services, just as it does for the B2 and C Class services. If it does so, it can also institute certain elements that private insurers are very hesitant to practise, such as front-loading of premiums and coverage of pre-existing diseases.

Madam, the next point I would like to make is that I hope MOH can consider releasing some data and projections on MediShield and MediShield Life. A frequent comment is that MediShield is too "profitable" – it collects more than it needs because it pays out so little. This is not true. I think it would be good if MOH can release MediShield's Loss Ratios for the last 20 years, and how it compares with private medical insurance, while taking into account that some front-loading and, hence, lower loss ratio may be desirable in a life-long insurance product, such as MediShield, as compared to a private one in which it is only as good as the year in which you have paid your premium.

Going forward, it would be good, too, if MOH can also now declare upfront what are the actuarial assumptions for MediShield Life so that we know why and what we are paying for. For example, what are the life-expectancy, healthcare inflation and loss ratio assumptions in the design of MediShield Life?

The actual performance of MediShield Life can then be monitored against its design assumptions by all interested parties and stakeholders when it is introduced. It will also facilitate benchmarking against other medical insurance schemes. This will give all MediShield Life users a better and collective sense of ownership and responsibility in making the system work. This disclosure of information will also enable all stakeholders to make

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informed decisions and constructive recommendations to improve MediShield Life.

Madam, the last point I would like to add is whether the 3M framework of Medisave, MediShield and Medifund will take up a larger share of total healthcare expenditure. One of the common comments of the 3M framework, that is, Medisave, MediShield and Medifund, is that 3M only funds a purported 10% of total healthcare expenditure. Government expenditure now accounts for 40% of total healthcare expenditure, up from 33% a few years ago. That leaves about half of total expenditure to be still funded either by out-of-pocket, employee benefits or private insurance. Will this share of funding change with MediShield Life?

Finally, I would like to once again express my appreciation to the MediShield Life Review Committee for their conviction and courage in coming up with the various landmark recommendations in the design of MediShield Life, and also to the Minister for Health for accepting these recommendations and in coming up with $4 billion to fund the transition period. Four billion dollars now and the $8 billion in the Pioneer Generation Package underscore the Government's determination to give Singaporeans peace of mind when it comes to the subject of healthcare costs. As I have said before, while $12 billion of funding may matter very little to Mr Tan in the street and Mdm Wong in the market, Mr Tan and Mdm Wong will find out that what they have to pay out of their pocket or savings will be very much reduced with the introduction of the Pioneer Generation Package and MediShield Life. I am very confident that our people will know and will feel the difference once the tyre hits the road. I support the Motion.

Mdm Speaker, with increasing life expectancy and inflation, public concerns from accessibility to quality and affordability of healthcare have been hanging heavily over the heads of Singaporeans. Senior citizens, in particular, especially those who have invested their hard-earned cash on their house and their children, would find themselves in a spot for not having invested on health insurance when they were younger. With significantly pricier premiums for their age groups or, even worse, a rejection from the insurers because of their age and/or because of pre-existing health problems, the dilemma becomes even greater. In today's healthcare setting, it is easy for one to rake up an astounding medical bill with just a surgery and a few days of hospital stay.

Worse still, in some cases, it may have discouraged patients from seeking further treatment, such as chemotherapy and radiotherapy.

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I know of someone who was diagnosed with stomach cancer. At first, the family members did not want to tell him that he had cancer. But later on, the doctor said that the cancer had spread to the liver. After the operation, he needed to have chemotherapy, and that was the time the family members told their father that he had cancer. And the father told the children he did not want to have further treatment. He did not want to have chemotherapy. Why? Because he said he had some friends who had sold away their houses and their shophouses to seek treatment but eventually the friends still passed away.

The upgrade to MediShield Life comes at a very timely moment and has addressed this ominous problem along with other concerns, such as incurring large medical bills when diagnosed with critical illness. Just now, the hon Member Mr Png Eng Huat mentioned that 100 million people in the world got into poverty because of medical expenses, if I listened correctly. It is precisely because we care for our Singaporeans and do not want our Singaporeans to go into poverty because of medical expenses that is why we introduced MediShield Life. I congratulate the Review Committee for their hard work, and I am pleased that the Government has deemed it fit to accept all its recommendations and move this Motion for the House to debate.

We have often heard the argument that the Government could reduce healthcare costs. Yes, perhaps, but to what extent? Rising healthcare cost is an inevitable global problem.

The New York Times, in an article entitled "A World of Rising Health Care Costs" last year, revealed that having to inject more funds into healthcare has become a common predicament among industralised countries and some big developing countries.

Our healthcare sector is also influenced by external factors. In fact, there was a big debate about pharmaceutical companies having different pricing for different countries, depending on whether they are classified as Third World or others. Instead of following in the footsteps of the struggling welfare states and placing the onus solely on the Government and national reserve funds, it is far more pragmatic and sustainable to have in place a healthcare model that emphasises "Shared Responsibility" and then, when necessary, more assistance from the Government.

I have confidence that this enhancement of MediShield Life supports this model well.

Dr William Haseltine, President and Founder of ACCESS Health International, was in praise of our subscription to the shared responsibility model. He referred to our CPF as "a big social stabiliser, and a big stabiliser of health", and suggested that the USA could solve some of its current problems by taking a leaf out of our books with mandatory health savings

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accounts and regulation of insurance company prices and policies.

MediShield Life is a true reflection of the society we strive to be – one that is inclusive, leaving no one behind, from those with pre-existing illnesses to the aged. These were the vulnerable groups previously not insurable.

While the increased premiums to cope with a more comprehensive healthcare scheme may seem like a penalty to the young and healthy, it clearly seeks to drive home the message of shared responsibility and paying forward, that is, to pay more when we are young and working so that, when we are old, premiums need not grow exponentially.

In any case, in spite of the premium increments, the enhanced MediShield Life keeps medical expenses manageable for most, while shoring up various gaps. Based on feedback from the ground, Singaporeans, I believe, generally prefer to be able to pay their insurance premiums out of their Medisave accounts.

On the other hand, premiums for health insurance policies offered by private insurance companies tend to go up exponentially with age, and it may be inevitable to pay a portion of the premiums out of one's pocket instead of paying the full sum via Medisave.

In fact, I have received feedback from many of my residents over the last few years that their premiums from the private insurance companies have gone up tremendously. So, my residents are worried. With the introduction of MediShield Life, will their premiums be increased again? They worry that the companies will take this opportunity to increase the premium upwards. Perhaps, the Government needs to monitor the premium of IPs and asking them to break it down into MediShield Life, plus whatever that is extra.

There are also residents who misunderstood that MediShield Life is all-encompassing. I have already heard residents talking about not renewing their existing insurance plans when MediShield Life kicks in.

MediShield Life provides better protection against large hospital bills and expensive chronic treatment. Perhaps, we need to bring up awareness on what is a large hospital bill. There may be many more smaller hospital bills that are not covered under MediShield Life, and these will have to be picked up ideally by employers' coverage. Otherwise, individually, they will have to buy another insurance to cover the smaller hospital bills, if they do not want to pay cash. Mdm Speaker, in Mandarin, please.

(In Mandarin): [Please refer to Vernacular Speech.] MediShield Life truly reflects our aspiration for an inclusive society that leaves no one behind, from those with pre-existing

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conditions to the aged.

As for young and healthy Singaporeans, the increased premiums may seem like a penalty to them. But this is obviously meant to encourage everyone – from family members to friends, neighbours and even strangers – to be responsible for their health and to have a better lifestyle.

Despite the Government's repeated assurances that the premiums for MediShield Life will be affordable for everyone, there are still some residents who are not fully convinced.

Recently, I went to the coffee shops and one resident came to me and said that at the moment he did not have any insurance. Now, because of this compulsory MediShield Life, he is forced to buy medical insurance. So, I asked him, "Does it occur to you what would happen if one day you fall sick and have to be hospitalised?" He said, "I have never thought about that". Maybe our Government is thinking too much.

According to residents' feedback, Singaporeans hope that they will be able to pay for all the premiums with their Medisave. But not everybody has money in their Medisave.

Insurance policies have always been very complicated, particularly for the lay people. This could be the main reason why some senior citizens do not seek comprehensive coverage. I suggest that we apply the same communication methods as what we have done for the Pioneer Generation Package by "dissecting" the policies so as to communicate with the seniors effectively and help them understand how they can look for the kind of healthcare they need.

In fact, many people still do not understand that MediShield Life is a form of insurance. Some people wrote on my Facebook, "If I pass away, will my family members get anything?" MediShield Life is actually a medical insurance. People may not know what is deductible and what is co-insurance either. By the time they find out they need to pay out of their own pocket for the deductibles and co-insurance, they will say that insurance is cheating people.

MediShield Life can help to pay for large medical bills. However, we need to be careful not to create the misconception that it can pay every single medical bill. After listening to my explanation, the residents said, "Oh, so, it is like that? It is not all-inclusive, it does not cover everything."

Life is not plain sailing every day. Sometimes, we may discover that we are facing financial difficulties. Although the Independent Review Committee suggested that we should take stern action against those who default, I feel we should give people who are in genuine

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difficulties some breathing space. In addition, I think we should also give consideration to the unemployed and the seniors who have very little CPF and Medisave savings. How can we help them pay the premiums? I think the Government needs to give a more detailed explanation.

Some people are worried how they can get help after the subsidy period ends. Perhaps, we need to explain to people whether the assistance is conditional or unconditional, where the money is coming from, and whether we are moving towards the direction of Western countries whereby working people will have to bear a bigger burden.

From what I understand, the Independent Review Committee has already recommended that employers adopt a more flexible and portable medical insurance for their employees, for example, upgrading their employees' current MediShield and IP plans. This would be a very good move. Apart from providing solutions to offset cost and restructure the medical benefits of the employees, we should also put more emphasis on public education to help Singaporeans understand.

With more benefits, wider coverage and by bringing those with pre-existing conditions under the scheme, MediShield Life is a revolutionary move. Do not forget we also have Medifund and we do not need to pay high income tax of 30% or 40% like the Western countries. This kind of medical benefits is unique in the world.

Even with MediShield Life in place, we should continue to promote healthy lifestyles. MediShield Life should not become an excuse for us to stop exercising. I fully support this Motion.

Mdm Speaker, over these past two days, 24 Members have spoken about MediShield Life. I am heartened by Members' unanimous support for MediShield Life and what it means – Better Protection, For All, For Life.

Many Members spoke passionately of how MediShield Life would help ordinary Singaporeans with large unexpected hospital bills, giving them better peace of mind. A number shared stories of their constituents who were unfortunately struck by serious illnesses and were concerned with how to pay their bills as they had no insurance coverage before MediShield Life. Members also spoke on related issues, such as the Integrated Shield Plans and Employer Medical Benefits. More importantly, Members also raised fundamental

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issues in healthcare financing, like how we can continue paying for our healthcare now and into the future.

Let me start by addressing comments and questions on the larger healthcare system and financing framework in Singapore.

I agree with Dr Chia Shi-Lu and Dr Lam Pin Min's observations about the quality and effectiveness of Singapore's healthcare system. We have achieved good outcomes, and at lower cost than most other countries. I earlier highlighted the key principles that have guided us through the years and which will remain important.

First, emphasising cost effectiveness, with co-payments to guard against over-provision and over-consumption. Second, ensuring that healthcare is accessible for all Singaporeans, through targeted subsidies. And, third, maintaining sustainability for current and future generations. These principles continue to serve as the foundation for our healthcare financing system, even as we adapt our system to meet Singaporeans' changing needs.

To meet these challenges, we need to foster greater collective support for healthcare costs. As Mr Sitoh Yih Pin has noted, the Government will raise its share of healthcare spending, from one-third in FY 2012 to 40% or more, going forward.

We are strengthening risk-pooling through MediShield Life, in addition to enhancing subsidies, allowing more flexible use of Medisave, and having expanded coverage of Medifund.

I thank Members, such as Mr Christopher de Souza, Mr Zainal Sapari and Ms Denise Phua, for raising valid concerns about the long-term sustainability of our system. This is a very important issue and I am glad that many Members recognise the need to manage overall healthcare costs.

Patients' co-payments are an important safeguard. In setting co-payments, we need to balance between affordability and the need to focus providers and patients on cost-effective treatments and minimise over-consumption.

In many countries, minimal co-payments have distorted the incentives for patients and doctors. As it is a third party – the Government or the insurer – footing the bill, they are less likely to consider the cost of treatment carefully, and may opt for more expensive treatments or drugs which do not lead to significantly better outcomes for patients. The costs are borne by the rest of society, in the form of higher premiums or taxes. Dr Chia has warned us against

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the pitfalls of such systems.

Beyond co-payments, we will also need to work with providers and insurers to better manage healthcare inflation, as several Members have highlighted.

Mr Yeo Guat Kwang called on providers to be prudent in offering healthcare services, while Mr Sitoh Yih Pin emphasised the need to tightly control the scope and delivery of services in subsidised wards. I agree with the Members that providers play a critical role in managing costs.

In the public sector, we will continue to develop and enforce strong clinical protocols, to guide doctors on what is clinically appropriate and cost-effective. Drugs are a good example. We have developed a Standard Drugs List (SDL) based on clinical appropriateness and cost-effectiveness. SDL drugs are subsidised and the list is regularly reviewed to ensure access and affordability of treatments for a wide range of illnesses. The SDL is a good guide for doctors on which are the effective drugs, based on sound clinical evidence. SDL drugs should be used as a first choice, unless there are medical indications otherwise.

As Dr Chia has suggested, we will expand the use of Health Technology Assessment. We will apply it for medical devices and implants used in our public hospitals and the purchase of new costly technologies. This involves a rigorous review of patient outcomes and cost-effectiveness. We will do so in an efficient and targeted manner, to avoid increasing administrative costs.

Assoc Prof Fatimah Lateef and Mr Yee Jenn Jong suggested close monitoring of insurance claims and healthcare consumption patterns. We will do so.

However, we will need the support of our healthcare professionals, providers, patients and families to do this effectively. To better manage healthcare inflation, we will need to curtail unfettered choice, which does not translate into outcomes. We must work together to keep a lid on healthcare inflation.

I am encouraged by Mr Faisal Manap's compliments for the Health Promotion Board's programmes. We will continue to strengthen our efforts in this area, guided by the Healthy Living Master Plan. As suggested by Mr Teo Siong Seng, employers and other stakeholders can also play an active role in this, by promoting a healthy lifestyle and greater work-life balance at the workplace.

As Ms Ellen Lee has mentioned, Singaporeans must ultimately be responsible for their own health. This includes going for recommended screenings regularly, and following the

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treatment for chronic conditions. This will avoid unnecessary costs by picking up and managing chronic conditions early and reducing the risk of progression to more serious complications that may require hospitalisation.

Let me now turn to comments specifically on MediShield Life.

Several Members have asked about the benefit features for MediShield Life, including the scope of what it covers. MediShield Life Review Committee decided that MediShield Life should continue to focus on large hospital bills, to maximise the benefits of risk-pooling while keeping premiums affordable. Costly outpatient treatments, like dialysis and cancer, are currently already covered by MediShield. The higher claim limits, lower co-insurance rate, and removal of the lifetime claim limit will further help cancer and dialysis patients with their bills.

Dr Lam Pin Min and Mrs Lina Chiam asked about funding and affordability for community hospitals and palliative care. Members will recall that subsidies for community hospitals and long-term care services were increased across the board in 2012. With MediShield Life, the daily claim limit for community hospitals will increase from $250 a day to $350 a day. Medisave limits for community hospitals are generally adequate. For patients having difficulties, we can consider their bills on a case-by-case basis and we will exercise some flexibility.

However, MediShield Life will not cover palliative care, which will continue to be affordable after Government subsidies and expanded use of Medisave, as recently announced. MediShield Life will also not cover long-term care such as nursing home and home care, which are covered separately by ElderShield and the Pioneer Generation Disability Assistance Scheme.

My Ministry will review the scope of MediShield Life coverage from time to time taking into account changes in how medical care is delivered and new information on patient outcomes and effectiveness, while keeping an eye on premiums.

Ms Mary Liew asked whether there could be an annual cap on out-of-pocket payments. MediShield Life will be paying out significantly more, but we should continue to be mindful of the need to manage costs, and a cap on out-of-pocket payments may encourage unnecessary consumption beyond the cap. Hence some level of co-payment will remain. For those who still face difficulties after subsidies, Medisave and MediShield Life, Medifund help will still be available.

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Let me now move on to address questions about premiums and premium affordability.

Dr Lily Neo and Ms Tin Pei Ling asked how MediShield Life premiums are determined. Premiums are priced based on the established actuarial principles and approaches and they are done by an actuarial consultant, Deloitte Actuaries & Consultants in this case. Premium pricing takes into account several factors, including (a) the benefits and expected claims experience, which takes into account future changes in demographics, utilisation rates and costs of medical treatment; (b) provision for premium rebates for policyholders when they grow old is also included; and (c) provisions for reserves, capital and administrative costs for the scheme as well.

Three main factors have led to higher MediShield Life premiums – better benefits, bringing everyone into MediShield Life and spreading MediShield Life premiums more evenly throughout one's lifetime.

Let me explain each in turn. First, better benefits. With better protection, MediShield Life payouts will increase, premiums will have to increase, to support the higher payouts. Second, a small part of the premium increase goes towards bringing all Singaporeans, including those with pre-existing conditions, into MediShield Life, with Government supporting the bulk of the additional costs.

Several Members have asked how the Committee decided on the additional premium of 30% for those with pre-existing conditions. Those with pre-existing conditions would need to pay more, in fact a lot more than 30%, to reflect their higher risks. However, the committee recommended a 30% additional premium so that it will not be overly onerous.

The Ministry is currently reviewing the types of pre-existing medical conditions which will be subject to additional premiums, and will share more details when ready.

Third, for the working-age groups, part of the increase is to pay for their own old-age premiums in advance, to achieve a more even distribution of premiums over one's lifetime, as highlighted by Ms Ellen Lee. This helps to cushion the impact of future premium increases during their own retirement years.

This is quite different from what some have suggested – to cap premiums for the elderly or have flat premiums across all age groups. Because this means that the older generation will be contributing less than the payout from MediShield Life and the deficit will have to be paid for by the younger generation. Given our ageing population, this is not advisable as it entrenches an inter-generational cross-subsidy, where the young carries the burden to pay for the premiums of the old. With a growing number of elderly being supported by a

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shrinking number of younger policyholders, premiums of the younger generation will keep escalating, imposing an increasing burden on our children's generation. This will not be sustainable. Instead, what we have done is to determine the premium on an actuarial basis, as recommended by the Committee, while putting in place Government subsidies and additional support to help the older generation and the needy with their premiums.

Some Members, including Mrs Lina Chiam, have also voiced concerns about premium affordability and asked whether Government support could be extended beyond the first four years of transitional subsidies. Let me reiterate and clarify that Premium Subsidies for the lower to middle income, covering up to two-thirds of the population, are a permanent feature of MediShield Life and will continue to be provided, beyond the first four years. Pioneers will also enjoy the special Pioneer Generation premium subsidies for MediShield Life, for life.

Some Members, such as Assoc Prof Fatimah Lateef, have questioned the use of annual value (AV) in assessing eligibility for premium subsidies. Madam, subsidies have to be targeted at those in greater need. Hence, MediShield Life premium subsidies are provided based on per capita monthly household income and annual value of homes.

Annual value is a relevant consideration, as among those with the same income, those who live in homes with a higher AV would generally be better off than those who live in homes with a lower AV. While this approach is not perfect, it strikes a balance between being more precise in assessing applicants' means, while keeping the process simpler for most applicants.

The $21,000 threshold for annual value covers all HDB flats and some lower value private properties. Those genuinely needy but living in homes with AVs beyond the eligibility criteria for Premium Subsidies can appeal and they will be assessed on a case-by-case basis, taking into account specific family circumstances. If they are Pioneers, they will still be eligible for Pioneer Generation Package regardless of income or AVs.

Mr Gerald Giam called for the Government to consider automatically extending Premium Subsidies to those who are known to be needy and already on Government help schemes. Indeed, this is our intention. Assessment for Premium Subsidies will be done in as simple and convenient a way as possible. We will share the details when ready.

For those who are unable to afford their premiums after Premium Subsidies, the Government will also provide additional premium support, similar to how Medifund helps Singaporeans with medical expenses in the public healthcare institutions today. No

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Singaporean will drop out of MediShield Life because of inability to pay for premiums.

The Government has planned its budget to include higher subsidies under MediShield Life. We do not plan to raise taxes for the purpose of paying for these MediShield subsidies. Whether taxes have to be raised in future depends on our overall spending and our overall revenues in Government.

The Minister for Finance has stated during this year's Budget debate that over the next decade, total healthcare spending will go up significantly. The Government will work with the healthcare providers to contain healthcare cost increases. It will also ensure it has the revenues over the next decade to fund this increase.

Even with MediShield Life taking on a larger share of Singaporeans' healthcare expenses, I would like to assure Members that the Government will not cut down on Medifund assistance. There will still be some who will need extra help. The amount that the Government has set aside for Medifund assistance will continue to be available to help any Singaporean who falls into difficulties with their healthcare expenses, including for outpatient care and intermediate and long-term care.

Let me now touch on pensioners. Mr Png Eng Huat gave the impression that pensioners will be worse off by being included in MediShield Life mandatorily and gave several examples of how that is the case. In the press release on Friday, 4 July, as well as in the reply in Parliament yesterday, Deputy Prime Minister Teo has made it quite clear that pensioners will not be worse off in their medical benefits. In addition, the spouse will now receive MediShield Life coverage. Under the current pension scheme, a pensioner's spouse will lose coverage when the pensioner passes away. But going forward, the spouse will now be covered under MediShield Life for life, even after the pensioner has passed away. I hope Mr Png is now assured that pensioners will not be worse off and he will help us to reach out to these pensioners and assure them that they will not be worse off.

Let me now turn to the long-term sustainability of MediShield Life, which Dr Janil Puthucheary, Mr Yeo and Mr Giam spoke on. MediShield and MediShield Life as long-term health insurance schemes ensure sustainability by setting aside sufficient reserves. The reserves enable MediShield to honour not just current-year claims but also long-term commitments such as continuing claims for dialysis and cancer treatments, and premium rebates for the older age groups. It would not be responsible to all Singaporeans and policyholders if yearly premiums for MediShield just exactly balanced yearly payouts, for this would mean that it cannot meet any continuing commitments for long-term dialysis patients or premium rebates. I am glad to note that Mr Giam agrees that MediShield Life should be

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financially sustainable and have adequate reserves.

In assessing premium adequacy, we cannot consider only claims incurred in the current year. This looks only at current cash flow without considering the long-term claim liabilities, for example, for conditions which are already receiving payouts, leading to the misconception that MediShield is collecting more premiums than needed.

As Dr Puthucheary has explained, the incurred loss ratio is a more appropriate measure, as it compares total premiums to the total monies required to ensure that the Fund is able to meet both current-year claims and also its liabilities into the future. MediShield Fund's incurred loss ratio over the last five years was 96%, as Dr Puthucheary pointed out – just sufficient to ensure sustainability of benefits but not excessive.

Apart from reserves held for expected future claims, insurance schemes also need to set aside capital to ensure sufficient buffer against adverse scenarios beyond projected claims.

Mr Giam asked about the rationale for the Capital Adequacy Ratio, or CAR, of 200% that the MediShield Fund targets to maintain. The CAR compares an insurance fund's financial resources with the capital that is required to hold under regulations set by the Monetary Authority of Singapore (MAS). MAS requires funds to meet a minimum threshold CAR of 120%. Below this threshold, regulatory intervention may be taken against the Fund. Most commercial insurers therefore typically aim for 200% or higher as a result of this risk. No prudent insurance fund operates by holding only the absolute minimum requirement, as otherwise any small variation in claims would immediately cause a breach. A target CAR of 200% is broadly in line with industry practice and was recommended by MediShield's appointed actuary to ensure that the Fund is able to meet its liabilities to policyholders even in adverse scenarios. MediShield Life CAR is currently 157% as of end of 2013.

The Member also asked about adverse scenarios that the Fund is expected to cope with. Adverse scenarios include worse than expected claims experience or a sharp drop in investment returns. In 2008, for example, the CAR fell to148%, and if the economic crisis then worsened further, we could have breached the minimum requirement. The capital gives peace of mind that MediShield can continue paying out on benefits during adverse scenarios without having to make sudden adjustments to premiums. This provides more certainty to the public. I am keenly aware of the impact on premiums, but I would rather have sufficient reserves in MediShield Life and provide the necessary premium support and subsidies, than to put Singaporeans' healthcare protection at risk.

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MOH and CPF Board will continue to ensure that the MediShield Fund adheres to actuarial principles with premiums priced on a sound and sustainable financial basis. Members can then be assured of the Fund's ability to honour claims in the future.

We have also heard concerns from Members such as Mr Ang Wei Neng and Mr Gan Thiam Poh about the capacity in the public hospitals if more people turn to subsidised care, especially with the introduction of MediShield Life. As part of our Healthcare 2020 Master Plan, we have laid the groundwork to add significantly more capacity to improve access and meet the long-term demand for healthcare services, including subsidised beds.

Beyond building more acute beds, we need to transform the model of care, as Dr Lily Neo has noted, to one that is less reliant on acute hospital care, closer to the community, and allows our elders to age in place and live their golden years with or close to their families. This means providing appropriate care to patients in the right setting, through primary care and community-based long-term care providers. We are also expanding capacity and capability in these areas. Altogether, from now until the end of 2020, we will add over 11,000 more acute hospital, community hospital and nursing home beds.

Let me now turn to Integrated Shield Plans. A number of Members also spoke about the need to better regulate the IP insurers. We will study the Committee's recommendations and suggestions to strengthen the current regulatory and accountability framework for IP insurers, while being mindful not to over-regulate the IPs, as imposing requirements which are too onerous could limit choice or result in higher premiums for policyholders.

I am heartened that many Members, including Mr Ang and Mr Sitoh, have welcomed the proposed standard IPs providing coverage based on B1 charges. Members have raised many useful points and suggestions, which we will take into account when we design the B1 plan. We will release more details after studying this carefully.

Many Members expressed support for the idea of portable medical benefits. As I had mentioned yesterday, the Government encourages employers and unions to work together to move towards portable medical benefits, and tap on MediShield Life's national risk-pool to provide lifetime medical coverage for workers beyond retirement.

Incentives are already in place today for employers with portable medical benefits, as they receive an additional tax deduction of up to 1% of their expenses on the portable medical benefits scheme. I thank Mr Teo Siong Seng for his suggestion on working with the business community to reach out to more employers. The tripartite work group, which held its first meeting last Friday, will study this in greater detail, and see how we can better

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support companies and workers in making this shift.

Madam, even as we conclude our debate on MediShield Life, there is still a lot of work to be done from now until the end of 2015 when MediShield Life will go live. My Ministry and the CPF Board will work hard to implement MediShield Life smoothly.

The engagement of fellow citizens will not stop, but will continue in many forms. My Senior Minister of State has earlier elaborated on our efforts. Dr Lam Pin Min, Ms Ellen Lee, Er Dr Lee Bee Wah and Dr Lily Neo have all highlighted the importance of ensuring that Singaporeans have a good understanding of our healthcare financing system and how MediShield Life works, so that they can better plan and prepare for their healthcare needs. I agree, and we will step up our engagement and outreach efforts on MediShield Life as well as the Pioneer Generation Package and other healthcare financing changes, so that Singaporeans can better understand and benefit from these changes.

Madam, we have covered a very wide range of issues in this debate, from the broad changes in our healthcare financing framework to the detailed design and implementation of MediShield Life. I would like to thank Members for their many thoughtful comments and useful suggestions.

I am glad that Members agree on our key objectives of building a healthcare system that achieves quality outcomes, while being cost-effective, accessible to all and sustainable for current and future generations.

But to turn the ideas into reality requires a blend of three important things: Listening with our Hearts – to know what worries Singaporeans; Thinking with clear Heads – to balance among competing needs and objectives; and Being Hands-on in implementation and delivery.

As Mr Christopher de Souza and many other Members have highlighted, we need to ensure that our healthcare system is sustainable and effective, not just for the next five or 10 years, but for generations ahead. This requires good governance, long-term policy planning and a strong economy, with good jobs for Singaporeans. Only then would we be able to generate the growth and revenue for us to continue enhancing and strengthening our healthcare financing framework, including making MediShield Life a reality. It is not just MOH making things work, but a whole-of-Government team, with all Singaporeans playing their parts.

Let me once again urge Members to support the Motion and give Singaporeans better protection, for all, for life.

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*Question put, and agreed to.*

*Resolved,*

*"That this House endorses Paper Cmd 4 of 2014 on 'MediShield Life Review Committee Report' as the basis for designing MediShield Life, to provide every Singaporean with better lifelong protection against large medical bills through better collective support, in a scheme that is financially sustainable, affordable to all, and strengthens our social safety net."*

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