1. Today, we are not facing a big problem with regards to the healthcare needs of the elderly because they comprise only 7% of the population. But our population is ageing rapidly, and will treble to nearly 20% of the population by the year 2030. We must take the time now to plan the strategies and implement measures that will enable us to effectively meet the health care needs of the increasing numbers of elderly in the years ahead.

2. The Inter-Ministerial Committee (IMC) has recommended a two-pronged approach to looking after the health care needs of the elderly:

i) Firstly, health promotion and disease prevention to enhance the position of the elderly who are still healthy;

ii) Secondly, to provide adequate and appropriate services for those who require long-term care.

3. The main thrust is health promotion and disease prevention throughout life. The objective is to enable the elderly to remain healthy and active in the community, and to shorten the period of ill health as much as possible. Secondly, when disease and disability set in, the system must be able to provide appropriate and cost-effective health care according to each elderly person’s need, so as to achieve maximum functional capability.

4. Most of the medical needs of the elderly can be met in the outpatient setting. Nevertheless, hospitalisation for more serious illnesses is required some of the time. As the elderly are prone to chronic degenerative illnesses, a small proportion of the elderly will also require some form of long-term care, whether in a nursing home or in their own homes. When the elderly are unable to manage their daily living activities, their families bear the primary responsibility of providing care at home, or paying for institutional care. My ministry has made the necessary projections of the demand for the different types of long-term care services, and we will ensure that there are sufficient facilities and services provided by both the voluntary and private sectors to meet the demand. We will also continue to provide appropriate levels of financial subsidy for those who are unable to bear the full cost of these services.

5. VWOs are in the best position to provide long-term care for the elderly, whether living in their own homes or in nursing homes. This is because, driven by altruism and community spirit, VWOs add warmth in their care of what can otherwise be a continuous grind of long-term care. They are also able to mobilise community participation. Their continued participation will strengthen community spirit and enhance the bonds between Singaporeans. Traditionally, VWOs have catered only to the poor. We will work with them to expand their outreach to cater to the elderly from all income groups who requires long term-care. The private sector will also be encouraged to build long-term care facilities to provide options to those who can afford to pay commercial rates.

6. Our health care financing philosophy emphasises personal responsibility. Individuals and their families are required to pay all or part of the costs when they consume medical services. The co-payment principle, coupled with community support and government subsidies, has to-date kept acute care services affordable to all Singaporeans. The same approach will be applied to the financing of long-term care, to keep such services affordable as well.

7. Over the past 15 years, Medisave, MediShield & Medifund (the 3Ms) have helped individuals to meet their share of the costs of acute care. The 3Ms are working well. It is timely for us now, when our population is still relatively young, to turn our attention to and put in place the proper framework for financing long-term care.

8. As the risk of acquiring serious disabilities is low but the costs are very high, it will be useful to put in place a long-term care insurance system to supplement individual savings. If we were to use solely an individual savings approach, most Singaporeans would end up setting aside savings they would not need because they did not require long-term care. At the same time, the minority who did would not have saved enough to meet the full cost of such care. With long-term care insurance, the cash benefits received would reduce the out-of-pocket payment required by individuals when they need long-term care. It would also help cushion the impact on the financial resources of their family members.

9. My ministry and the CPF Board are currently working out the details of the long-term care insurance plan. We plan to launch the scheme within a year. The objective is to help individuals and their families to lighten the cost burden of long-term care. However, it will only pay a part of the cost of such care, not the total cost. The elderly and their families are expected to co-pay for the services.

10. All Singaporeans and PRs will be eligible to subscribe to the insurance plan. They will also be encouraged to enrol family members, particularly aged parents. Like MediShield, the long-term care insurance plan will be structured to prevent inter-generational transfers, over-consumption and over-servicing. We will keep the premiums affordable to the average Singaporean. The premiums can be paid through Medisave.

11. VWOs are currently the main provider of long-term care, especially institutional care. They will continue to fulfil this critical role in future, and in home care as well. VWOs fund their operating expenditure through a combination of community donations, patient fees and government subsidies. They must continue to receive funding support from the community, for this is part and parcel of the community support structure.

12. The government currently helps fund VWO services to the needy and lower income families. Because long-term care can be prolonged and expensive, the government has agreed to extend subsidy support to lower-middle income families also. The subsidies will be inversely proportional to the household income up to the cut-off level.

13. However, as public funds are finite, the government must ensure that the subsidies for long-term care services are given to the Singaporean elderly patients who need it most. This will be achieved by putting in place within the next 2 to 3 years, a compulsory means test for those applying for subsidised long-term care. My ministry will be working out the details, including the cut-off household income level and the mechanism to ensure that the means test is conducted fairly and efficiently.

14. Singaporeans who do not meet the means test criteria will nonetheless still have access to long-term care. The government will work with the VWOs to expand their capacity so that they can take in upper middle and upper income patients as full-paying patients. Despite the absence of government subsidies, these patients would still be better off, because VWO-provided long-term care is likely to be more affordable than the same care provided by the private, for-profit sector. The availability of a long-term care insurance scheme will also help to keep cash outlay affordable.