How much is the projected spending by the Government on CareShield Life in the future?

I refer to the article “Government refutes text message claims that it is profiting from ElderShield, CareShield Life” (Straits Times, Jul 2).

It states that “The Government has refuted claims made in a text message being circulated on messaging platforms that the ElderShield and CareShield Life health insurance schemes were introduced to reap profits off Singaporeans.

The text message also suggested that because the risk of severe disability is very low, it is unlikely that policyholders will make a claim.”

As to “The Government said on its website that it will not profit from CareShield Life.

The premiums collected and returns from investments will stay within the fund so that policyholders can benefit through higher payouts or premium rebates.

“Today, premiums collected under ElderShield are more than the claims paid out, as most policyholders are relatively young,” the website said.

However, these premiums collected do not become Government surpluses. Rather, they are meant for future claims – when policyholders become older and more of them make claims for severe disabilities” – why not make the actuarial reports for CareShield Life, Eldershield and MediShield Life public information, so that Singaporeans can have a better understanding of how they work?

With regard to “It also said that as the population ages, half of Singaporeans who are healthy at the age of 65 could go on to become severely disabled” – this estimate for the percentage of those who could be severely disabled do not seem to gel with the estimates that were given in Parliament? 

In this connection, according to a Parliamentary reply on 6 February 2017 – “The prevalence rate of Persons with Disabilities in Singapore is as follows:

Population Group
Approximate Prevalence Rate
Student population
2.1% of student population
18-49 years
3.4% of resident population
50 years and above
13.3% of resident population”

Persons with sensory (blind and deaf) and physical disabilities would constitute half of the disability group. The remainder comprises those with Intellectual Disabilities and Autistic Spectrum Disorder.”

Since “Persons with sensory (blind and deaf) and physical disabilities would constitute half of the disability group” – does it mean that those with disability such that it may not meet the claim requirements of not being able to perform at least 3 out of the 6 daily activities of living under CareShield Life (such as being blind and deaf), may be about 6.65% (13.3% divided by 2)?

So, does it mean that those who can claim under CareShield Life may be much less than 6.65%?

In this connection, “Nearly half of Americans who turn 65 — a common retirement age — will eventually enter a care facility because they are unable to perform specific ADLs. While the majority of care facility admissions will be for the short term (less than a year), about a quarter will stay longer than one year. Typically, long-term care insurance coverage for nursing costs requires an individual who is unable to perform two or more of the six ADLs” (investopedia).

So, how likely is it that those who can claim under CareShield Life will do so for their lifetime or for 10 years as the media has been illustrating as an example, given that the above statistics for the United States are based on 2 ADLs, instead of the required 3 ADLs in Singapore?

In respect of “From 2013 to last year, the annual claims paid out rose by 12 per cent more than the annual premiums collected, which went up by 3 per cent – if we assume that the accumulated surplus is now $3.6 billion and the claims last year was $30 million – using the calculator at http://financeformulas.net/Present_Value_of_Growing_Annuity.html – the projected number of years into the future for the accumulated surplus (assuming 4% interest and 12% increase in claims per annum) to run out is about 32 years.

However, the above does not account for the current 3% rate of increase in the premiums collected. So, how much longer may it be if this is included – about 40 years?

Also, given that the Government does not spend any money on ElderShield – why are we collecting such arguably, high premiums now and in the past?

So, to what extent will CareShield Life be like ElderShield in respect of premiums, claims, surpluses, etc?

$2.6b in premiums, $100m in claims

As to “While the expected median duration for severely disabled individuals to remain in disability is around four years, three in 10 severely disabled individuals are expected to remain in disability for 10 years or more”” – why are there also no statistics on the claims to premiums ratio of the ElderShield scheme, from its inception?

In this regard, according to the article “Gan Kim Yong: $2.6 billion collected in premiums for ElderShield insurance and around $100 million paid out in claims since 2002” (theonlinecitizen, Feb 18, 2017)

– “from 2002 to end-2015, about $2.6 billion have been collected in premiums for ElderShield insurance and around $100 million have been paid out in claims, adding that about $130 million in premium rebates have been given to policyholders so far, the first tranche in 2007 and another in 2012.”

What is the accumulated interest (investment returns) on the excess premiums over the last 15 years? Will it increase the total excess premiums accumulated to over $3 billion?

When will annual claims exceed premiums?

Also, when do we project that the current trend of premiums exceeding claims every year to end?

Claims ratio for last year?

For example, what was the claims to premiums ratio for say the last year?

Not spending a single cent?

When will the Government start to allocate some of the Budget into ElderShield or CareShield Life, as it does not cost the Government any money now, or possibly in the future too, as long as from a cashflow perspective – the cash inflows exceed the outflows annually?

 

Leong Sze Hian

 

 

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3 Responses to “How much is the projected spending by the Government on CareShield Life in the future?”

  • HarderTruths:

    I am waiting for CareShield AfterLife which will be compulsory as usual to keep $G citizens comfortable in hell.

    Since the old man is there he must be getting us a good deal….

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  • clown pap and S$m gang:

    the INDIAN malay milo president has NOT done a single thing since started collecting the easy money S$m.

    are we surprised?

    NO. same with the previous kentucky jiak liao bee whose son 12 years NSF deferment. from his swearing in to his swearing out, over a thousand days, cannot even recall a single SMALL good this Lj has done for citizens. NOT a single SMALL good. truly WTF all these pap clown Ljs and clown pap Cbs.

    only thing we know is with S$10 billion surplus GD up, electricity up, water up, carpark up, ffff anything that can up clown pap goes up before next GE.

    lan jiao to the 70% sheep if they still slumber next GE2019.

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  • Fake news refute truth:

    When orang hantu ordered his comforter to pay half million $ bonus tp gorilla who nfi-ly chewing up billions in some human game she has nfi abt, little Roy wondered aloud could it be one disappearing avenues of his compatriots’cpf. Gosh before Roy can tuck in his nuts, he was slammed till deaf n dumb forever with came many months too late. Roy noises in the enviroment rings on. came up with a novel paper laundering of lateral transfer of cpf to opaque national kitty by mandatory foward spending with no or negligible help insurance. But laundering rate fell well behind disappearing rate so novel insurance who knows next could involve nuts just in case prolong use of as comforters deteriorated thru misuse. So Roy can get his answer. Your compatroits spend it all not Gorilla or her mates playing, chewing or hiding them.

    So ingenious. These plping biws siblings’ feared agents may have nfi why mrt should failed, why the s laughed when the plping biw munster said orchard flood caused by rain but they know how to be billionaires with nfi of anything but many committees to shield it n to devise such fantastic paper lateral ttrnsfer laundering gambit of roy stupid compatroits’cpf n they brain damaged by fake nnes that they r so grateful the plping biws self ying themselves gleefully on stupity.

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